How HP’s Focus on Core Businesses Helped the PC Maker Regain the Lead

The battle for the throne of computerland continues, as the fourth quarter of last year saw yet another upheaval in the PC market.  Although it failed to increase PC shipments in Q4, Hewlett-Packard regained world leadership in computer sales for the period, according to the latest quarterly report by research firm IDC.

The top spot had been occupied by Chinese manufacturer Lenovo since October 2012, toppling a six year reign for HP. The U.S. company ended the fourth quarter with a market share of 16.2%.  Lenovo came in second, snapping a share of 15.5% YoY.  HP sales declined by 0.6 percent, while Lenovo grew by 8.2 percent.

According to earlier figures by analyst firm Gartner, HP was lagging behind Lenovo in the third quarter, when Lenovo took 15.7 percent of the market, compared with 15.5 percent for HP.  But according to IDC, HP had maintained first place with 15.9 percent in the third quarter, compared to 15.7 percent of Lenovo.  Dell held 10.6 percent market share worldwide during the same period, placing it in third place.

Windows 8 to rescue?

IDC reported nearly 90 million PCs shipped during the holiday quarter, a 6.4 percent drop from shipments a year earlier. HP maintained growth in the U.S. and Asia/Pacific markets despite continued lower sales in the Europe, Middle East and Africa markets.

But an aggressive push for Microsoft’s Windows 8 volume helped HP regain some of its lost ground.  However, the shipment totals were 0.6% lower than last year, while Lenovo’s grew by 8.2%.

HP still holds the top spot globally, with over 15 million units sold, a similar number to last year, and a rebound in the latter part of the year. HP was successful in managing large retail deals targeting Microsoft’s Windows 8 launch and holiday sales in selected regions.

“HP continued to defend its top position in IDC’s worldwide ranking, recovering somewhat from past weakness in key markets,” IDC reported. “An aggressive push for Windows 8 volume helped the vendor make gains in Asia/Pacific and its home turf in the US.”

According to Gartner analysts, HP managed to sign agreements with large retailers to benefit from the arrival of the new operating system on the market. In the report, Dell came in at No. 3 with sales decreasing to 20.8% from a year earlier. Between October and December, HP grabbed 26.6% of the PC market in the United States, compared to 19.2% for Dell.  In the last quarter of 2011, HP and Dell had of 23.1% and 22.5% of the market, respectively.

Although the third quarter was focused on clearing Windows 7 inventory, preliminary research indicates the clearance did not significantly boost the uptake of Windows 8 systems in Q4.  Lost in the shuffle to promote a touch-centric PC, vendors have not stressed enough some of the other perks of Windows 8 that promote a more secure, reliable and efficient user experience. As Windows 8 matures, and other corresponding variables such as Ultrabook pricing continue to drop, hopefully the PC market can see a reset in both marketing and demand in 2013.

Return to prominence

HP’s top strategist is reaffirming the company’s commitment to the PC business these last six months, and it’s finally paying off.  During the 10K filing Mohamad Ali, Chief Strategy Officer, HP, said the company is committed to the PC business.

In a recent analyst conference, CEO Meg Whitman spoke about her strategy to turnaround HP businesses.  She mentioned fixing many operational problems such as better aligning the cost and revenue structure.  In addition, the company is investing in revolutionary research and development initiatives as part of its drive to restore its position as a technology leader.

Throughout the year, HP plans to deliver superior, innovative PC products and experiences across customer segments, such as the ENVY x2 hybrid PC and the sleek SpectreONE all-in-one desktop, HP Pavilion dm1, HP Pavilion dv6 and HP Pavilion g4. The latest we saw at CES was ultra-high resolution HP Envy 14 Spectre laptop, alongside the 3-pound EliteBook Revolve with a rotatable touch screen display.

HP is also looking to place marketing at the heart of its turnaround strategy this year. The company returned to TV advertising in the UK for the first time in twelve months to promote its Envy X2 hybrid tablet in December. HP is planning a one year strategic marketing partnership with Universal Music Group to amplify campaigns and continue the media-centric marketing approach.