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Dell v/s. HP: The Battle In The Indian PC Market

Posted on February 26, 2011 in Business and Economy


By Pradyut Hande:

The ever-burgeoning electronic goods market in India continues to register steady growth rates quarter after quarter owing to accelerating demand, enhanced accessibility rising disposable incomes and aspirations. Within this rapidly progressing market, the Indian Personal Computer (PC) market is bearing witness to unprecedented growth in its hyper-competitive environs with companies looking to carve themselves a greater slice of the abundantly promising market. The intriguing tussle between global players such as Dell, Hewlett Packard (HP), Lenovo, Samsung, Apple and the likes to cater to a broader spectrum of an increasingly discerning and quality conscious target consumer base to enhance their market presence is worthy of attention. Both Dell and HP are presently engaged in a fiery battle for the Numero Uno position in the Indian PC segment (inclusive of Desktop PCs and Laptops).

In a curious turn of events, barely a few months after relinquishing its Number One position in the market to the Texas, USA-based manufacturer, Dell; global behemoth, HP has usurped the market leadership position in the October-December 4th Quarter, 2010. Dell’s market share has fallen from over 16.5% to 14.2% in the last quarter alone; hampered by a resurgent HP and an agile Lenovo that has also eaten into its market share and ensuing profit margins. Consequently, Dell has no been shunted down to the 2nd position in the Indian PC market after HP that stands at 17.3%. With a firm eye to up the ante against a formidable rival in Dell, HP has successfully managed to unseat and unsettle its competitors by adopting a clear, proactive manufacturing and marketing approach; bouncing back in customary fashion. While Dell continued to bask in the glory of their newly acquired market leadership position, HP appeared to move with alacrity, streamlining operations and distribution channels in their successful bid to turn the tables on a seemingly unassuming rival.

However, a mere glance at the sales figures fail to paint a clear picture as is often the case. The myriad layers of associated factors that determine the relative success or failure of any firm in any industry are worthy of further analysis. Now although Dell’s market share took a bit of a pounding in the last quarter and its enterprise sales fell 34%, au contraire, it still managed to register an overall revenue growth of 37% which is far from unsatisfactory. In essence, it is not as though Dell grew weaker but more a case of its competitors rising to the occasion and growing exponentially stronger in the same period.

But industry analysts are of the opinion that after assuming the market leader’s role, Dell had the ideal opportunity to capitalize on its position and further concentrate on greater market penetration through a calibrated amalgamation of new innovative strategies and “tried and tested” result-oriented strategies. However, their efforts were hampered and ensuing problems compounded by a handful of factors that have collectively contrived to adversely affect its market share today.

For starters, even as orders poured in, Dell had to grapple with huge logistical impediments especially at its Chennai factory. Consequently, they were unable to meet the demand causing the archetypal demand-supply deficit; unpardonable in a market such as theirs. Dell is presently contemplating expanding the capacity of its Chennai plant and also exploring the plausibility of setting up a new plant. In its bid to gain a greater foothold in the high margin PC segment, competing with the likes of Apple; Dell has been guilty of losing focus (perhaps intentionally) in the lower margin PC segment; much to its detriment. This could be a change in strategy that may or may not stand them in good stead. Only time will tell. Additionally, one must not overlook the unstinting and wily “market smart” approach of HP that has resulted in Dell’s dethroning. Following weeks of internal turmoil, leadership crises (after Mark Hurd’s resignation), wavering focus and general uncertainty; HP has definitely pulled up its socks as is evident from its strong performance globally. In India, HP took a leaf out of Dell’s books and attacked them at its Small and Medium Sized Business (SMBs) segment; reestablishing its dominance in the very segment Dell had “stolen” from it.

The coming few months will be crucial for all players in the Indian PC market; more so for Dell as it looks to address its logistical frailties and reanalyze and further streamline its distribution channels. This is one “Dell”-icious race to the top you don’t want to miss!