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Dell tops business desktop market

In the second quarter, Dell surpassed perennial leader Compaq to become the No. 1 supplier of desktop PCs to U.S. corporations, according to IDC.

Dell Computer (DELL) became the No. 1 supplier of desktop PCs to U.S. corporations last quarter, toppling market leader Compaq (CPQ), according to a major marketing research firm.

In the second quarter of this year, Dell attained a market share of 18.4 percent versus Compaq?s 16.5 percent, reported International Data Corp. (IDC), a Framingham, Massachusetts-based marketing research firm.

"This is an example of the meat grinder that is Dell. These guys have been moving up the ranks slowly and steadily," said Roger Kay, senior industry analyst at IDC, who worked on the study. "You have to include the quality of the buying experience, which Dell has managed to make very good. That represents a challenge to Compaq," said Kay.

The IDC report was based on shipments to large and medium-size U.S. businesses. Hewlett-Packard was the third largest at 13.8 percent market share, IBM was at 9.3 percent, and Gateway 2000 at 6.6 percent, according to IDC.

IDC also reported that while Compaq continues to hold on to the No. 1 position in the U.S. for total PC sales to medium and large businesses, Dell's share was increasing. No. 2 Dell had a 15.3 percent market share in the second quarter, up from 13.8 percent in the first quarter of 1997, or about 23,000 units behind Compaq, the overall leader. Total sales comprise desktops, notebook PCs, and servers.

Kay added, however, that Compaq will implement some aggressive programs over the next 12 to 18 months to close cost gaps with Dell. Moreover, buying patterns change from quarter to quarter, so it remains to be seen whether Dell can hold on to this position in coming quarters, he said.

IDC expects PC vendors to increasingly duplicate each others' strengths over the next year or so. "We expect to see all the top vendors look more like each other in the next 18 months as the indirect vendors take on some of the characteristics of the direct vendors, and the direct vendors have to take on some of the capabilities of the indirect vendors."

IDC also stated that Dell ranked No. 1 in desktop unit sales to federal, state, and local government agencies in the U.S., with a 14 percent share of shipments.

Jim Davis and Michael Kanellos contributed to this report.