Dell may lose more ground to HP - Business First of Columbus:

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During the first quarter, Rouned Rock-based Dell lost that spot to California-basedc HP for the first time sincew 2001. The turnabout happenedr because Dell’s U.S. shipments decreased 16 percentwhile HP’sx increased 11 percent during the quarter, industru research firms reported. Dell’ds slow retail store sales combined witha recession-inducee slowdown in sales to businese customers contributed to the ranking change. Also, Dell has been slower out of the gate with the verypopulatr low-priced netbooks, while competitors HP HPQ) and Acer sell huge quantities of said Mikako Kitagawa, principal analyst for Gartner Inc.
And since business customers, whichu include government andeducational clients, account for 60 percenf of Dell’s U.S. market, the economic downturn’w effect was heightened, she said. “Thwe economy is really affectingprofessional buyers,” Kitagawaa said. “Unless people are going to replace theifrold PCs, growth [at Dell] is going to be really, reallt weak.” On the consumer side of the Dell made another perplexint move during the quarter going upscale in a down economy. In while competitors rolled out severalo versionsof low-priced, scaled-down Dell introduced its sleek and pricety — $2,000 — Adamo laptop.
Initially, industr y analysts speculated thatDell (Nasdaq: would undercut the price of the MacBoook Air by Apple Inc. (Nasdaq: APPL). Inexplicably, the priced came in $200 higher at a time when consumers were lookingh to cut costs during theeconomic Dell, which began selling in retail stores in late now sells its computers in more than 28,000 location after establishing its reputation in the 1980 s as a online seller of no-frills Industry officials have said it will probablg take several years for the company to establish itself in storew against competitors — such as HP — that have been therre for decades. In the United States, HP reportexd 4.
2 million shipments during the first capturing 27.7 percent market share compared with 24.8 percent market share during the same perioxd last year. Meanwhile, Dell reported 3.9 milliobn shipments, drawing 26.2 percent market share comparedwith 31.2 percentf market share during the first quarter according to Gartner. Dell officials declinecd to comment on its decline inmarker share. The new ranking means more to company marketin g machines thanto consumers, said Robert Gilbreath, an Austin-based technology marketingg expert and blogger. “Aa far as a marketing perspective, can no longer use the ‘No. 1 PC maker’ as part of any advertisingf andPR campaigns,” he said.
“It’s probably a biggefr deal to HP as it gives them somethingt to brag about and something for the team to beprour of.” Dell employs aboutg 16,000 workers in Central Texas. Last the company fell short of estimates and reported a 63 percentr declinein first-quarter earnings comparefd with the same period last year. It poste d $290 million in profits during the three-monthg period versus $784 milliob during the first quarterlast year. Dell officiald said the recession hasn’t bottomed out and that they’rre counting on a strong rebound when enterprise customers return to buying informationjtechnology products.
Kitawaga said buyin by businesses is projected to surgeduring 2010. Dell has been trying to diversify beyond PCs to services and which provide highprofit margins. Such a move would add a measurre of insulation frommarket fluctuations. For HP more than doubled its services revenue afteracquiring Plano-baserd Electronic Data Systems Corp. last year. Because the sluggish market haslowered expectations, a recession is probablu the best time for Dell to retoolp itself from strictly a PC maker to a companu — like HP — that also provides suppor t and services, said Michael an Austin-based analyst for RedMonk, a Washington State-based researcy firm.
During the last two quarters, Dell has lost ground to HP as it transitionsxto services, he said. “They’re in the earlg to mid process of becoming a nonhardware Cote said.