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By | Paul Kunert 28th October 2011 15:29

HP UK PC team baying for rivals' blood

Vendor back on the attack after landmark decision

HP UK's PSG team is unsurprisingly eager to put to bed the disastrous events of the past few months and go on the offensive.

CEO Meg Whitman vowed to make a decision on the future ownership of PSG by the end of this month, and that HP is keeping the unit is not a huge surprise, neither is the fact it will have another stab at the fondleslab market, this time with Window 8.

What is still shocking is that the largest PC vendor in the world could shoot itself in the foot so publicly in August – with seven weeks to go until the end of its fiscal Q4 ending this month – which wiped 20 per cent off its market cap.

The local PSG operation was left dealing with the fall out and are now trying to go on the attack rather than reacting to calls from trade and end-customers.

"It would be naive to say it didn't [have an impact]," Trevor Evans, HP UK and Ireland channel sales director for PSG told El Reg.

"The announcement [in August] was an important one and had people talking about things that were not overly favourable to HP."

Figures from Context revealed the uncertainty surrounding PSG, created by former boss Leo Apothker who pocketed a nice payout on his way out of the door, took a toll on UK shipments and revenues from August to September with market share for both falling.

However, IDC sales-in data for Q3 revealed that HP sales-in to channel customers fell 9 per cent on a year ago period, slower than the market decline of 11 per cent.

So clearly there was some appetite from distributors to maintain stock levels.

Evans said HP continued to have a "clear roadmap" – which was in place irrespective of whether the ownership had changed – and is planning some "aggressive programmes" for the channel to take the fight back to rivals to "stretch our lead in the market".

HP's retention of PSG has gone down well Greg Spierkel, chief exec at PSG distributor Ingram Micro, claiming – during a Q3 results call with analysts – the decision means channel partners can avoid the inevitable fall out from a spin-off.

"There's just so many intertwined systems, programs and initiatives that we work with ... hardware from print to servers to PSG division. So by pulling that out, clearly, there were going to be some issues and a transition of some sort."

But he described the situation now as "water under the bridge".

Alastair Edwards, principal analyst at Canalys, said the past couple of months had "clearly been frustrating for partners" but claimed HP had made the right decision.

"For IBM, PCD was a non-core, loss-making business, it had a declining market share and relevance. HP's situation was very different, it is market leading and spinning off the unit would have seriously diminished its market standing and financial strength."

He said the "biggest challenge" facing HP is how it will tackle the mobility.

"The PC market is rapidly changing – the Wintel domination is declining with a new set of operating systems and platforms out there – and HP needs to build a strategy that positions them to win in that space," said Edwards.

Keen to amplify the uncertainty surrounding PSG, arch rival Cisco said the loss of PSG to HP would have seriously dented purchasing power, channel funding and resulted in a margin loss.

PC rival Dell also used the PSG saga to talk up its commitment to the market, and Dave Johnson, senior veep of corporate strategy is still banging the drum.

"HP’s decision to re-enter the PC business is consistent with our vision and validates our long-term strategy. And this strategy is resonating well with customers worldwide as they look for a stable, reliable solutions provider to meet their IT needs," he said. ®

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