Editor’s note: Ezra Gottheil is a senior analyst with Technology Business Research.
HAMPTON, N.H. - HP’s PC future is bright, albeit still a little hazy: HP’s PC and printer product lines are stronger than ever, and much better aligned to the market than in the past.
The company is also transforming its organizational structure into one that will, TBR believes, deliver winning products faster, more consistently, and more efficiently.
HP (NYSE: HPQ) has not yet created or communicated a vision or a message for the company as a whole or for the PC and printers business, but TBR believes it is now better organized to form and deliver its vision.
HP brought hundreds of journalists, bloggers and analysts to a two-day event in Shanghai earlier this month to introduce its new merged PC and printer divisions, show off its new PCs, and demonstrate China’s importance to HP.
HP PCs are now better designed and better engineered. More importantly, the HP personal computer organization is now aligned around market segments instead of form factors, as in the past, which will lead to better targeted products and clearer product marketing communications.
Marketing, however, is not as evolved as product development. Companywide marketing was recently reorganized, and HP and HP PC messaging is weak, and its eventual message uncertain. Also, the entire PC market is currently in flux, anticipating Windows 8 and a more clear relationship between tablets, smartphones and PCs. Uncertain marketing and an uncertain PC future contribute to the haze of HP’s bright future.
HP is also contending with a very strong competitor in PCs: Lenovo.
TBR believes Lenovo [which operates its executive headquarters in Morrisville, N.C. but is largely based in China] will surpass HP in unit shipments of PCs in 2Q12 or 3Q12. HP, however, will generate much larger profits from PCs than Lenovo, and its PC business will continue to grow.
Going forward, as both companies execute well, the contest will be between Lenovo’s momentum and willingness to absorb lower margins and HP’s overall scale and stronger global brand.
TBR believes the PC business will continue to grow as it matures, and there will be room for more than two successful companies.
(C) TBR 2012