HP Extends Lead Over Dell in PC Market

Hewlett-Packard Co. extended its lead over Dell Inc. in the worldwide personal-computer market in the fourth quarter.

Hewlett-Packard Co. extended its lead over Dell Inc. in the worldwide personal-computer market in the fourth quarter, according to reports released Wednesday by two top technology research firms.

The analyses from IDC and Gartner Inc. produced slightly different numbers but the same general results: With overall PC sales unspectacular, HP> managed to outgrow the rest of the market and lead the worldwide tally of PC sales for the second quarter in a row.

PC sales increased roughly 7.4 percent in the fourth quarter, according to Gartner, while IDC pegged the rise at 8.7 percent. Both firms noted declines in the U.S. market, the second consecutive period with a domestic slump.

One culprit appeared to be heavy competition from flat-panel TVs and other consumer electronics over the holiday season.

Also, many people may have been holding off on PC purchases because of the Jan. 30 consumer release of the new Windows Vista operating system from Microsoft Corp. But analysts at both firms said the Vista effect was hard to measure -- many consumers just as likely took advantage of low PC prices that manufacturers offered to clear their inventories before Vista arrives.

For all of 2006, PC sales rose around 9 percent to roughly 230 million. The leading vendor for the year was Dell, but just barely. Dell and HP each registered 16 or 17 percent market share in the IDC and Gartner tallies. Lenovo Group Ltd. was third with 7 percent, while Acer Inc. had 6 percent and Toshiba Corp. 4 percent.

HP ate away at Dell's dominance by outselling its rival in the third quarter and keeping it up in the fourth. HP's sales jumped 24 percent in the fourth quarter _ its best such period since 2000 _ while Dell's sales dropped about 9 percent. The shift left HP with 17 to 18 percent of the worldwide market in the fourth quarter, to Dell's 14 to 15 percent.

The trend tracks the opposite directions that Dell's and HP's stock prices have been heading the past two years. HP has retooled itself as a leaner giant under CEO Mark Hurd, while Dell has struggled with strategic questions, an accounting investigation and huge laptop battery recall.

Dell remains the leading vendor in the U.S., with about 31 percent market share in all of 2006, according to IDC. HP was second at 22 percent, followed by Gateway Inc. at 6.7 percent, Apple Inc. at 4.7 percent and Toshiba at 4.3.

Even with the Vista launch, Gartner expects PC sales to only slightly increase their pace in 2007, with 9.9 percent growth in units sold. IDC expects to see a slightly better rise.

But Gartner vice president Charles Smulders cautioned that overall revenue should be just about flat because of brutal price competition.

"It's a very challenging market to operate in, with very slim margins, one which requires the highest levels of execution in order to maintain profitability," he said.


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