Fiorina: HP Will ‘Play to Win' in PC Market

Hewlett-Packard takes its PC business seriously and aims to be No. 1 or No. 2 in worldwide PC sales, CEO Carly Fiorina told attendees at Gartner Symposium/ITxpo 2000 in the US last week.

Fiorina said HP now ranks third in worldwide PC sales, compared with ninth place, which it held when it entered the PC business five years ago. "We're not only making money, but making pretty good money," she said. "We not only think it's a good growth business, but a good profitability business."

Fiorina said that analysts and others have talked about the PC marketplace "going off the cliff" but that that view is biased because it looks only at the U.S.

"There's a big world out there," Fiorina said. Laptop sales at HP are "going like wildfire" as U.S. businesses move away from desktop machines, she added.

Another product that promises to be successful is HP's recently introduced e-PC, a PC model with slimmed-down functionality and size that makes maintenance easier and cheaper for corporations. It will be available for less than $US500. Compaq Computer Corp., IBM and other manufacturers make similar desktop systems.

Despite HP's success, the U.S. corporate desktop market is "beginning to slow," Fiorina acknowledged. "We, as a company, have to play to win," she added.

Eric Rocco, an analyst at Stamford, Connecticut-based Gartner Group Inc., said Fiorina's goal is "an important goal" but it's also one that will require a "very aggressive strategy."

Rocco added that "HP wants to be first or second in all the products it makes, but getting to the top in PCs will require displacing Compaq or Dell, and that will be hard."

Since desktops are more of a "utility" product today, there's little HP can install in them to provide unique features, Rocco said. "HP will have to hope for Compaq or Dell to falter," perhaps in terms of failing to deliver products on time or to provide convenient service, he added.

Rocco and Gartner analyst Paul McGuckin said HP is a very strong company with a bright future, but they noted that the biggest piece of "indigestion" could come with its proposed $US18 billion acquisition of consulting firm PricewaterhouseCoopers in New York.

Both analysts said the acquisition, which might be formally completed within a month, could introduce obstacles for HP in integrating people and business models, just as Compaq found it difficult to integrate Digital Equipment Corp.

Analysts also asked about HP's commitment to the application service provider (ASP) model, to which Fiorina responded, "Fundamentally, we won't become a huge ASP ourselves, since that puts us in conflict with ASPs we want to support."

Fiorina didn't rule out having an internal information technology department to sell some small-scale technology services, however.

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