NEW YORK (Bloomberg) — Hewlett-Packard Co., the biggest seller of personal computers for three straight quarters, says its lead is secure as long as Dell Inc. focuses on price."To compete with Hewlett-Packard, you've going to have to compete on price, on product quality and on innovation," Todd Bradley, Hewlett-Packard's PC chief, said in an interview. "That's a much more difficult field to play in than just saying, 'This is a commodity and we can do it cheaper'."

Hewlett-Packard reported preliminary second-quarter earnings last week that topped analysts' estimates by rising to as much as 65 cents a share from 51 cents a year earlier. Chief executive officer Mark Hurd gained market share with new notebooks, the best-selling type of PC. Dell, which drove down prices by selling directly to buyers, lost its No. 1 rank last year amid complaints of poor customer service.

"Dell has lost most of its mystique and is now considered another stumbling, besieged competitor," said Stanley Nabi, vice-chairman of Silvercrest Asset Management Group, who helps manage $8 billion, including almost 1.1 million shares of Hewlett- Packard. "H-P, under Hurd, has become much more consumer-friendly."

Sales increased to as much as $25.55 billion, from $22.6 billion, on demand for home PCs and server computers, Hewlett-Packard said last week. The Palo Alto, California-based company's forecast for this quarter also beat estimates.

The results came a week ahead of schedule because Hewlett-Packard accidentally released some details. It was due to give a full report for the quarter ended April 30 last night.

Dell spokesman Bob Pearson declined to comment.

After giving up the market lead in 2003 to Dell, Hewlett-Packard reclaimed the top spot in the third calendar quarter of last year. In the US, the world's largest PC market, Hewlett-Packard's shipments rose 26 percent last quarter, compared with a 14 percent drop at Dell, according to Framingham, Massachusetts- based research firm IDC.

Hurd, who took over in 2005, cut jobs and pension costs, allowing him to trim PC prices. While the lower prices drew buyers' attention, Hewlett-Packard also learned how to communicate with customers, Bradley said on March 28.

"Two years ago our pricing was very competitive — it's just nobody knew it because we didn't take that lead of talking about our products," said Bradley, 48, the first executive hired by Hurd at Hewlett-Packard. "The only guy showing up with a message was Dell and that message was all around cost."

Hurd's July 2005 plan to eliminate 10 percent of the workforce has given Hewlett-Packard a profit boost even after the price cuts. Hurd and Bradley, a former Palm Inc. executive who was tapped to run the PC unit in June 2005, have delivered the highest profit margins for the PC business in five years.

Hewlett-Packard's advantage is its network of more than 100,000 retail partners. Those stores became more valuable as market demand shifted from business customers to consumers, analysts said. While many businesses order in bulk and prefer the direct-sales approach, home-PC shoppers often want to see and touch their machines before buying them.