Michael Dell: HP Server Share Losses Are 'Staggering'

Dell Founder and CEO Michael Dell Friday said the data is indisputable: Dell is gaining server share from rival Hewlett-Packard at a "staggering" clip even as the company moves to close its $24.4 billion leveraged buyout.

"There is no denying the facts," boasted Dell in an interview with CRN after reviewing preliminary data from market researcher IDC that showed his company gaining first-quarter unit server share both in North America and worldwide. "HP is losing share at a staggering rate, and they are losing it to Dell," Dell said.

The IDC data comes three days after HP vehemently disputed preliminary server unit market share data from Gartner that showed Round Rock, Texas-based Dell gaining worldwide unit server share. HP, in fact, had pointed to IDC data as the "industry standard" in an attempt to downplay the Gartner data.

[Related: Dell Trumpets Q1 Server Gains, HP Disputes Data ]

"He doth protest too much," said Dell, referring to claims from Jim Ganthier, vice president of global marketing in HP's server organization, that the Gartner data would change when final numbers are released later this month. "Now you have your IDC data. Look, we gained the most share and HP lost the most share [during the quarter according to IDC]. Customers are choosing Dell over HP in record numbers. The data is real clear. You can talk all you want. The facts tell the story."

Dell maintained its positions as the No. 1 server unit vendor in the North American market and No. 2 worldwide. HP is the No. 1 server vendor on a worldwide server unit basis and No. 2 in North America, according to IDC.

IDC's preliminary data shows Dell grew its first-quarter North American server shipments by 9.9 percent, while HP's dropped 18.9 percent.

Dell's unit share of the North American market climbed to 35.7 percent in the first quarter, up from 31.7 percent during the same quarter a year ago. HP's unit share dropped to 28.2 percent, down from 34.0 percent in the year-ago quarter.

On a worldwide basis, Dell's first-quarter server unit shipments grew 5.7 percent while HP's declined 15.4 percent compared to the previous year, according to IDC.

IDC measured HP's worldwide server unit share for the quarter at 30.9 percent, down from 35.3 percent a year ago, while Dell's worldwide server unit share climbed to 27.8 percent, up from 25.4 percent a year ago.

HP said in a prepared statement that it remains the worldwide market share leader. "One quarter does not make a trend," said the Palo Alto, Calif.-based company in a statement supplied to CRN. "We've been the leader for 17 years and now 68 quarters (according to the IDC preliminary report). HP continues to be at the forefront of the data center evolution, accelerating the pace of innovation and industry-leading server technology for our customers (e.g. Moonshot, SDN, CloudSystem, 3Par)," according to the HP statement.

The first-quarter server data is critical because it is one of the first third-party data points that measures Dell's enterprise solutions performance since the company announced the blockbuster buyout on February 5.

NEXT: Dell Credits Channel With Server Gains

Dell said the data disputes HP claims that the Dell leveraged buyout has raised the specter of uncertainty that could benefit HP and its partners. "They are trying to create something that is not there because they know they are under attack," said Dell. "They are trying to create the illusion that there is turmoil. If there is any turmoil, it is at HP."

In fact, Dell credited his company's channel focus with being critical in driving the server share gains. He said Dell's channel server sales are growing faster than the company's direct server sales. "We have channel momentum," he said. "There is no question about it. And we also have awesome products."

What's more, he said, his company is going to get more aggressive in the market as a private company when the leveraged buyout is completed. "We are on a tear in PCs and servers, and we are going to keep gaining share. Partners are winning. We are winning."

Solution providers, for their part, credit Dell's robust channel engagement model for the server share gains. They say Dell's steady channel march -- with strong channel teams in the field and a simplified account engagement model-- is paying off.

LAN Infotech, a Fort Lauderdale, Fla.-based Dell and HP partner, does nearly three times as much business with Dell annually -- $270,000 in sales as it does with HP ($100,000 in annual sales) because Dell is easier to do business, said Michael Goldstein, president and CEO of LAN Infotech.

"It's a lot easier to configure and customize Dell systems," he said. "And I am dealing directly with Dell versus most of the time with HP I am dealing with a distributor that has specific bundles."

That said, Goldstein sees HP incorporating changes that are making the company more competitive. "We have some good things coming down the pike with HP too," he said. "It is going to be an interesting next few months for both companies. It is definitely going to be interesting to watch these two companies do battle."

Dell sees the share gains continuing for his company, which Friday celebrated its 29th birthday with an online birthday party. The party marks another milestone for the Dell founder who says he is more excited than ever about the business. "We are relentlessly focused on customers and execution," he said. "We are not letting anything get in the way of executing our business."

PUBLISHED MAY 3, 2013