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Electronics Production | May 19, 2006

Hewlett-Packard<br>Gains in Q1 PC Market Share

Hewlett-Packard Co. (HP) gained more than 1 percentage point of share in the PC market in the first quarter of 2006 compared to the same period one year ago, according to a newly-issued preliminary ranking from iSuppli Corp.
HP's market-share gains underscore the company's strong first-quarter financial performance announced Tuesday, which revealed it achieved revenue and earnings that beat analysts' estimates. The company credited rising PC sales for its strong performance.

HP shipped 8.5 million PCs in the first quarter of 2006, up 21.5 percent from 6.98 million in the first quarter of 2005. The company's market share rose to 14.8 percent during the first quarter, up 1.1 percentage points from 13.7 percent during the same period in 2005.

HP closed its market-share gap with PC leader Dell Inc. to just 2 percentage points, down from 3.3 points in the first quarter of 2005. Dell shipped 9.6 million PCs during the first quarter, giving it a market share of 16.8 percent. This share is down 0.2 percentage points from the first quarter of 2005.

For HP to take market share away from Dell is a notable development, considering that the trend has been in the opposite direction in recent years. HP benefited from strong sales of mobile PCs during the quarter. Worldwide mobile-PC shipments were up 41 percent in the first quarter of 2006 compared to the same period in 2005.

"HP achieved very strong growth in the first quarter compared to 2005," said Matthew Wilkins, senior analyst with iSuppli. "However, it did not manage to topple archrival Dell from its number-one position in the overall first-quarter PC rankings."

The table attached presents iSuppli's preliminary ranking of the world's top-five PC suppliers in the first quarter.

With shipments of 57.4 million units, up 12.8 percent from 50.9 million in the first quarter of 2005, the PC industry's first-quarter performance came as a welcome positive note following disappointments including the delay Microsoft Corp.'s Windows Vista operating system and the sub-par financial results from Intel Corp.

Most of the growth was generated by the mobile-PC segment, with desktop PC shipments expanding by only 3 percent in the first quarter of 2006 compared to the same period in 2005.

While worldwide PC shipments in the first quarter were down compared to the fourth quarter, this is a typical seasonal pattern for the market. Shipments declined by 8.5 percent in the first quarter from 62.7 million units in the fourth quarter.

While the market has been focusing on the strong performance of HP and its market-share fight with Dell, the real star of the first-quarter PC market was number-four supplier Acer.

"Acer's PC shipments were up 41 percent compared to the first quarter of 2005, and the company has steadily grown market share for the past five quarters," Wilkins noted.

Acer also closed its market-share gap with number-three PC maker Lenovo.

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