HP riding high with 42pc share

By PETER GRIFFIN IT writer

A newly merged Hewlett-Packard has come through its restructuring with relatively few redundancies, a Compaq-heavy management team and a 42 per cent slice of the PC market.

Figures from analyst group IDC for the three months ended June 30 show the global merger of HP and Compaq did little to slow momentum locally, and the new HP is leading the desktop and server markets and trailing Toshiba by just 1 per cent in the laptop market.

HP sold nearly 40,000 PCs in the second quarter, up 23 per cent on the first three months of the year. Local assembler the PC Company moved into second place with sales of 7000 PCs, a 25 per cent increase giving it just over 7 per cent of the market. Dell and IBM filled third and fourth places respectively.

The PC Company's managing director, Rob Sweet, said it felt good to outsell Dell by a comfortable margin.

"Between us all we stimulated the market in quite a big way and the PC Company has done well out of it."

A total of 94,491 PCs were sold in the three months, an increase for the quarter of nearly 10 per cent and up 9 per cent on the same period last year.

HP's gains were made as it brought on board hundreds of employees from Compaq, appointed a new management team and integrated two large sales channels.

An ecstatic Russell Hewitt, HP's managing director, said the New Zealand operation had been the best performer for HP in the Asia Pacific region.

"At a time when everyone was saying that we'd fall apart, we actually grew by 7500 units. We'll be public enemy number one now."

Hewitt said that 95 per cent of restructuring was complete and the headcount had settled around 570, about 30 fewer than when Compaq and HP first merged. Some staff had accepted exit packages and left, but new recruits had also been picked up in the process, which had involved around 500 internal interviews.

New Zealand fared better than other HP regions, some of which faced a decrease in headcount of 10 to 15 per cent.

Among those declining to stay on with the new HP was virtually the entire original HP management team headed by former managing director Barry Hastings - who announced his own resignation last week.

"They've pretty much all gone," said Hewitt.

"A lot of those people had been at HP a very long time and I guess they took the opportunity to ask themselves, 'is it time for a change?"'

"When you've got this amount of change going on, you need a leadership that is absolutely wanting to be here," added Hewitt, who also sits on the boards of TVNZ and building software company Straightedge.

He said much of the second-quarter growth appeared to be at the expense of archrival Dell, which shipped 13.3 per cent fewer PCs in the second quarter than the first three months of the year.

Dell Sydney-based spokesman Robert Small said the company was concentrating on lower-volume but more profitable business in the corporate, government and education sectors.

"It's not one of our prouder quarters. It shows we're not playing in some growth segments of the market such as the home and small business sectors, where traditionally we've not been as strong as we need to be."

Dell had made a "conscious decision" to steer away from the consumer market because there was no money in it.

"Dell doesn't play in a market that is not profitable and we won't have one part of the business subsidising another part. Number one or two in market share does not necessarily mean number one or two in profitability," said Small.

In the server market HP had 55 per cent share selling 1415 servers - more than the rest of the vendors combined.

Globally, however, IDC's figures painted a gloomy picture for HP. On a year-to-year basis HP's PC shipments dropped 16.2 per cent and 13.2 per cent in the all-important US market.

That fall came at Dell's gain, the second-placed manufacturer boosting PC shipments 15.5 per cent worldwide and 19.3 per cent in the US.

Analyst group Gartner also had Hewlett-Packard with 42 per cent marketshare for the second quarter, but had Dell in second place with 7 per cent of the market, followed by IBM (6 per cent) and Toshiba (3 per cent).

The PC Company was bundled into the category "others".