HP Personal Service Division Sales in Trouble?

August 22, 2011

in General Interest

On Saturday I debated rushing to Best Buy to secure a $99 HP Touchpad. In the end I didn’t. It would have been more a purchase rooted in curiosity rather than one I needed. Last week I wrote the word “implosion” writing about HP and their strategy to abandon WebOS, the PC market and setting the course for the future at the intersection of mobility, communications and computing. Which is not a new trend!

I don’t believe the management and board at HP realizes the damage they have possibly done to:

  1. the HP brand,
  2. their Personal Services Division sales forecast, and
  3. employee moral and decision-making.

I fear HP will lose the trust of its customers completely. I would not underestimate the damage.

What will happen to  HP PC Sales? 

At retail they will decline rapidly – both volume and value. Consumers don’t want a losing proposition. By announcing they are getting out of the business they have sent the strongest signal possible to their retail channel that they are better off stocking other brands… What’s that mean. My guess is HP has 40% of shelf space in most of the big box retailers (I don’t go looking at them often would be easy to verify). By Xmas they will have half that as Best Buy, Walmart etc. will put brands they can grow onto the shelfs. The only space that HP will be able to get… is ‘promotional sell-outs”.  Yet I expect the large retailers will simply reduce their orders of HP products – immediately. A cut in shelf space means a similar drop in sales. I’d expect a 50% cut in shelf space going into the Xmas period. Why? Because as a buyer it’s what I’d do.  I’d also be worried as hell…. Profits on PC’s are about to go down… and HP just sent a whole lot more people to the Apple store. (Note my comments are more US centric – however, the HP brand will be hurt globally).

In the Enterprise. In the last few years HP sold an enterprise service contract which included the PC’s too. Employees think they are crappy and low budget and look longingly at companies that let users buy a nicer, slimmer, faster, newer designs. The Enterprise buyer is already feeling the pinch. Their employees are pushing for iPhones or Androids and giving up their Blackberrys. These devices cost more than the PC’s that have been given out. The opportunity is now wide-open to redefine how enterprise work gets done. However that evolves… it doesn’t matter. If Enterprise X signs another service contract with HP it won’t be including laptops and / or desktops, or tablets, or phones.

I’m a real believer that companies win or lose based on passion and a desire to make a difference. Computing and technology has never been more front and center in people’s lives. It has never been more personal, more engaging, or able to work harder in the background.  HP just threw away the channel they had to my pocket. That still seems very very short sighted to me.



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