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Business buying puts Dell back atop PC pile

PC shipments grow somewhat faster than expected. Increases in Asia and Europe, a traditional HP stronghold, help push Dell to the No. 1 spot.

John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
John G. Spooner
3 min read
PC shipments grew somewhat faster than expected during the first quarter of 2004, helping to hoist Dell into the No. 1 market share position, according to preliminary figures from research firms IDC and Gartner.

Shipments of PCs totaled 41.3 million units worldwide, a year-over-year increase of about 17 percent, beating out forecasts of just more than 15 percent, according to IDC. That growth was propelled largely by a surge in businesses purchasing PCs.

Europe was the fastest-growing regional market due to renewed corporate buying and the strength of the euro.

PC market share numbers Gartner said that units shipped equaled 45.3 million worldwide, up 13.4 percent year over year but down 6.8 percent from the previous quarter, a normal seasonal decline, said Gartner analyst Charles Smulders. IDC and Gartner use slightly different methods for measuring shipments, which causes the disparity between their numbers.

While Dell and Hewlett-Packard, the world's two largest PC makers, have traded the top spot since HP completed its merger with Compaq Computer in May 2002, the past quarter changed that equation.

The latest market share figures reveal that Dell was able to capture a good part of the increase in business spending on PCs. The company also grew faster in Asia and Europe, a traditional HP stronghold. Overall, Dell shipped over 1 million more units than HP--a bigger gap than in previous quarters.

"Dell did pretty well, and HP lost some momentum," said Loren Loverde, an analyst at IDC. "We expect that IBM will do well because of its focus on business."

Dell saw its unit shipments grow 28 percent worldwide to almost 7.7 million units. The jump gave it 18.6 percent of the market, according to IDC, and allowed it to retake the lead in total worldwide shipments. (HP shipped the most units during the fourth quarter of 2003.)

HP grew shipments by about 16 percent, according to IDC. Nevertheless, HP's share of the market declined to 15.5 percent, down from 15.7 percent a year ago and 16.7 percent in the fourth quarter, IDC said. Gartner figures were similar.

"We're very pleased with the international growth that came out of it, particularly the European growth...and also growth in Asia as well," said Neil Hand, director of worldwide enterprise marketing for Dell. "We think the traditional Dell effect (the company's ability to enter new markets with products that are priced relatively low and gain market share) is really starting to play in those markets."

IBM, a distant third to Dell and HP, had a good quarter as well. It cashed in on better sales to businesses, with a growth rate of 20.2 percent, according to Gartner.

"I think the Q1 results were right on track with our 2004 expectations," Smulders said. "All of the regions exhibited year-on-year double-digit growth, with the exception of Japan," which showed a 5.5 percent increase in shipments, Smulders said. "In Europe we think that growth (a 17 percent increase) was based on the euro versus dollar exchange rate. We had expected a reasonable quarter based on our (PC) replacement modeling in the developed regions. Based on the growth rates, we expect that's come to pass."

HP, meanwhile, was hit by some excess inventories, primarily notebooks, which likely slowed its sales.

"It's a credit to HP that it took some action to solve the problem, rather than just letting it build," Smulders said. "I think that was a factor in HP's performance. From that perspective, it's difficult for me to say if they were able to capitalize less or more" on businesses spending.

Other brands traded rankings as well. Toshiba, which grew its shipments only by about 7 percent compared with the first quarter in 2003, fell from the top five worldwide rankings. Meanwhile, Acer, which saw shipments increase by more than 35 percent, became the fifth largest PC maker.

In the United States, Dell accounted for 30.3 percent of all PCs shipped and grew its shipments by 23.5 percent. HP, at No. 3 with 17.2 percent of the market, saw shipments increase by 11.9 percent. Overall, U.S. PC shipments grew by 11.6 percent, according to Gartner, slightly lower than the worldwide growth rate.

Gateway, meanwhile, is expected to gain momentum from its eMachines purchase. Gateway's shipments declined by 17.2 percent in the United States, dropping its market share to 2.7 percent. By contrast, eMachines saw its market share grow to 3.2 percent through a 31.5 percent increase in shipments.

CNET News.com's Michael Kanellos contributed to this report.