HP Passes Dell As Leading PC Seller

For all the turmoil roiling Hewlett-Packard's Palo Alto campus of late, the third quarter has become a cause for celebration as the PC maker edged out rival Dell for the top spot in worldwide PC shipments, according to market-share analyst firm iSuppli. And the feat was likely more satisfying to someone who no longer works there.

HP's steady ascent in recent years to the top of the PC heap is nothing less than a mandate for the strategies of ousted CEO Carly Fiorina, according to industry analysts. Her controversial acquisition of Compaq Computer, made with the hopes of building the world's leading PC brand, eventually led the company's board of directors to fire her. Now, less than two years later, Fiorina's game plan looks like a bit of genius.

And the news is good for resellers, who see the ascension of channel-friendly HP's star over that of VAR nemesis Dell as a sign of opportunity.

"We're seeing a major uptick in HP in all areas," says Bob Venero, CEO of Future Tech Enterprises in Holbrook, NY. "Corporate end users are at this point going away from Dell. They did the Dell thing and now they are seeing more support, better features with HP.

"The market share numbers are proof of what we've been saying, and they are an indication that we are in the right sport going forward."

According to iSuppli's latest figures, released Thursday, HP shipped 9.9 million PCs in the third quarter of 2006, up 16.7 percent from the 8.4 million it moved in the same period a year ago. The jump exceeded even the 9.5 percent expansion of the overall PC market, as well as the 3.4 and 10.4 percent respective increases for HP's two closest rivals, Dell and Lenovo, according to iSuppli. The increase in shipments boosted HP's market share nearly three points over last quarter, up to 16.5 percent. That put HP two-tenths of a point ahead of Dell, according to iSuppli's preliminary top-five ranking.

Matthew Wilkins, principal analyst with iSuppli, says HP's sales grew by double digits both year-to-year and quarter-to-quarter. As a result, "HP has once again become the world's largest PC maker, a position it has not held since 2003," he says.

According to Wilkins, HP's better global position helped it beat Dell.

"HP's positive news is in part due to Dell's problems," Wilkins says. "The U.S. market caused some challenges for Dell. HP was less affected by these challenges due to its strong presence in other regions."

According to the iSuppli report, Dell posted a 1.9 percent decline in shipments from last quarter to 9.8 million units. Dell's 3.4 percent increase in sales year-to-year lagged the 11 percent growth rate for the PC industry as a whole.

For its part, Lenovo remained in third place with shipments of 4.47 million units, up 10.4 percent from 4 million in Q3 2005. Market share for the China-based company rose to 7.5 percent, up from 7.4 percent in the same period last year. Acer of Taiwan showed continued growth with its shipments, rising to 3.2 million units in the quarter, up 29 percent from last year. This represents the strongest growth of the top-five PC sellers, allowing Acer to maintain its fourth-place ranking. Japanese PC maker Toshiba, meanwhile, broke into the top five with shipments of 2.5 million units.

The numbers, overall, mark a solid quarter for PC sales, according to the report. Q3 PC shipments rose 9.5 percent year over year, coming in at 59.9 million units.

"The PC industry had been holding its breath regarding unit shipments in the third quarter, following disappointing results in some segments in the second quarter," Wilkins wrote in the report. "However, the accelerated growth of the third quarter has allayed those fears. Clearly, the dust has settled from the second quarter hiccup from the imminent arrival of Intel Corp.'s new desktop microprocessor chips and the expected price cuts."

Desktop PCs showed modest 2.7 percent gains while notebooks continued their strong performance with shipments rising 24 percent since last year.

Wilkins said he thinks the momentum will continue into the next quarter and beyond.

"Recent history has shown that aggressive price cuts among PC makers boost sales during the holiday season. We expect this year to be no different," Wilkins wrote.