Lenovo knocks HP off top of global PC market -Gartner

By Poornima Gupta

SAN FRANCISCO, Oct 10 (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 thirdquarter, according to new data released by research houseGartner on Wednesday.

A rival to Gartner, IDC, still ranks HP in the lead -- but byless than half a percentage point -- in terms of PC shipmentsworldwide. But both studies reinforce HP's struggles againstrivals as new CEO Meg Whitman tries to overhaul the stalled73-year-old company.

Worldwide shipments of personal computers fell over 8percent last quarter, according to both research firms, whichblamed myriad factors including retailers and vendors riddingthemselves of older inventory ahead of the launch of Microsoft's

Windows 8 operating system, the growing popularity ofmobile gadgets like tablets, and a slowing economy.

PC demand growth has crumbled over the past year as moreconsumers flock to ultra-portable and increasingly powerfultablets and smartphones for basic computing.

Both sets of data show that Lenovo, Acer and otherAsian PC makers are taking share away from U.S. competitors HPand Dell , which held on to the No. 3 spot in thequarter.

Lenovo's rise highlights the advance of China's technologyfirms on the world stage in recent years thanks to a combinationof aggressive pricing, overseas acquisitions and takingadvantage of a fast-growing home market.

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

HP's global PC share stood at 15.5 percent after shipping13.55 million units, down 16.4 percent from a year ago, Gartnersaid, adding that this is the first time HP has given up the topPC vendor position since 2006.

IDC had HP at the No. 1 spot with 15.9 percent market shareand Lenovo coming a close second with 15.7 percent share.

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

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

Shares of HP on Wednesday closed 1.32 percent lower at$14.18, after touching $14.02, its lowest level since October2002.

Analysts say PC makers have been sideswiped bystill-sluggish growth in consumer and corporate spending acrossthe globe, even in once-reliably hot markets like China,Lenovo's home turf. The industry is now grappling withuncertainty out to 2013, partly because of a proliferation ofcomputing devices from tablets of all sizes to smartphones.

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

"A weak global economy as well as questions about PC marketsaturation and delayed replacement cycles are certainly afactor, but the hard question of what is the 'it' product forPCs remain unanswered."

(Reporting By Poornima Gupta; Editing by Phil Berlowitz)

((poornima.gupta@thomsonreuters.com)(415 677 2536)(ReutersMessaging: Follow me on Twitter @PoornimaGupta))