This fall computer selling season is shaping up to be a big computer manufacturer battle. HP is going into it with a great earnings and market share sales increases .

This scenario has been brewing for a while. HP has completed the major integration issues with Compaq (since they are firing on all cylinders again). Dell has been struggling on expanding their product line (with AMD processors, Alienware high-end pcs, and seemingly to match all contenders and customers in the cpu space).

While running errands I watch the streets. Computer boxes are bulky, and people stack them at the curb on trash day so it is easy to keep track of real buyer votes (this also works for market share comparisons of pizza boxes, by the way). Last fall all that could be found were Dell boxes while this fall is stacking up to favor HP. By the way, the fall selling season is the largest for computer manufacturers, covering back-to-school and pre-Christmas purchases. Anyway…

Pricing out the currently offered low end systems for each manufacturer shows where some of this is playing out. Prices are “after rebates” (editorial note: why continue with rebates? Look what problems the automotive companies have gotten into. Real people buy a real price after the rebates and after shipping). I’ll list only the relevant differences in specifications. Also, I ignore “services” like extended warranties and phone call-center help - real people don’t usually bother with this stuff either. Certainly it adds to profitability, but it’s always a magic show or theme park like ride.

Dell has a “B110″ offered at $280 ($310 with shipping) with a big bulky 17″ CRT monitor and a “disposable” inkjet printer (after the cartridge runs out people tend to dispose of them rather than refill).

HP offers a 16% faster cpu, drops the combination DVD drive for just a CD-RW drive and does not offer a monitor or printer. The printer I was surprised about (since HP has been the printer king - but when faced with a choice rather than a freebie then buyers may actually purchase a regular laser printer at a higher overall margin). The price is $250 (with free shipping). Or they offer a 30% faster cpu Compaq branded box for $250 with paid shipping ($315 with shipping).

Then there are laptops with their growing popularity, at nearly twice the sales growth rate of desktops. Laptop shipments were reported to have exceeded desktop shipments during 2005 - I’m not sure of the validity so I’m not naming a source - but it’s realistic with the number of laptops getting carted around these days. So my guess is roughly 50-50 up from 30-70 just a few years ago.

Oh, there are only about six OEM laptop suppliers worldwide that ship completed units vs Dell or HP assembling them from components (I believe the low end desktops are also shipped fully assembled). So no inherent computer manufacturer advantage there (other than purchasing department negotiating skills - which can be significant, at times).

Dell’s cheapest laptop offering is $490 with 1.6Ghz cpu, 512MB ram, CDRW/DVDrom drive, and free shipping. HP offers a 1.4Ghz with 256MB ram for $569 with free shipping and a Compaq branded unit for $400 with 1.8Ghz cpu, 256MB ram, DVDrom drive, and $50 shipping. So HP (Compaq) is offering a 12% faster machine for $40 less than Dell. And cpu speed is generally the main differentiator to consumers. When running at the ragged edge between software and hardware, a 12% increase can mean the difference between getting work done or not (note: my latest web site was built using such a system - over clocking the development machine by 14% made it work - see “developer notes” under “Contacts” section there for details).

So HP has carved out a modest performance advantage in the consumer market (and quite possibly in business sales based on other street metrics) that is showing up in sales.

While not everyone will buy the base budget product - those usually indicate the strengths or weaknesses of a company in engineering, purchasing, and manufacturing. An automotive example is small car engineers fight to better engineer components to fit the application and shave grams from weight that SUV engineers play a lot looser with. Computers are not much different so the low end can reveal more about them than looking at their latest gaming rig.

This is a battle that will be interesting to watch unfold over the next few months. So watch for those boxes on your way to work.

Cheers!