PC makers like Hewlett-Packard Corp. (NYSE: HPQ), Dell Inc. (NASDAQ: DELL) and Taiwan's Acer have seen computer sales decline in the past year as consumers faced a recession and tightened wallets.

Now, this isn't the first time PC sales have slumped, but it did send a red flag up a bit to those the sell the most: how about diversifying a little bit?

Yahoo! Inc. (NASDAQ: YHOO) won't be the default search toolbar on the Internet Explorer browser included on new Hewlett-Packard (NYSE: HPQ) and Acer computers soon, according to the company. With toolbars being a main way PC users use internet search, this could cost Yahoo! dearly.

Dell (NASDAQ: DELL) lost the crown of being the premier PC company to Hewlett-Packard (NYSE: HPQ) years ago. Now Asia companies like Lenovo and Acer are after its No.2 position. And, they are having some success.

According to The Wall Street Journal, "Dell Inc. is preparing management changes that are expected to shake up an executive team that Chief Executive Michael Dell brought in as part of his turnaround plan for the big computer maker." The head of global operations and the chief of marketing will both be moved out of their jobs.

Dell has already done a lot of restructuring, laying off thousand of workers. Its stock is off almost 80% this year, compared to less than 30% for HP. Surprisingly, Dell's shares have done as well as Apple's (NASDAQ: AAPL) over the same period.

Most commentators will say that Micheal Dell is the problem and that the board should replace him, but that dodges the complexity of Dell's situation. It operates in world where PCs are often a commodities, sold on price as much as function. The new Microsoft (NASDAQ:MSFT) operation system that runs them, Vista, is unpopular. Apple appears to have taken much of the high end of the market with its Mac.

Dell also faces a harsh economy which has already begun to erode its sales. One of the reasons Apple's stock is down so much is that it faces the same negative forces.

For the time being, it looks like even Dell cannot fix Dell. And, its situation in the broader marketplace is such that no one else can either.

Douglas A. McIntyre is an editor at 247wallst.com.

PC makers Dell Inc. (NASDAQ: DELL) and Hewlett-Packard Corp. (NYSE: HPQ) entered the new netbook computer category in 2008, hoping to capitalize on any new growth area in the industry. The PC market has not really come to a standstill, but laptops continue to outshine desktop PCs and even at that, overall sales have slowed. These net netbooks, which are really tiny laptops with small screens and minimal power, are meant for just that -- mostly net usage (internet, that is) -- and not much else.

But it's Taiwanese PC maker Acer that has stolen the show as of late. Taiwanese company Asus made the netbook category popular quite some time ago with the Eee PC, but it has been Acer that has been the most aggressive on pricing and marketing its netbook products. For example, you'll find Acer's netbook offerings at national retailers for $249 and up -- quite the discount from even the lowest-end laptop PC.

Netbook global sales in the third quarter of 2008 hit 5.61 million units, an increase of 160% from the second quarter. Acer was at the top of the list with a 38.3% market share of all those units. With a 2008 sales level of 14 million units (over 2007's one million sold), the market for netbooks is still relatively small, but the growth is explosive. The question is this: how much margin are manufacturers gaining on these small-priced PCs? In the latest quarter, HP was in third place and Dell was in fifth place, but Acer and Asus are completely stealing the show. If the netbook trend follows in 2009, Acer -- the king of low retailer PC prices -- should stay on top until this fad is over.

Laptop computers, especially small and light ones, were supposed to be the way the computer companies kept mobile users as customers. It has worked pretty well. At most large PC companies like Apple (NASDAQ: AAPL) and Dell (NASDAQ: DELL), laptops outsell desktops.

The profits from the laptop business could be under siege. Little netbooks from manufacturer in Asia, lead by Acer, are making $500 ultra-small machines that are good for e-mail and internet browsing. Beyond that, they don't do much, but many consumers don't need anything beyond those functions. The products may be a good way for Acer to get market share from larger U.S. PC companies.

In a recession, these "netbooks," are fairly attractive compared to $1,200 laptops that have a lot of features many people don't want to pay for.

According to Reuters, "Up to a third of netbook sales reflect customers ditching their old desktops and laptops, analysts say."

Dell's share price is down to $12.50 from a 52-week high of $30.77. The company and its peers do not need more competition in a world where the economy is hurting and price competition is fierce.

It does not want new competition, but it got it anyway.

Douglas A. McIntyre is an editor at 247wallst.com.

Investors tend to forget that some of the world largest PC companies are based in China, lead by Lenovo and Acer. The two companies run behind Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) in global market share. But, that may be changing in a way that the two US companies will find unpleasant.

Research firm Gartner looked at PC sales around the world during the third quarter. According to Reuters, "Overall, worldwide PC shipments rose 15 percent from last year to 80.6 million units." To no one's surprise, growth in the US was slower, up 4.6%.

HP's global market share was 18.4% and Dell's was 13.6%. Acer rose to 12.5% making it the most improved of the three compared with last year.

Acer's secret is that it is selling netbooks, small PCs which usually cost under $500. Analysts have questioned whether consumers would want these because smartphones have many of the same functions. Acer has taken the gamble of ramping up production, a potentially risky move if the customers were not out there. The decision is giving them a chance to steal a march on the larger rivals.

The Acer move may say as much about what is wrong with US PC companies as its says about what is right at Acer. There are many people, especially in emerging markets, who are not likely to be able to spend $1,000 on a computer. And, the mobility of the US PC user is improving with the success of WiFi and 3G.

Dell and HP should be concerned every time they see someone walking down the street with a netbook. It has probably been sold to them by a competitor.

Douglas A McIntyre is an editor at 247wallst.com.

Usually, when sovereign funds put money into a company it is simply a financial investment. Dell (NASDAQ: DELL) may have unlocked something more. According to The Wall Street Journal: "Dell said it is in talks with a government-owned entity in Dubai about establishing a joint venture to further increase the personal-computer maker's sales in the Middle East." In other words, the computer company will get value well beyond cash.

For Dell, it is a brilliant move that shows government funds can do more than just write checks. The PC market in the Middle East is large and growing very rapidly.

The US company may have found a template for improving its market share around the world through forming joint ventures with local pools of capital. Dell's growth in many markets has been hurt by the improvement of share by Hewlett-Packard (NYSE: HPQ), and the rise of big computer companies Lenovo and Acer out of China. All of these companies need to improve their business in growing markets, like the Middle East and Asia, if they want their earnings to move up.

If the Dell venture in Dubai works, it would be wise to look to sovereign funds in Russia, China, and Singapore for similar deals. Dell's market share in many of these regions is in trouble. Who better than the locals to help them?

Douglas A. McIntyre is an editor at 24wallst.com.