Dell gains from HP woes, becomes No. 1

Sunday, 14 November 2010 21:46 - - {{hitsCtrl.values.hits}}

Technology giant Dell has overtaken traditional leader HP in the desktop PC segment during the September quarter of 2010 and stands No 1 in terms of overall shipments which includes notebooks. Dell’s growth has come on the back of higher marketing spending and better distribution.

The firm has been able to make the most of a troubled restructuring at rival HP, analysts said.

Data from market research firms IDC and Gartner peg Dell’s overall market share at around 17% compared to 13-14% of HP in the September quarter of this year. This is a sea-change from the year-ago period when HP held about 16% of the market and Dell only 10% share.

In a study released on Friday, IDC said Dell clinched the top position in the Indian desktop PC market for the first time with a share of 9.8%, followed by HP and Acer in second and third spots respectively during the September quarter.

Analysts said Dell and Lenovo were able to capitalise on HP’s poor channel management during the quarter, resulting in a change of fortune. HP, in May this year, had made a conscious decision to transition from a national to a regional distribution model. “The move had its own challenges. HP is taking time to settle down,” said Sumanta Mukherjee, lead PC analyst at IDC India.

“HP is reorganising its PC business and restructuring and consolidating their channels, so it will take some time to get the results. Lower marketing budgets and poor channel management may have cost them market share,” principal research analyst at Gartner India Vishal Tripathi said.

Gartner said Dell’s desktop segment grew at a whopping 94% in the July-September (JAS) quarter of 2010 compared to the year-ago period while notebooks grew at 86%. HP, in comparision, saw a decline of 17% in desktop shipments and notebooks grew at a modest 16% rate.

“Dell has very high marketing spends, strong channel partnerships and aggressive sales in smaller cities which was their weak link earlier. All these efforts are giving them incremental sales,” Tripathi said.

Besides higher marketing spending, Dell and Lenovo may have leveraged their global accounts better. “Both the companies have good global business accounts. As the economy improved, the global accounts started spending,” IDC’s Mukherjee said, adding that the current health of the PC market points to a robust economic recovery. Increased hiring is leading to greater PC sales. However, Acer lost out on big accounts to the competition, he added.

IDC said that the overall India PC market sales touched 27.9 lakh units during the September 2010 quarter recording a 27% year-on-year growth. Desktop PC sales accounted for nearly 60% of total PC sales at 16.7 lakh units, representing a 15% growth. The sales of notebook computers grew at 52%.