Dell Goes To AMD, Drops To Second . . .

I thought that would get your attention. 🙂

No, I don’t believe going to AMD caused Dell to drop to second place, not at all. This is a good example of correlation not meaning causality (i.e., because one thing happens after something else, the first didn’t cause the second).

Nonetheless, this is a rather stunning change of events. Dell had passed HP + Compaq a while back, and had opened up a big lead.

Lately, HP had been nibbling away at that lead, but very slowly. At the rate they were going, they would have caught up with Dell sometime around 2015.

Then this happened:

(Figures from IDC, see here and here)

Let’s see what happened in the U.S., the place where Dell is strongest:

Same thing.

Ten years turned into one quarter.

HP obviously took some of its growth out of Dell’s hide.

Why do I think Dell dipped?

Well, recalling 4 million batteries didn’t help, to the extent that it reinforced the notion that Dell might be cutting expenses a bit too much.

That’s probably unfair given that most of this is based on Sony batteries exploding and intolerance of Indian accents on the tech support lines, but what is, is.

More to the point, though, Dell has been trying to edge its prices upward by discounting their discounts, and this has made HP relatively more competitive.

Given how Dell has been pricing its AMD models (you can currently get a dual-core E521 with a gig of RAM for just $400 without monitor; $320 for “just” an A64 3200+), going to AMD is probably a response to the HP challenge.

It should also be noted that the US market is very anemic. Sales last quarter were actually a little worse than they were a year ago, which says something during a price war. Non-US sales are doing better, but even those are only up about 11% year-on-year, which is on the slow side under nonprice war conditions.

Tell Me Why I Should Care

Well, fairly slow sales in the world, no growth in the US, declining sales for Dell, seems like we’re going to see some Sixpack bargains before the year’s out.

Ed