HP, Dell Grapple to Win Both Enterprise, Consumer Markets

 
 
By Scott Ferguson  |  Posted 2007-11-20 Email Print this article Print
 
 
 
 
 
 
 

While Dell continues to dominate the enterprise, Hewlett-Packard is being carried along by the consumer market.

Hewlett-Packard and Dell are relentlessly wrestling to see if one of them can become king of both the enterprise and consumer hills. Dell is entrenched in the enterprise space while HP is firmly ensconced in the consumer sector. Analysts say that as hard as the two companies struggle, it will take a phenomenal effort for one to topple the other. HP revenue is being driven by sales of consumer PCs, especially notebooks sales both in the North American market and in the emerging markets, such as China, India and Brazil, which CEO Mark Hurd and his team have targeted for expansion. This effort, which started in earnest last year, has helped HP maintain its number one position in the market against rival Dell.
After releasing its fourth-quarter fiscal results Nov. 19, the Palo Alto, Calif., company showed that its PC business revenue grew 30 percent from the same time last year to a total of $10.1 billion. This growth, according to HP, was driven by sales of notebooks, which grew 49 percent.
Despite its lead in overall PC shipments and another quarter of robust results, HP still lags behind Dell in the enterprise market. A recent survey by Forrester Research showed that commercial buyers prefer buying PCs from Dell compared to both HP and Lenovo. While HP continues to increase its revenue—the company reported $28.3 billion in revenue this quarter, an increase of 15 percent from a year ago—its position compared to Dell within the enterprise space is unlikely to change anytime soon, according to analysts. At the same time, HP will continue to dominate the consumer market as Dell looks to find its footing there with new offerings.
"Commercial deals are long-term agreements and those take time to build up," said Richard Shim, an analyst with IDC. "HP is not foreign to the enterprise business; they are just not number one. They are not suffering in the commercial space and the company continues to move in the direction of focusing more on services, which is where the whole industry is going." Click here to read the latest development from HPs printing division. Shim added that Dell will not concede its privileged position within the enterprise easily and the vendor has worked to beef up its services portfolio within the last year to compete with HPs more established services division. Dell is scheduled to release its quarterly financial results Nov. 29, which should give analysts a better view of how its new strategies are working. Dells direct sales model and low prices have helped it win and keep many of its consumer customers as the company looks for new ways to expand its consumer business and move into the emerging market, such as Eastern Europe. However, Josh Farina, an analyst with Technology Business Research, said that HPs diversity—its focus on emerging markets, its services division and the breadth of its notebook offering—will continue to make it a stronger competitor in the enterprise market. "HP can leverage its service engagements with enterprise clients to win in hardware—HPs already at the table, so customers can easily source hardware from HP rather than having to work with another vendor, such as Dell, for hardware," Farina wrote in an e-mail to eWEEK. "This is especially important for emerging markets, both geo and [midsized companies], where resources are tight and the time savings of just using one vendor for services and hardware is likely a valuable proposition that HP can use to win business," Farina added. Even with all its enterprise pieces in place, HP is still likely to continue pushing its consumer brands, especially in the emerging markets, as well as mature markets, where mobility is a must. "I would say that consumer is where the growth is right now and were seeing a collision course of trends, like low prices for laptops, that are continuing to drive that demand," Shim said. Check out eWEEK.coms for the latest news in desktop and notebook computing.
 
 
 
 
 
 
 
 
 
 
 

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