Jon Peddie Blogs
No longer in Dell’s rear-view mirror, HP now shares the workstation market lead
Posted by Alex Herrera on March 14th 2009 | Discuss
With ’08 seeing long-time graybeard Sun drastically trimming back its workstation business and fellow industry pioneer IBM dropping its business altogether, the on-going between Dell and HP has become one of the more entertaining dynamics to watch in the marketplace. Dell’s been trying fervently to hold on to market leadership, while HP’s been working even harder to take it away.
Not long ago, it was Dell that looked poised to dominate the workstation market the way Nvidia and Intel dominate the platform side: by a wide margin. Quarter after stellar quarter, Dell pleased stockholders and analysts alike. But a few years back, that luster began to wear off.
Triggered (in part) by its long steadfast strategy to stand by Intel while its platform was losing ground to AMD - especially in multi-socket applications - both Dell’s overall corporate financials and its market share in workstations began to suffer, particularly in ’05 and ’06. As the merits of AMD’s Opteron became clear and competing OEMs signed on, Xeon’s market share slid. Accordingly, Dell slipped, helping #2 HP to narrow the gap, from nearly 20% behind Dell in Q3’04 to around 10% by Q4’06.
But once Intel’s fortunes began to rebound, so did Dell’s. It was in the second half of ’06 where Dell’s share began to rebound, precisely when Glidewell came out. Not coincidentally, it also marked the flattening and subsequent decline of Opteron’s penetration in the market.
So despite some past bumps in the road, Dell’s been able to regain some lost ground and get its share relatively stable. Where its share had dropped to about 38.7% in Q1’06, by ’08 it was back in the low 40%’s, actually picking up a few points. But did that mean Dell was keeping HP at bay? Not quite. It appears both have been taking share from others, with HP being the hungrier of the two.
While Dell bounced and held on to share, HP kept its foot on the gas, steadily picking up points over the same period. In ’08, we saw HP’s biggest gains, with the company moving from 33.4% (units) in the first quarter up to 38% in by Q4’08, just a couple of scant percentage points behind Dell. But in terms of revenue, JPR’s estimates show HP actually nudging ahead of Dell in Q4’08 by roughly the same margin. The two are essentially tied.
HP made a lot of its gains in the Entry level
As one might expect, Dell and HP dominate the high-volume entry and mid-range deskside workstation segments. Interestingly, HP’s closing of the gap to leader Dell can be traced most to gains it’s made in the Entry-level segment. We attribute the results to HP’s conscious decision to more proactively promote its business and more closely match Dell’s aggressive price structure, rather than because of any particular change in Dell’s execution. In the past, we didn’t have to go price-compare; we knew Dell would always be the price leader, no question about it. But that’s no longer the given it once was.
‘08’s behind us, and heading through ’09, we find HP and Dell in a virtual dead heat in their race for top spot in the workstation market. The question now is whether we’ve reached a new status quo with the two sharing the market crown, or whether HP’s momentum will carry on, eventually giving Dell the unfamiliar view of HP’s tail lights. Of those scenarios, the former wouldn’t exactly be a surprise, but it’s feeling like the latter is the more likely.