IBM Could Lose PC Customers to Dell, HP

Online Staff -- Electronic News, 12/10/2004

Both Dell and HP will take over business from potential IBM defectors, with the latter's decision to sell its PC business to a Chinese manufacturer, suggests Forrester Research Inc..

According to the Cambridge, Mass.-based market research firm, IBM lags behind both Dell and HP as a primary enterprise PC supplier and almost half of IBM’s prospects are more willing to buy from another vendor than either of their main competitors. Furthermore, Forrester’s research indicates that potential IBM defectors are split evenly between Dell and HP, giving HP an opportunity to build on recent momentum to pick up market share, according to the market research firm.

With the IBM-Lenovo deal in place, many potential IBM PC buyers will rethink their plans, the firm said.

Based on studies completed in July and November, Forrester determined which of the remaining PC vendors would have the most to gain in the corporate PC market. Data showed that IBM’s departure puts almost 14 million U.S. corporate PCs up for grabs, with an estimated 75 million corporate PCs in use today.

In its survey, 46 percent of U.S. firms said desktops are refreshed every three years, and about 31 percent said every four years. 53 percent said they refresh laptops every three years, and 22 percent said every four years.

The survey also showed that 70 percent of workers use desktop PCs, and 16 percent of firms said IBM was their primary desktop supplier -- or about 8.4 million IBM ThinkCentre users. The survey, conducted in July, asked IT decision-makers responsible for PC procurement about their current primary suppliers for laptop and desktop PCs with data showing 63 percent of firms still buying desktop PC s for more than three-quarters of their users, with 49 percent choosing Dell as their primary supplier, 24 percent pointing to HP. In laptops, 40 percent chose Dell, HP and IBM each garnered 24 percent.

In the laptop market, 24 percent of firms surveyed choose IBM laptops -- or about 5.4 million ThinkPad users. Both enterprises and small to medium sized businesses named Dell as their primary supplier for both desktops and laptops.

Further, almost half of IBM prospects would consider another vendor. The conventional wisdom says that loyalty to IBM -- and ThinkPad notebooks in particular -- runs deep, but Forrester’s data showed the exact opposite. Even before rumors of a sale emerged, research showed that 48 percent of IBM prospects in its sample would consider purchasing PCs from a vendor other than IBM next year.

In contrast, only 29 percent of Dell prospects and 41 percent of HP prospects would consider using either one of the other two major players. IBM prospects in North America and Europe are more likely than HP or Dell prospects to consider using other vendors next year.

Forrester believes HP has the most to gain from the sale. Among the 48 percent of IBM prospects considering either Dell or HP, 43 percent would also consider Dell, 39 percent would also consider HP, and 18 percent would consider all three. On a unit basis, the data suggested that Dell and HP would split any potential IBM defectors evenly.

Finally, Forrester recommends that U.S. buyers considering IBM as a best-and-final candidate in PC refresh negotiations need to be aware of the risks associated with the strategy. Although IBM retains a significant stake in the new company, the degree to which IBM will control or influence long-term product and quality remains to be seen. Forrester also expects both HP and Dell to offer enticing trade-up deals to IBM’s existing customers.