How much market share can Dell afford to keep losing?

How much market share can Dell afford to keep losing?

ChannelWeb reports today that HP continues to lengthen its lead over Dell in the worldwide PC space. With shipments of 13.7 million PC’s in Q307, HP increased its PC’s shipped by a whopping 32.7 percent over the same period the year prior.

Research firm iSupply said Thursday that Hewlett-Packard (NYSE:HPQ) Co., which recently surpassed the $100 billion market in annual sales, continued to build its lead over Dell (NSDQ:Dell) in the worldwide PC space.

The El Segundo, Calif.-based firm said that HP shipped 13.1 million PCs in the third quarter of 2007, a staggering 32.7 percent increase from the 9.9 million PC units it shipped during the same period a year earlier. But Dell still lagged and much of the industry’s growth has passed it by, iSupply said in a statement.

According to ChannelWeb’s source for the article, iSuppli, Dell underperformed the market for the same period by shipping 9.9 million PC’s, a meager growth of 1.5% over the same period the prior year, dropping in market share to 14.6 percent from 16.3 percent a year ago. iSupply posits that Dell’s lackluster growth is due to the delay in execution of their channel expansion plans, and notes that Dell’s growth is the weakest among the top 5 PC OEMs during this period.

"Dell underperformed the market with meager growth of 1.5 percent. Dell shipped 9.9 million PCs worldwide in the third quarter of 2007, compared to 9.8 million during the same period in 2006," the firm said. "(Dell) market share fell to 14.6 percent in the third quarter, down from 16.3 percent a year earlier. Dell posted the weakest growth among the Top-5 PC OEMs during the third quarter."

iSupply analyst Matthew Wilkins attributed Dell’s sluggishness largely to the fact that its channel expansion plans have yet to take off.

See the entire article here.

Meanwhile, in a separate article on ChannelWeb, Dell CFO released a statement that reinforces Dell’s commitment to a growth strategy that includes acquisitions. Dell has made recent strategic acquisitions of MSP Tool Silverback Technologies, ASAP Software, Equalogic and has most recently announced the acquisition of Everdream Corp., a Software as a Service provider. These purchases foreshadow Dell’s restructuring to add more services to its deliverables. The debate among service providers has centered around Dell’s plans to include or exclude its Partners in their new service delivery model.

See the entire article here.

Recent opinion in the industry has reflected negatively upon Dell as a result of directly marketing to end-user customers for their remote help desk services, along with their new offering which bundles desktops, servers, networking and service – but will only sell it directly to end-user customers as well, again shutting out their partner channel. See my blog on this announcement here.

It remains to be seen how long it will take Dell to regain its positioning among the top OEMs, and how much more restructuring and acquisition they will continue to execute – not to mention how much of their Partner base will jump ship to other OEMs such as HP in the interim. Many of MSPU’s Members have done exactly that in the current quarter, looking for a better Vendor relationship and feeling of security and support. What about you?

Erick Simpson 

Posted in: Industry Trends

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