HP, Lenovo battle for top spot in PC market

HP, Lenovo battle for top spot in PC market

IDC has Gartner holding onto its top position, but Gartner calls the win for Lenovo

After years as the top PC maker in the world, Hewlett-Packard may be pushed aside by a quick-moving Lenovo.

It's no longer clear which company sits at the top of the rankings for the PC industry.

Two industry analyst firms rated the top players on Wednesday and has HP maintaining its top position, while another has Lenovo grabbing the lead spot for the first time in the company's history.

China-based Lenovo edged out HP with 15.7% of the global PC market compared to 15.5%, said a report from industry analyst firm Gartner. That's a big advance for Lenovo, which held 13.1% of the market a year ago, while HP was holding at a lofty 17%.

However, IDC reported that HP retained its long-held leadership position with 15.9% of the global PC market, compared to Lenovo's 15.7% for the third quarter.

Both reports have Dell in third place, with Gartner reporting that the company has 10.5% of the market and IDC reporting that it has 10.8%. And both analyst firms have Acer Group in fourth place and ASUS in the fifth spot.

Regardless of whether HP or Lenovo is in the top spot, it's a tough race and one that HP is struggling with.

"On Lenovo's side, things must be pretty sweet," said Charles King, an analyst with Pund-IT. "It wasn't that long ago that people were dismissing the company as a lightweight wannabe." King adds: "Proving detractors wrong is satisfying but to maintain its new leadership position the company will have to keep on with what it has been doing -- blending solid value with innovative new design points."

Gartner noted that Lenovo was smart to take an aggressive position on pricing, especially in the professional market. That helped the company achieve big market share gains over the last two years, exceeding regional average growth rates across all regions.

As for HP, slipping out of the top spot may sting but it's not devastating, King said.

"It's a bigger deal symbolically than in any business sense," he said. "HP has been on top for so long that some will consider this a major disaster. But let's face it, PCs are HP's lowest margin business so while any reduction of share is somewhat painful, it isn't the end of the world."

Rob Enderle, an analyst with the Enderle Group, said some of HP's problems may stem from its lack of business focus. "Focused companies seem to be doing much better of late than those that are very diverse," he said. "HP's massive breadth makes it very hard to focus."

So, can HP reinvigorate its PC division and get back into a dominant position in the market?

Patrick Moorhead, an analyst with Moor Insights & Strategy, said the company can do it but the real question is if they want to put the effort into doing it.

The company has the ability to put out inventive and interesting products. Moorhead pointed to the fact that HP just launched some unique tablets in the market, which should give them a little lift in the Windows hybrid and convertible market.

How hard, though, do they want to keep pushing?

"They would need to fundamentally change their business model in emerging regions and use HP's massive R&D arm to develop relevant differentiation," Moorhead said. "Let's not forget that HP is the most profitable PC company out there. It's pretty easy to buy market share, but it's a lot more difficult to profitably grow it."

While today's reports weren't great news for HP, it's also a tough one for the entire PC market.

According to Gartner, worldwide PC shipments sank 8.3% year over year, with a total of 87.5 million units shipped in the third quarter of 2012. IDC shows the global market dropping 8.6%.

The PC industry has been battered for several quarters now by a sluggish economy, as well as consumers and enterprises putting off replacing their desktops and laptops in lieu of buying new tablets and smartphones.

Now Gartner said the upcoming release of Microsoft's Windows 8 operating system also seems to have been a problem for third-quarter PC sales.

"Retailers were conservative in placing orders as they responded to weak back-to-school sales," Mikako Kitagawa, an analyst at Gartner, said in a statement. "By the end of September, retailers were focused on clearing out inventory in advance of the Windows 8 launch later this month."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is

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