HP's bad quarter could prove bad for America

China on verge of being world's top PC maker, and the PC business of HP or Dell could be headed there too

By , Computerworld |  IT Management, HP

Unless Hewlett-Packard gets its act together quickly, Lenovo will soon become the world's number one PC maker.

If that happens, it's going to create a moment of national angst.

Headlines would declare: Chinese firm becomes world's top PC maker, displacing U.S., or, more simply, Chinese firm now leads world in PCs.

A Lenovo lead in the PC market would prompt widespread commentary about how the U.S. is losing its place in the world as the tech leader.

Some others in the technology chattering class could try to rationalize it, declaring that the PC is just a commodity and that we've entered the post-PC era.

That would be wrong. We're no more in the post-PC era than we are in the post-car era. The PC is, and will remain, a monumentally important part of getting work done.

Thanks to HP's most recent -- and dismal -- quarter, the U.S. may be only months away from turning over PC leadership to China.

Overall, HP posted an $8.9 billion quarterly loss, much of it due to its IT services division. But the personal systems group's 10% decline in revenue may be as significant as it just may be enough to help get Lenovo to the top of the PC market by year's end.

Declining global PC share

Gartner's report on second quarter PC shipments, released last month, showed HP with 14.9% of the world's PC market, and Lenovo with 14.7%. Most troubling for HP in the Gartner report were the PC growth rates -- HP's share declined by more than 12% while Lenovo's share increased by nearly 15%.

IDC's latest market share numbers give HP a little more breathing room. The Framingham, Mass., research firm listed HP's second quarter worldwide PC share at 15.5%, and Lenovo at 14.9%.

IDC found HP's market share decline similar to the percentage in Gartner's report, but it also found much faster year-to-year growth rate for Lenovo -- just over 25%.

Either way, both research firms had Lenovo close to being the world's top PC maker. "Lenovo has been making great progress around the world," especially in the Asia-Pacific region, said Crawford Del Prete, an analyst at IDC. A big consumer push is helping Lenovo as well.

The decline in the PC business isn't a new problem for HP.

Last year, former CEO Leo Apotheker even floated the idea of spinning off the PC division -- an idea, along with some other issues such as the TouchPad disaster, that led to his ouster.

Originally published on Computerworld |  Click here to read the original story.
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