Dell gaining on HP and Compaq

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Hewlett-Packard and Compaq have said that their proposed merger will strengthen both outfits, but for now the two seem to be losing ground to Dell Computer in key markets. In unit shipments of Intel-based servers, Compaq remains the top dog, with 242,000 systems sold in the quarter and 22.8 percent of the 1.1 billion total, according to preliminary figures released Friday by market researcher Gartner. But while Compaq's share barely budged from the same quarter last year, second-place Dell grew the fastest, increasing from 15.7 percent to 17.8 percent of the market. At the same time, HP saw its unit shipments of Intel-based servers shrink by 10 percent worldwide. HP dropped from 10 percent of the market in the first quarter of 2001 to 8.6 percent in the first quarter of 2002. The company introduced a flock of new Intel servers, but its presence in the market has been eroding. Indeed, Intel servers are one of the driving reasons behind uniting with Compaq and, if and when the merger goes through, a Compaq executive is expected to head up the group. "HP has been losing momentum and money in our (Intel server) business. Our efforts here need to be beefed up quickly," HP chief executive Carly Fiorina said in February. Though unit shipments for the industry as a whole were essentially flat from the first quarter of 2001 to the first quarter of 2002, revenue from server sales in general has been shrinking. Granted, the market has gone quickly from feast to famine: overwhelmed by excessive sales during the years of Internet exuberance and then slammed amid the economic recession. "Spending on servers is still slow," Gartner said in the report. The analyst firm "expects the server market to show signs of recovery at least two quarters after the initial improvement in the general economy. This is especially true for the high-end servers." Intel servers accounted for 90 percent of overall server shipments, Gartner said, but for a proportionally smaller fraction of the money spent. Higher-end Unix and mainframe servers -- refrigerator-sized machines handling critical jobs such as retailer inventory -- cost hundreds of thousands or even millions of dollars. Third-place IBM, which dropped slightly from 14.5 percent to 14.3 percent, is in the process of revamping its Intel servers with technology drawn from its higher-end Unix and mainframe lines. Sun Microsystems, which sells only Unix servers, is in fifth place, dropping from 6.4 percent to 6.3 percent, Gartner said. PC sales in Europe
Meanwhile, a separate study of shipments in the European PC market by Context, a research group based in London, shows strength at Dell and difficulty at Compaq and HP. "The combined HP-Compaq share has dropped from 25.5 percent to 23 percent, while Dell has continued its rise from 11 percent to 11.6 percent," said Context analyst Jeremy Davies in an email interview. "It certainly lends weight to the feeling that the merger has either spooked customers, taken employees' eyes off the ball, or both." Individually, Compaq dropped from 15.9 percent to 14.1 percent and HP dropped from 9.6 percent to 8.9 percent. Davies attributes much of the decline to curtailed spending among corporations. The overall figures indicate no sign of "any market recovery for Europe as had been hoped," Davies said. Unit shipments in the United Kingdom, France and Germany dropped 17.4 percent.
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