As PC veterans HP and Dell slump, Apple, Lenovo are rising.

20120524010947d4b46 300x300 Dell, HP PC Sales Tank As iPad Rules
Image credit: Fastcompany

The old order for the PC industry appears to be ending as HP, the biggest computer maker globally, reported a 30% net profit slump this week.

HP net profit dropped 30% for Q2 to April 30, amid flat growth in its PC division ‘Personal System Group’, at $9.4bn

The PC maker earnings declined in two out of five of its business divisions including Imaging and Printing (-10%), and Enterprise division which slumped 3%.

The world’s biggest PC maker showed disappointing 0% growth in its computer business – despite the release of a slew of new PCs and Laptops, both here in Australia and worldwide.

PC sales are sluggish globally and grew just 1.9% in Q1 2012, according to Gartner, while the tablet market is growing at an astounding 124% annually, although this is from a low benchmark. Notebooks and mini-notes are growing 12%.

This comes as HP continues to suffer in the face of intense competition from mobile tabs like the iPad and a slew of Androids hitting the market, which analysts re-confirmed this week.

Hewlett Packard notebooks were down 3%, although revenue desktop PCs were up 5% compared to 2011.

However, its Software division grew 22% in Q2- one of the only divisions that witnessed growth, along with Financial Services.

In fact, HP software division is far more profitable than its hardware business, which prompted bosses at Palo Alto to controversially fork out $11 bn for UK software giant Autonomy last year.

The company, under leadership of former CEO Leo Apotheker, even thought seriously of ditching its hardware division altogether, a gamble which later cost him his job and damaged HP’s repuation.

Read: HP Slash 27,000 Jobs, Profits Dive

Another US PC stalwart, Dell, also reported less than stellar performance on the PC front this week, announcing a 4% drop in revenue $14.4 bn, with its Consumer business revenues dropping 12% to $3 bn.

And like HP it is looking to expand its proftiable enterprise division ‘Enterprise Solutions and Services’, which grew 2% year over year to $4.5 billion and is something it has pledged to invest in for future growth.

Dell are focusing on more profitable enterprise services, which now account for 50 percent of our gross margin, confirmed Dell chief financial officer, Tuesday.

PC maker Dell has also confirmed it is contunuing to reform its business to that of “an end-to-end IT provider,” with a major focus on profitable enterprise rather than consumer solutions.

“We saw continued progress in our first quarter with the innovative IT solutions we’re providing – notably our latest Dell servers, storage, networking and services that deliver customers enhanced productivity,” said Brian Gladden, Dell CFO.

“We continued to shift the mix of our business during a challenging environment.”

This comes as new rivals like Apple are grabbing huge chunks of the PC market and are winning the mobile computing war -and has outran HP to the number one spot with 22.5% marketshare in Q1 this year, almost double that of HP’s 11.6% share.


Analysts NDP Display said Apple shipped almost 17.2 m ‘mobile PCs’ in first three months of 2012 – nearly 80% of which were iPads – compared to HP 8.9m units.

However, in the notebook rankings, HP held on to the No.1 spot with 16.2% share, ahead of Acer, Lenovo and Dell.

Read: Apple Swamps HP In Overall PC Market

Rising Chinese player Lenovo also reported stellar performance results this week, on net income of US$473 m – up a whopping 70% year to year with “all-time highs” in revenue, and global market share up 12%.

Lenovo now says it is #2 and the fastest growing major PC Co. for the 10th straight quarter.

 According to NDP, it ranked in the top 5 for both notebook (No. 3) and tablet or mobile PC categories (No.4) with 10.6% and 7.7% share respectively.

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