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Toshiba's notebook sales slide

For the first time, the company's notebooks get knocked out of one of the top two retail sales slots as rivals turn up the heat.

For the first time ever, Toshiba notebooks have been knocked out of one of the top two retail sales slots, according to a leading market researcher.

And in the corporate market, IBM has widened its market share to double that of its nearest competitor.

The July sales


Gartner analyst Charles Smulders says reports that Hewlett-Packard has edged out Toshiba for the No. 2 position in retail sales present a somewhat misleading picture of the notebook market as a whole.

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figures that NPD Intelect released today are particularly good for IBM, which has struggled to get notebooks to its corporate customers because of a parts shortage.

CNET News.com also has learned that IBM is expected to complete the transition of its notebook models next month with the ThinkPad X Series. As previously reported, the ThinkPad X Series will replace IBM's lightest-weight models: the ThinkPad 240 and 570. The ThinkPad X, which complements the A and T models announced in May, is expected to ship by the end of September, a source close to the company said.

Hewlett-Packard gained some bragging rights in July by nudging Toshiba out of the No. 2 position for notebooks sold at retail. Compaq Computer led with a 41.2 percent market share, followed by HP at 19.57 percent and Toshiba at 19.2 percent. Sony's share rose about six points from the previous month to 15.16 percent.

"This is the first time Toshiba has not placed in the No. 1 or No. 2 position at retail," ARS analyst Matt Sargent said today.

"HP in a lot of ways is replicating what they did in their desktop business over two years ago," he continued. "They came into a market where they had very little presence, and it's hard to believe HP wasn't a retail desktop player two years ago."

Earlier this year, HP took the PC retail sales crown from Compaq and consistently widened its lead until July, when Compaq reclaimed the top spot, according to NPD Intelect.

In notebook sales this year HP has gained consistently on Toshiba. In May's retail sales, HP had only 11.56 percent market share compared with Toshiba's 26.23 percent, according to NPD Intelect. A month later, HP jumped to 14.8 percent, while Toshiba fell to 19.2 percent. Compaq led both months, with more than a 42 percent share.

HP, which had almost no retail presence a year ago, used its brand awareness in Pavilion desktops, printers and other peripherals to gain "nearly instant success," Sargent said. "They've done just a great job in this market."

But Sargent warned that HP's position is in no way secure. With only about a half-percentage separating the two notebook makers, Toshiba could easily bump HP in August.

IBM's position is much more secure. The Armonk, N.Y.-based company in July led notebook sales through mail order and corporate dealers--in the latter category by a wide margin. But the breadth of IBM's success is dampened by how much greater it could have been.

A second-quarter shortage of a single component cost the company $250 million in lost notebook and server sales. Although demand for its notebooks remains robust, ThinkPad A20 and T20 models are back-ordered, with many A Series configurations unavailable until at least mid-September, according to IBM.

"IBM has gone through a painful product transition, and it's clear they're returning back to the IBM notebook company people have come to love, which has really dominated this market for the last three or four years," Sargent said. "I don't know if the transition was as painful as it had to be--it could have been better managed--but they seem to be beyond that now."

In May, when IBM replaced the ThinkPad 600 with the T20 and its 390 and 770 models with the A20, the company's market share through corporate dealers was 28.9 percent vs. 24.85 percent for Toshiba and 24.5 percent for Compaq, according to NPD Intelect. But a month later, IBM had widened its share lead to 34.2 percent compared with Toshiba's 30.8 percent and 20.2 percent for Compaq.

July was a phenomenal month for IBM, and Sargent predicts even greater figures for August. IBM had 44.6 percent market share through corporate dealers, more than double Toshiba's 22.2 percent. Compaq fell to 18.2 percent.

NPD's data measures corporate dealers selling to Fortune 500 companies.

"I have nothing but positive forecasts from IBM, stating this quarter and next quarter sales will be very strong and above expectations," Technology Business Research analyst Bob Sutherland said.

Sources close to IBM said sales for ThinkPad portables were up nearly 40 percent, despite supply problems.

IBM has maintained a healthy lead in mail-order sales, although not as great through corporate dealers, according to NPD Intelect. Between May and July, IBM moved from 25.4 percent mail-order market share to 33.39 percent, compared with Toshiba's drop from 28.75 percent to 22.85 percent. Compaq also lost share, picked up by IBM, falling to 10.52 percent in July from about 14 percent in May.

Besides showing stronger-than-expected sales through dealers and mail order, sources close to IBM said direct sales were up 50 percent beyond projections. The company during the second quarter sold about 24 percent of its PCs and notebooks direct, in line with a goal of 35 percent by year's end.