HP Beats Dell, Apple In Bruising U.S. PC Market-Share Battle

HP Inc. remained at the top of the U.S. PC market in the first quarter, capturing share from Dell and Apple, according to the latest data from market research firm Gartner.

HP PC shipments in the first quarter soared 16 percent, with Dell finishing No. 2 with a 4 percent decline in shipments, according to Gartner.

Gartner data shows that HP also continued to gain share against premium PC power Apple, which finished No. 4 with a slight decline in shipments.

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The results marked the fourth consecutive quarter that HP has maintained its advantage over Dell in the U.S. market.

HP, in fact, was the only major PC vendor gaining first-quarter shipment share in the U.S. market – which accounts for about 20 percent of the overall market – also beating Lenovo, which finished No. 3 in the bruising PC market-share battle.

Solution providers said HP is firing on all cylinders, delivering more innovation in PC design, performance and experience than competitors. They said HP -- with its most stylish and coolest product portfolio ever – is delivering on the promise of the split from Hewlett Packard Enterprise 17 months ago,

The CEO of a large Dell partner, who did not want to be identified, said Dell's drive to be a bigger player in the enterprise with its $60 billion acquisition of storage market leader EMC had taken its toll on the company's U.S. PC business.

"Dell was a clear No. 1 in PCs several years ago," said the CEO. "I think most people would agree that in their effort to build up their data center business they have lowered their investment and focus on their golden goose – the PC business. The focus of all their energy has been in the data center."

Conversely, the source said, HP has become reinvigorated since the split. "HP has become more innovative and is producing better products. I was skeptical when HP announced the split, but it is clearly working. They are growing their PC business by a significant margin."

Dell executives say the company is focused on the global PC market, where it has enjoyed a four-year run of market-share gains, but has also implemented a more "robust" North America plan.

"The technology we're bringing to the PC space is spectacular," Dell channel chief John Byrne told CRN. "In PCs, and in servers, we're going to be No. 1 in those spaces."

Dell's worldwide PC business is "going on 17 quarters of successive share gain," said Byrne.

The report of HP's U.S. share shipment gains come just one week after Dell confirmed that its president of Dell EMC North America, Bill Rodrigues, an 18-year Dell veteran, will step aside as of April 30.

David Schmook, current president of the $38 billion end-user computing business at Dell and former president of Lenovo North America, is set to replace Rodrigues effective May 8.

HP's U.S. PC shipments for the quarter ended March 31 were 3.6 million, up from 3.1 million in the year-ago period, according to Gartner.

Dell's U.S. PC shipments for the same period, meanwhile, were 3.2 million, down from 3.4 million in the year-ago period, according to Gartner.

Apple, meanwhile, shipped 1.47 million units in the U.S., down from 1.48 million units in the year-ago quarter.

HP, however, was also the biggest gainer in the global PC market during the quarter, shipping 12.1 million units, notching 6.5 percent growth and controlling 19.5 percent of the market, Gartner said.

Dell's PC global PC business grew 3.4 percent in the quarter, shipping 9.4 million units and controlling 15 percent of the market, Gartner said.

Lenovo was No. 1 in the global market, shipping 12.4 million units during the first quarter and commanding a 19.9 percent share of the market, according to Gartner.

Apple, meanwhile, was No. 5 in the global market, shipping 4.2 million units – up from 4.0 million units in the year-ago quarter, according to Gartner.

Apple's 4.5 increase in global share in the first quarter was second to HP's 6.5 percent increase in global share, according to Gartner.

Skip Tappen, CEO of NWN, one of HP's top partners and No. 68 on the 2016 CRN Solution Provider 500, said HP is flat out producing products that are more stylish and sexy than the competition, even Apple.

"They are producing really cool products," said Tappen.

"If you look at the products HP was producing five years ago versus what they are producing now, there is no comparison. HP is really innovating. They have come a long way with innovation. Their products are stylish with nice stainless steel and nice keyboards," he said.

At the same time, while HP's PC products have become more stylish and cooler, the Apple products have not kept pace, said Tappen. "If you look at Apple today versus the Apple of five years ago, the level of innovation is minimal," he said. "If you look at HP in those last five years, they have innovated a ton. HP caught up and passed the Apples of the world. The HP products are as thin or thinner, longer battery life, more features. Apple still does not even have a touch screen."

Apple did not reply to a request for comment by press time.

Tappen said his 18-year-old son Will – who loves "cool" tech products -- recently bought on his own an HP Spectre, which is billed as the world's thinnest notebook. "My son wouldn't have had any interest in HP products five years ago," he said. "He looked at all the different products out there and picked the HP Spectre. He thought it was light and cool. He couldn't wait to get his hands on it."

Harry Zarek, CEO of Compugen, one of HP's top partners and No. 67 on the 2016 CRN Solution Provider 500, said the products from HP have never been better. He said Stacy Wolff, global head of personal systems design at HP, is now a rock star in the tech design world.

"HP is designing systems that you want to have," said Zarek. "They are stylish and they have oomph. HP has really delivered on the idea that people want to have a personal relationship with their machine."

For its first fiscal quarter ended Jan. 31, HP's Personal Systems business saw a 10 percent increase in sales year over year to $8.2 billion – up from $7.46 billion in the year-ago period -- and booked an operating profit of $313 million, an increase of nearly 37 percent .

Dell's Client Solutions Group revenue for the quarter ended Feb. 1 increased 11 percent year over year to $9.8 billion, but the group's $342 million operating income represents a 29 percent decrease from $484 million in the year-ago period.

Dell CFO Tom Sweet told analysts during a recent conference call to discuss the quarterly results that the company sees the need to take share in what it sees as a "consolidation market."

"Obviously that needs to be profitable share," he said, noting that Dell's focus is on high-end and mobility products like its XPS, Latitude, Precision and Mobile Workstation lines.

Sweet said Dell expects the market to continue to consolidate in line with the 2 percent shrinkage it's seen in recent periods. He said it remains to be seen whether Dell's PC business gets a bump from increased adoption of the Microsoft Windows 10 operating system or new Intel processors offering boosted PC performance.

"We are thinking at some point that will happen," Sweet said. "We are optimistic about the PC market this coming year, but we're still going to be down."

Stephen Monteros, vice president at Sigmanet, an Ontario, Calif., solution provider that works with the PC market's three dominant vendors, Dell, HP and Lenovo, said it's an ultra-competitive market.

"Any pricing move by one vendor means some sort of move by the other vendors," he said. "Dell makes a move, HP does some stuff. Lenovo has been very aggressive pricewise. Volatility in pricing is not a good thing when margins are already getting thin."