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HP: We're hurting Dell

HP claims to be winning orders from big businesses at its rival's expense. Dell's warning on earnings cited.

SAN FRANCISCO--Hewlett-Packard says it is displacing Dell from its powerful position in direct PC sales by luring away its business customers.

HP said on Wednesday that larger businesses are increasingly dissatisfied with Dell's sales practices. It also cited Dell's warning earlier this week that its first-quarter earnings will be below analyst expectations.

"We are displacing Dell in most of the bigger and strategic accounts," Alberto Bozzo, vice president of HP's personal systems group, told ZDNet UK at the HP Mobility Summit here.

Alberto Bozzo Alberto Bozzo

"Most of our large customers are dissatisfied customers from Dell. They were dissatisfied with the services that haven't been delivered, delivery times and with the quality of the product," he added.

Bozzo said that Dell's shortfall in performance was linked to "fierce competition" in the direct-sales market.

"Customers are asking to buy directly from us because of the quality of service of the direct relationship," Bozzo said.

HP is aiming to attract more corporate customers to its direct sales operation.

"There's still a huge global customer list to address--mainly current IBM and Dell customers," Bozzo said.

HP's revenue grew 6 percent in its last financial quarter, when it recorded net revenue of $22.7 billion. Dell is expected to record between $14.2 billion and $14.6 billion in revenue for the period ended in April. HP's personal systems group--which competes directly with Dell--saw its revenue grow 8 percent year-over-year to $7.4 billion in the first quarter.

Dell declined to comment on HP's claims regarding its revenue, as it is in its "quiet period" ahead of the disclosure of first-quarter results. But Dean Kline, a senior manager at Dell, denied the computer seller was losing big customers to HP.

"Large business customers, both U.S.-based and globally, continue to turn toward Dell to get the benefits of working directly with Dell as their technology partner," Kline told ZDNet UK by e-mail.

"Data from IDC backs this up. According to IDC results for the fourth quarter in 2005, Dell held a 44.4 percent share of PCs shipped to large business customers (those with greater than 500 employees) in the U.S., compared to HP's 21.9 percent. Dell's share increased +2.4 points year over year and +2.7 points quarter over quarter from the third quarter last year, while HP's grew by +1.9 points year over year and +0.8 point quarter over quarter," Kline said.

Tom Espiner reported for London-based ZDNet UK.