Dell takes slim lead over Compaq as top PC maker, surveys say

Dell Computer Corp. assumed the No. 1 ranking in the worldwide PC market for the first quarter, slipping ahead of rival Compaq Computer Corp. in global unit shipments for the first time, according to surveys released today.

Dell achieved a 12.8% worldwide market share in shipments during the quarter, while Compaq commanded a 12.1% share, according to figures released by Dataquest, a unit of Stamford, Conn.-based Gartner Inc.

According to a survey by Framingham, Mass.-based market research firm IDC, Dell had a 13.1% worldwide market share, while Compaq's market share was 11.9%.

Dell was able to top Compaq due to its ability to cut prices faster than its competitors and to sell directly to customers rather than through distributors or retail stores, according to analysts.

Last December, Dell cut prices on most of the models in its Latitude line of notebook PCs for corporate users, a move the company said was the result of lower costs for components that go into the machines. Dell spokesman Mike Maher today said the survey results are "a vote of confidence from our customers, but we know there is a lot of [work] left to do."

David Friedlander, an analyst at Giga Information Group Inc. in Cambridge, Mass., agreed that Dell's strength lies in its aggressive pricing strategy. "Compaq would take a huge loss if it lowered prices on its PCs any more," Friedlander said. "It's difficult to compete [on prices] with Dell."

But Compaq isn't overly concerned about its market share position in relation to Dell, because the PC market just isn't the most important one, according to a company spokesman.

"Back in the fourth quarter, we were very vocal that we would not chase market share on the PC front," Compaq spokesman Arch Currid said. "It's not an important market in today's IT market. In the '90s, it was the brass ring, [and we were the market leader]. The real opportunity today is in the enterprise [sector]." About 90% of Compaq's profits in last year's fourth quarter came from high-end services and enterprise-level servers and storage devices, he added.

In the first quarter of this year, the worldwide PC market grew only 2.8% over the same period a year ago, with a market drop of 9.5% in the U.S., according to IDC. Gartner put worldwide growth at 3.5% and the U.S. market drop at 3.5%.

The overall poor growth in the PC market worldwide can be attributed to the softening of the U.S. economy, which is now spilling over into other regions, Gartner said.

Also in the first quarter, according to Gartner, Dell's global shipments grew by 34.3%. IBM posted a 7% increase in shipments, while Compaq saw only 0.3% growth and Hewlett-Packard Co.'s shipments declined 3.5%.

Dell's U.S. shipments were up 30.7%, while Compaq's were down 17.9%; HP's U.S. shipments declined 24.7%. IBM's U.S. shipments were up 19.1%, according to Gartner.

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Copyright © 2001 IDG Communications, Inc.

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