Dell feels the heat from Apple

“Is Dell, Inc. really in that bad of shape? Some in the market seem to think so, as Dell, Inc. shares were downgraded from ‘buy’ to ‘neutral’ today by American Technology, who pointed out that the world’s largest computer manufacturer is feeling the heat from industry competitors like Hewlett-Packard Company and Apple Computer, Inc.,” Brian White writes for BloggingStocks.

“I’m not so sure I buy the Apple argument (its marketshare is low and its computer prices, high), but I’d agree HP is causing much of Dell’s grief these days,” White writes.

“Analysts at American Technology published a research note published on Tuesday that referenced Dell’s recent ramp-up of AMD-based computers — which was termed as ‘weak’ by the analysts. While I am not sure how they are measuring this, a quick look at Dell’s web site prominently features many systems (mostly desktop) with AMD processors are excellent prices — not looking to ‘weak’ to me in light of that,” White writes.

Full article here.

MacDailyNews Take: If you’re going to blog about stocks, if would be helpful if you understood the market in which the companies you’re covering compete, Mr. White. Now for some actual facts:

According to IDC, Apple’s U.S. unit shipments posted 16% growth in Q2 2006 vs. Q2 2005, HP grew 15.5% during the same period. Dell showed only 6.4% growth during the same period. In February, Apple pushed Dell down into second place in the European education market, taking the #1 spot with 15.2% to Dell’s 14.7% (HP in third with 14.2%). And this was with Apple still in the middle of the Intel transition. Quite obviously, Dell is feeling serious heat from Apple. In addition, Apple’s OS-unlimited Macs are very competitively-priced to Dell’s and HP’s OS-limited boxes; often, Macs are considerably less expensive than comparable Dell and HP PCs. Apple’s current market value is $64,076,458,560. That’s $11,761,188,140 more than Dell’s value. Lastly, AMD processors now lag behind Intel’s processors which now power all of Apple’s Macs, that’s why Dell’s AMD-based PCs are “weak.”

Related articles:
Dell cannot compete with Apple’s new Mac Pro price or feature set – August 15, 2006
Apple Mac Pro with/ 20” Cinema Display less expensive than Dell Precision 690 sans monitor – August 10, 2006
Bear Stearns: Apple’s new Mac Pro, Xserve pricing well below comparable Dell systems – August 09, 2006
IDC: Apple Mac attained 4.8% U.S. market share in Q2 06 – July 19, 2006
IDC: Apple Mac sales outpace industry average in UK and Western Europe markets – June 09, 2006
Apple passes Dell in market value – May 02, 2006
Apple Mac is #1 in European education market, pushes Dell down into second place – February 03, 2006


  1. The formula is fairly simple – Dell is a one-trick pony, that is stuborn to change. The insantity effect has been setting in down there in Round-Rock, TX (doing the same thing over and over again, and expecting different results)…

    Dell is getting hit hard in retail:
    1. HP is pushing hard and effectively with their ads. Yes, little in the way of actual HP inventiveness in the product, but the ads are none-the-less effective and target the consumer well.

    2. Apple opens a new Apple retail store, on average, every nine days. With 161 stores in operation, Apple is making a very effective dent into consumer purchases.

    3. The delta between a well-equiped Dell and it’s competition has narrowed so much, the $50 premium to purchase at a retail store, where the consumer has test drove the product and can leave with the PC right then and there is worth the difference.

    Lenovo, HP and even Apple have also created intelecutal brain drain on Dell, further compounding their issues.

    Topping it off, world-wide, Lenovo is rapidly emerging as the new Dell.


  2. Dell’s biggest problem is repeat business.

    Few people who buy a Dell, ever buy another one.

    Even if you love Windows, can build your own PC, if you were in a bind and speak fluent Hindi, you do not make the same mistake and buy another Dell.

    It’s more than cheap components, poor assembly and bad customer service, it’s the ignorant a**holes that run the company.

  3. You can play with percentages all you like MDN but it is HP that is hurting Dell. A couple of years back HP made a big effort to lower their prices on corporate desktops and laptops. You can now buy HP quality kit for nearly the same price as a piece of s**t from Dell and the corporate world is shifting back.

    Apple is having some effect though. They’re stealing Dell’s top-end consumer market, where Dell used to make a lot of profit. Combined with the HP effect, Dell are left with the low-end consumer area, with it’s miniscule margins and virtually non-existent profit. They could sell 20 million of those machines a quarter and still not make enough to justify the share price.

    Net effect? Dell going the same way as Gateway. Successive losses leading to customers running for the door and the business heading into the toilet.

  4. You hit the nail on the head, Big Al.

    I don’t know one Mac user that ever said to me, “This OS sucks. I am going to Windows or Linux.” Apple must be over 85% as far as users repurchasing Mac products once they have tried one. This is why turning switchers is so important.

    So get your friends to come out of the closet… except for Tom Cruise.

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