HPs Two-Tone Retail Stylings

 
 
By Rob Enderle  |  Posted 2003-12-11 Print this article Print
 
 
 
 
 
 
 

With its two desktop lines—HP Pavilion and Compaq Presario—HP enjoys the retail benefits of two distinct companies. But will it be enough to beat out Dell in the battle for mobile domination?

Recent reports from financial analysts and feedback from large enterprises agree: Dell and Hewlett-Packard currently top the heap in mobile sales, despite their very different routes to that position. Outside the enterprise, Dell and HP have pursued distinct sales channels. Dell mostly sells direct (notwithstanding some localized efforts, such as mall kiosks and placement in membership stores like Costco). HP has a direct presence but is better-known for its retail efforts; currently, its the most powerful PC vendor in retail. But when it comes to retail, HP is actually two vendors in one. Much like General Motors does with cars, HP has two complete desktop lines: the HP Pavilion and the Compaq Presario. Whats HP up to? When you to go to a store like Best Buy that segments products by line, you might see an area dedicated to Sony, an area dedicated to HP—and another area dedicated to Compaq. That gives HP twice the shelf space and twice the opportunity to capture revenue. I think this multi-brand strategy is behind recent sales numbers that show HP growing substantially faster than both the market and Dell.
The differences between the HP and Compaq brands dont stop there, of course. While there was initially a lot of overlap between the Pavilion and Presario products, HP is slowly moving the lines away from each other. The HP Pavilion line is more of a packaged offering, particularly in consumer product sets, with a warmer industrial design.
Compaq is more basic, with sharp lines that identify a more crisp and technology-oriented nature. Personally I like the Compaq line better because it has a very high-tech look with which I identify. This is by design, much like it is with Buick and Chevrolet; these products (which are almost identical inside) are supposed to target a specific audience that may be buying from Dell, Toshiba, Sony or Apple today. It looks to me like HP Pavilion is targeting Apple, Sony and Toshiba, while the Compaq Presario is targeting Dell Dimension, Gateway and Acer. As time goes on, youll see these lines move further and further apart. If HP is pushing performance and value, it will likely be in the Compaq line (I expect the Presario brand, which seems redundant to me at this point, will fade over time); while features and advanced capabilities will fall in the Pavilion line. For instance, on the desktop side, the new "X" product, which is positioned against the Dell XPS and products from companies like AlienWare and Falcon, will be branded Compaq, much like Corvette is a Chevrolet brand. The HP Pavilion, much like Buick, may never have a product in this space. HP does have a Cadillac line, currently populated with its Media Center products, which may expand over time (this is still somewhat confusing because the Media Center laptops are part of the HP Pavilion notebook line, but the desktops are in the Media Center line. I expect this will get fixed next year.) The battle between HP and Dell will be particularly interesting to watch because it seems to parallel the battle between Ford and GM. In that battle Ford eventually had to acquire other brands or face being trivialized in the market, and GM has had serious problems with husbanding the brands while creating a balance between differentiation and common parts. Like Ford and GM, I expect both Dell and HP are in for a similar learning experience, and as we go through the maturing of this market, like it was with the car market, it will be interesting to see how many independent U.S. domestic brands we have in a few short years. Rob Enderle is the principal analyst for the Enderle Group, a company specializing in emerging personal technology.
 
 
 
 
Rob Enderle Rob Enderle Enderle Group 389 Photinia Lane San Jose, CA 95127
 
 
 
 
 
 
 

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