NEW YORK ( Trefis ) -- Dell ( DELL) is known primarily for its product line of desktop and notebook PCs, printers, and PC displays. Dell, currently the third-largest PC vendor in the world, primarily competes with HP ( HPQ) and Acer at the top end of the PC market.

We currently have a $19.25 Trefis price estimate for Dell's stock, which is well ahead of market value. Desktops sales constitute roughly 3% of our estimated stock value (vs. notebook and netbook sales which represent a much more substantial 18%).

We recently discussed upside to Dell's stock value from increased notebook and netbook sales (See Dell Could Draw Upside from Notebook PC Market Share ). Here we highlight the impact from potential stabilization in the company's desktop PC market share.

Desktop Market

Dell has also seen shaky market share in its desktop segment. We project a sharp decline in Dell's market share over the next few years from above 15% in 2010 to 11% by the end of our forecast period, and consider the following factors in our projections:

1. Increasing popularity of Apple's iMac desktop PC

Desktop sales increased in Oct 2010 for the first time in 24 months, through strong performance of Apple's ( AAPL) iMac line that has boosted year-over-year shipments by approximately 3%, compared to last year's 12% slippage. In 2010, Apple's iMac accounted for nearly 25% of the desktop market growth. Given the increasing popularity of iMac PC's in emerging countries and the launch of new and innovative products from Apple, Apple's iMac is expected to drive the growth (if any) in the worldwide desktop PC market going forward and increase its market share at the cost of other major players like Dell, HP etc.

2. Dell's competitors offer more attractive prices

Dell will face intense competitive pressure in the years ahead, particularly across lower priced desktops. We expect that Dell's competitors, which historically have offered better pricing than Dell, will continue to beat Dell on pricing and, correspondingly, erode Dell's market share.

PC Sales Improvement Could Present Upside for Dell

Despite its recent loss of share to Acer and HP, Dell might be regaining its position. As we've previously noted in our article emphasizing notebook and netbook trends, Dell increased Q3¿10 PC shipments by 9.3% over the same period last year while HP's sales declined by 0.2% and Acer's dropped 0.7%. These figures include desktop sales, in addition to notebook and netbook sales.

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