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Lenovo knocks HP from top of global PC market: Gartner

By Poornima Gupta and Lee Chyen Yee

SAN FRANCISCO/HONG KONG (Reuters) - China's Lenovo Group Ltd edged out Silicon Valley icon Hewlett-Packard Co to become the world's No. 1 PC maker in the third quarter, according to data released by research house Gartner on Wednesday.

A rival to Gartner, IDC, still ranks HP in the lead - but by less than half a percentage point - in terms of PC shipments worldwide. Both studies reinforce HP's struggles against rivals as new chief executive Meg Whitman tries to overhaul the stalled 73-year-old company.

Worldwide shipments of personal computers fell over 8 percent in the third quarter to 87.5 million, the steepest decline since 2001, Gartner analysts said.

PC demand growth has crumbled over the past year as more consumers flock to ultra-portable and increasingly powerful tablets and smartphones for basic computing.

"It's quite a tough year for PC makers because (Microsoft's) Windows 8 is not launched yet and some consumers are waiting for that. Cannibalisation of tablet PCs is also another factor," said Eve Jung, an analyst with Nomura Securities in Taipei.

Both sets of data show that Lenovo, Taiwan's Acer and other Asian PC makers are taking share away from U.S. competitors HP and Dell, which held on to the No. 3 spot in the quarter.

Lenovo, which has a market value of $8.2 billion, said it believed there was room for continued growth in the sector.

"We are establishing even deeper roots in each major market around the world. In addition to localized sales and distribution teams in major markets, we are establishing an even stronger manufacturing footprint," Lenovo Chairman and CEO Yuanqing Yang said in a statement.

This year the company has bought Brazilian electronics maker CCE, valued at a base price of 300 million reais ($148 million), and U.S. cloud computing firm Stoneware.

CHINA'S TECH RISE

Lenovo's rise highlights the advance of China's technology firms on the world stage in recent years as a result of aggressive pricing, overseas acquisitions, and taking advantage of a fast-growing home market.

The Chinese company, which vaulted into the PC market by buying IBM's personal computer division in 2005, took the top spot for the first time by growing its market share to 15.7 percent, shipping an estimated 13.77 million units during the quarter, up nearly 10 percent from a year ago, Gartner said.

HP's global PC share stood at 15.5 percent after shipping 13.55 million units, down 16.4 percent from a year ago, Gartner said, adding that this was the first time HP has not been the top-ranked PC vendor position since 2006.

IDC had HP at the No. 1 spot with a 15.9 percent market share, marginally ahead of Lenovo's 15.7 percent share.

HP responded to Gartner's study by saying IDC's was more expansive.

"While there are a variety of PC share reports in the market, some don't measure the market in its entirety," HP said in a statement. "The IDC analysis includes the very important workstation segment, and therefore is more comprehensive."

HP shares closed 1.32 percent lower at $14.18 on Wednesday, after touching $14.02, its lowest level since October 2002.

Lenovo's shares ended up 0.3 percent on Thursday, compared with a 0.4 rise in the benchmark Hong Kong index.

Since the start of 2012, Lenovo's shares have risen more than 9 percent, in contrast to a roughly 40 percent drop in HP's stock, a 35 percent fall in Dell and Acer's 21 percent slide.

Analysts say PC makers are suffering from still-sluggish growth in consumer and corporate spending across the globe, even in once-reliably hot markets like China, Lenovo's home turf. The industry's future is uncertain, partly because of a proliferation of computing devices from tablets of all sizes to smartphones.

"PCs are going through a severe slump," said Jay Chou, senior research analyst at IDC's Worldwide PC Tracker.

"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."

(Additional reporting by Tarmo Virki in HELSINKI; Editing by Anne Marie Roantree and Daniel Magnowski)

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