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Lenovo and Hewlett-Packard Battle Over Title of No. 1 PC Seller

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Damning with faint praise? The two tech titans cite different studies to lay claim to being the leader in PC shipments in the third quarter.

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MINYANVILLE ORIGINAL The battle between Lenovo (PINK:LNVGY) and Hewlett-Packard (NYSE:HPQ) for the title of the world's No. 1 PC maker heated up after research firm Gartner said last week that Lenovo has overtaken HP by shipping more PCs in this year's third quarter.

Lenovo shipped 13.7 million PCs during the quarter (a near-10% increase from a year ago) to nab a 15.7% market share, while HP shipped 13.6 million for a 15.5% share, Gartner noted in a report.

Troubled HP, which had held the pole position for six years running, swiftly put out a statement citing another study from IDC Worldwide that put itself on top. "While there are a variety of PC share reports in the market, some don't measure the market in its entirety. The IDC analysis includes the very important workstation segment and therefore is more comprehensive. In that IDC report, HP occupies the No. 1 position in PCs."

In the IDC report, HP held a 15.9% share of the PC market in the third quarter, which represented a 16.4% drop from a year ago. Lenovo, meanwhile, improved 10.2% from last year to 15.7%. Clearly, the gap between the two has all but vanished.

Of course, at this juncture, being the global leader in PC sales is pretty much equivalent to being the most intelligent Kardashian sister, what with PC sales shrinking by the minute. A total of 87.5 million PCs were sold in the third quarter, which represented a sharp 8.3% decline in sales from the same quarter a year ago, according to Gartner (IDC numbers suggested a 8.6% fall).

"PCs are going through a severe slump," Jay Chou, senior research analyst, Worldwide PC Tracker, told Campaign Asia-Pacific. "A weak global economy as well as questions about PC market saturation and delayed replacement cycles are certainly a factor, but the hard question of what is the 'it' product for PCs remain unanswered."

Consumers have also increasingly eschewed PCs for mobile devices such as tablet computers. More than 100 million tablets will be sold in 2012, estimates Gartner, which will represent a massive 98% sales increase from 2011. In the tablet sector, Apple's (NASDAQ:AAPL) iPad is the dominant leader, with 65% of the share globally. Samsung (PINK:SSNLF) is second with 9%, while Lenovo was sixth with 1.4%. HP, whose TouchPad held a 5% share of the worldwide market before it pulled the product, is now planning to introduce a new tablet targeted at business users in January 2013.

While mobile is clearly the future of computing, all is not lost for PC vendors, at least not in the short term. Experts say that the third quarter PC sales dip can be attributed to consumers and businesses holding out for the new Microsoft (NASDAQ:MSFT) Windows 8 operating system.

"We expected a weak PC market in the lead up to Windows 8 release in the fourth quarter. While the industry has been focused on shaving excess inventory and preparing to launch a new generation of products, consumers have been looking at alternative devices like tablets. In addition, businesses have slowed their refresh cycle as they remain concerned about the broad economic outlook, amid a busy political season," noted IDC research director David Daoud. "Nevertheless, as vendors line up innovative new products and designs, consumers are likely to respond positively during the tail-end of 4Q12, and that means a potential return to positive growth at the end of this year."

With the marginal difference in numbers logged by Lenovo and HP in the third quarter, Gartner principal analyst Mikako Kitagawa said that fourth quarter results will reveal more decisively whether Lenovo can truly overtake HP in the PC market.

"Next quarter will be the real test to see if Lenovo can really be the top vendor or not. Lenovo has a good business model for the PC business which fits very well in the current environment of low margin and high volume market. They can operate with very low margin level as opposed to some of their competitors." Kitagawa told the E-Commerce Times.

"The challenge for HP and Dell (NASDAQ:DELL) is to have a good balance between profitability and share gain. You cannot pursue both. This is the major difference between HP and Dell and Lenovo, that Lenovo can live with low margin, but HP and Dell cannot."


Twitter: @sterlingwong
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