January 18, 2007 3:31 am

HP extends lead over Dell in PCs

Hewlett-Packard extended its lead over Dell in personal computer shipments last quarter, according to a study published on Wednesday by Gartner, the market research group.

The study found that HP shipped 11.6m computers in the fourth quarter of 2006, compared with 9.4m at Dell. Lenovo rounded out the top three PC vendors, shipping about 4.8m computers in the period.

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The news marked the second successive quarter that Dell has lagged its arch-rival in PC shipments. Last quarter, Dell lost the number one spot in the PC market to HP for the first time in three years.

Gartner said PC makers had grappled with difficult conditions in the fourth quarter as companies battled against falling prices and delayed purchases ahead of the launch of Vista, Microsoft’s new operating system.

“PC price erosion was a defining feature of the quarter,” said Mikako Kitagawa, analyst at Gartner. “In the consumer market, the PC industry battled for wallet share against other consumer electronics products, such as games consoles and flat panel TVs, while at the same time cutting prices to ensure market demand did not stall prior to Microsoft’s Vista consumer launch in January.”

Dell managed to hold on to its lead in the US PC market. But while the struggling computer maker shipped more units than HP in the period, its overall market share fell.

“Dell’s market share was its lowest in four years” Ms Kitagawa said. “It lost market share across all segments in the US, particularly the home market.”

Dell declined to comment on its performance in the fourth quarter ahead of its quarterly results due out next month. A spokesman pointed instead to Gartner’s full-year numbers, which showed Dell slightly ahead of HP. “Dell set an industry record for shipments for the year,” he said.

Nonetheless, this quarters’s loss of market share in Dell’s core US market is likely to add to the pressures facing Kevin Rollins, chief executive, who is trying to put the company back on track after a several quarters of mis-steps.

Over the past six months, Mr Rollins has reshuffled the company’s business units and has invested millions to improve customer service. Although the company’s shares benefited from improved margins last quarter, sales growth has languished.

Some analysts have argued that the company’s eroding cost advantage means that it could be difficult for the computer maker to return to its traditional double digit sales growth rate.

Dell’s shares fell 2.5 per cent on Wednesday to $25.84. The shares had risen from a low of $19.91 in July.

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