Dell fights to outpace rivals

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Growth in personal computer shipments at Dell, the US computer maker, failed to outpace the broader market by a significant margin for the first time in seven years in the third quarter, according to two big IT research groups.

Although Dell continued to lead the PC industry in worldwide shipments, its shipment growth rate was 17.6 per cent, compared with an average growth rate of 17.2 per cent worldwide, according to Gartner, the IT consultants.

“Dell normally has a premium,” said Loren Loverde at IDC, the IT research group, whose separate report showed similar results.

Mikako Kitagawa, a Gartner analyst, said the change likely reflected a reduced focus on growing market share and an increased focus on profitability at Dell, which shocked Wall Street in August after second-quarter sales failed to meet forecasts in spite of aggressive price cuts.

A Dell spokeswoman declined to comment on third-quarter shipments. However, she said the company’s strategy had not changed and that the company would “continue to drive balanced and profitable growth”. Dell is scheduled to report its third-quarter earnings on November 10.

PC prices have fallen in recent years thanks to fierce competition between established computer makers like Dell and Hewlett-Packard and upstart rivals such as Acer, the Taiwanese computer group. Acer’s quarterly shipments shot up 54.5 per cent year-on-year, while the company ranked fourth in worldwide PC market share, according to Gartner.

Shipments at Hewlett-Packard, which ranked second in worldwide market share, grew 18.5 per cent in the quarter.

Gartner and IDC said that low prices and strong demand for portable notebook computers led to bigger than expected growth in personal computer shipments in the third quarter.

However, they said tight margins and slowing economic growth were likely to lead to a weaker PC market next year.

“The market is very price driven,” said Ms Kitagawa. “We don’t believe this is sustainable.”

Gartner, which predicts 12.5 per cent growth in PC shipments this year, said it expected growth to slow to 8.9 per cent in 2006 as fewer people take advantage of low prices to replace old computers.

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