No Hurd’le in his path

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HP has posted gains again this quarter, leaving Dell chasing behind. Will it retain the lead?

In a scenario where tech investors are scouting for different propositions to safeguard their portfolios from the possible global recession, Hewlett Packard (HP), numero uno in terms of global revenues amongst PC manufacturers, has once again surpassed analyst expectations, with yet another wonderful quarter under the leadership of Mark Hurd. “Robust consumer and mobile PC sales across all regions were the two main drivers of HP’s overall growth. The company experienced the strongest growth among the top five vendors in the fourth quarter of 2007, as its shipments increased 23.3% in the quarter,” said Mikako Kitagawa, Principal Analyst, Gartner. Well, not only did Hurd bail out HP from doldrums back in 2005, he also made sure that HP retained its tag of being the leading computer manufacturer. Initially, in 2006, Michael Dell did pose a strong threat with Dell placed neck to neck with HP in global PC shipments. However, things changed slowly with Hurd’s renewed focus on emerging markets. Consequently, during Q4 2007, 69% of HP’s total revenues came from outside US, thus largely safeguarding the company against recessionary issues. Interestingly, this strategy also helped Hurd to counter the growing prowess of Dell to an extent that while HP’s market share has increased from 15.9% to 18.2% since 2006, Dell has struggled with its market share decreasing from 15.9% to 14.3%. “HP remains well positioned for profitable growth as we continue to focus on our numerous cost initiatives and improve our market coverage,” says Mark Hurd, CEO of HP.Amusingly, even now, Hurd is at a crossroads, confronting several challenges. Having implemented cost cutting and operational improvement measures, there remains little room for further improvements in efficiency. Moreover, after a few dismal quarters, Michael Dell is taking all possible measures to address cost and productivity across Dell’s entire operations, while revamping its strategic outlook by refreshing its product cycles with a renewed focus on cost & design.Dell also made public his intentions to embrace an indirect marketing model. Matthew Wilkins, Principal Analyst, iSuppli agreeingly asserts, “Despite a renewed focus on its PC business, and the return of Michael Dell to the company’s helm, Dell’s channel business is taking time to ramp up and will have an impact on company sales.” Well, with Dell’s new strategy scheduled to gather momentum during 2008, juxtaposed against HP’s focus on the emerging markets, Dell & Hurd will soon be at loggerheads, yet again. And yes, with these two spending sleepless nights, there are two others who will have a sound sleep – the investors and the consumers!

Edit bureau: Devdeep Singh

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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