UPDATE 1-Lenovo rises to top of PC maker rankings as market slumps

Thu Jul 11, 2013 3:49am EDT

* Global PC shipments slump 11 pct in Q2

* Fifth quarter of decline as consumers switch to tablets

* PC market expected to continue to fall but pace to moderate

By Noel Randewich and Lee Chyen Yee

SAN FRANCISCO/SINGAPORE, July 10 (Reuters) - China's Lenovo Group Ltd unseated Hewlett-Packard as the world's top PC maker in the latest quarter - a quarter which saw global shipments tumble 11 percent from a year earlier due to spectacular growth in tablets and smartphones.

It was the fifth straight quarter of decline and analysts expect PC shipments to continue to fall, albeit at a slower pace as companies upgrade to Windows 8 and buy laptops that can be separated from keyboards to become tablets.

Lenovo now commands 16.7 percent of the world's personal computer market, up from 15.3 percent in the previous quarter according to research firm IDC. It has spent heavily over the past few years to bolster its PC business with purchases such as Brazilian electronics maker CCE last year, Germany's Medion in 2011 and IBM's PC business in 2005.

As smaller vendors lost share, HP also rose, climbing to 16.4 percent from 15.7 percent. But the U.S. firm has ceded ground to Lenovo as it grappled with numerous changes in executive leadership in recent years, leading to strategic mistakes, analysts said.

Worldwide PC shipments totaled 75.6 million units in the second quarter, down 11.4 percent compared to the same quarter in 2012 but slightly better than expected, IDC said.

The waning fortunes of the $200 billion PC market, has prompted some PC vendors, such as Lenovo, to diversify into smartphones, tablets and other mobile gadgets, as well as into the enterprise sector, such as servers.

"Based on our (smartphone) success in China, we will slowly roll out in different markets. Tablets are part of our overall PC-plus portfolio," Lenovo CFO Wong Wai Ming told Reuters in a phone interview.

Analysts at CLSA said in a report they expect the PC market to emerge from a trough in the second quarter, adding that volumes are likely to decline by 7 percent this year and 4.5 percent next year.

On Thursday, Lenovo's Hong Kong-listed shares and Acer Inc's 's Taipei stock rose by about 5 percent, outperforming HP's 1.9 percent rise and Dell Inc 's 0.2 percent fall.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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