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HP jumps ahead in notebook race

The computer maker reaps the benefits of making the transition to Windows XP more quickly with its notebooks than Compaq.

Hewlett-Packard weathered a tough retail market to become the top notebook seller in October.

Notebook sales at U.S. retail stores fell 9 percent in the month compared with October 2000 levels, according to new figures from research firm NPD Intelect.

In claiming the top spot, HP increased, by 2 percent, its market share to 28 percent. In September, the Palo Alto, Calif.-based company held 26 percent of the market, the No. 2 position behind Compaq Computer, which had 32 percent of the market.

Sony was close behind HP in October with 26 percent of the market, up from 17 percent in September. Compaq fell to No. 3 with 21 percent.

October was a key month for retail computer sales, with manufacturers moving to models containing Microsoft's new Windows XP operating system. HP benefited by making the transition to Windows XP more quickly with its notebooks than Compaq, according to NPD.

"Their products were out there for a couple of weeks before Compaq got its out," said Stephen Baker, an analyst with NPD. "In a category like this...it's important to be right all the time because if you're wrong for a week, it carries over...and makes it tough to recover."

Compaq continued to hold the No. 1 market share spot for the entire year period. The Houston-based company has so far sold 32 percent of retail notebook PCs. HP, meanwhile, has sold 23 percent of retail notebooks so far this year, according to NPD.

Retail sources suggest that November notebook sales were particularly strong, driven by lower pricing. As a result, November will be a real horse race between HP and Compaq for the top sales spot, the sources said.

Based on early information about retail sales during November's Thanksgiving week, published earlier this month, notebooks were much more popular than desktop PCs, most likely because of aggressive pricing.

The average selling prices for notebooks have dropped precipitously from 2000 levels because of falling component costs. NPD said the average selling price for retail notebooks dropped from $1,715 in October 2000 to $1,509 this past October.

HP notebooks have gained footing since the debut of its Pavilion systems in late 1999.

None of the top computer makers, including Compaq, Sony or Toshiba, should be written off, NPD's Baker said. Toshiba, for example, has become more aggressive, with pricing that is about 10 percent below the competition.

As a result, the notebook market is "still a very strong four-player category right now," he said.