Dell falls further behind HP

Dell shares fell almost 1 per cent on Thursday, a day after two new studies showed the world’s number two PC maker continued to give up ground to Hewlett-Packard in spite of a pickup in computer sales worldwide.

Preliminary figures from IDC and Gartner, the market research companies, showed that HP pummelled Dell in the battle for PC market share in the first quarter.

HP’s PC shipments grew by more than 28 per cent in the first three months of the year, while Dell’s PC shipments fell 6.9 per cent over the same period, according to IDC. Gartner’s numbers painted a similar picture, with HP shipments up 28 per cent and Dell shipments down 7.8 per cent worldwide.

The move marked the third successive quarter that HP has gained market share at the expense of its once-dominant rival. Analysts said HP had benefited in part from a backlog in demand for personal computers at retail stores following the launch of Microsoft’s Vista operating system earlier in the quarter.

“It’s really dramatic,” said Loren Loverde, an IDC analyst. “Dell has a large exposure to the US and that’s a slow market. On top of that they’ve got low exposure to retail, which is a high growth area.”

Total PC shipments by all vendors rose 10.9 per cent and 9 per cent in the first quarter, respectively.

“The strong first quarter is a good indicator of the health of the industry,” said Mr Loverde. “The United States and Japan didn’t grow much in the first quarter, but solid gains everywhere else and a boost from [Microsoft’s Vista operating system] brought us back to doube-digit growth.”

Earlier this year, Michael Dell returned as chief executive of Dell in order to help put the company back on track after price competition and poor customer service led to a string of weak results. Dell’s problems have been exacerbated by HP’s improved execution under chief executive Mark Hurd.

“The first quarter of 2007 was a transitional quarter for Dell as the company began a major restructuring project,” said Mikako Kitagawa, an analyst at Gartner.

Although Dell managed to hold on to the top spot in US market share, its US PC shipments fell by 15.5 per cent in the first quarter, according to Gartner. HP’s US shipments use 25.8 per cent in the same period.

Inernationally, HP widened its lead, claiming 17.6 per cent of total PC shipments, according to Gartner. Dell came in second with a market share of 13.9 per cent.

Acer displaced Lenovo as the world's third-biggest PC marker following a 46.1 per cent increas in PC shipments in the quarter. Lenovo’s PC shipments grew 16.1 per cent, according to Gartner. The IDC study showed Acer and Lenovo tied for third in worldwide PC shipments.

Dell’s shares fell 0.7 per cent to $24.84 by mid-day in New York. HP’s shares rose 0.7 per cent to $41.27.