Last month, HP released better-than-expected worldwide earnings for its final fiscal quarter of 2003 which ended Oct. 31. A lynchpin of this healthy global performance has been attributed to improved PC sales and this trend also extends to Asia-Pacific.
Excluding Japan, HP yesterday revealed its Personal Systems Group (PSG) in the region has exceeded revenue targets for six consecutive quarters. PSG oversees desktops, notebooks, handhelds and workstations.
HP sold close to one million products in the fourth quarter, and saw a 30 percent increase in revenue over the same period last year, said Adrian Koch, HP's senior vice president of PSG in Asia-Pacific and Japan.
"We had a strong quarter, and we're delivering at a point where we're sustaining profitable growth in a systematic manner," Koch stressed.
Among the highlights was its strong showing in China where, according to market research firm Gartner, saw HP out-perform its arch rivals.
In terms of overall PC unit shipment growth in the mainland compared to last year, HP grew 69 percent while Dell and IBM grew 67 percent and 17 percent respectively, said Annie Chung, Gartner Asia-Pacific's principal analyst for hardware and systems.
Besides aggressive promotions and price cuts, Gartner attributed HP's improved market position to the introduction of its "highly competitive" Pavilion line of consumer desktops.
Another factor for its mainland success lies in HP's "efficient direct channel model to the retailer", added Chung.
"They are strong in the consumer and SMB (small and medium businesses) space and they cover most of the market segments." Chung said. "The consumer market is the only potential segment to capturing the overall PC market and based on their results, HP's growth comes mainly from its Pavilion desktop line."
On whether these strategies are sustainable in the long term, Chung said aggressive pricing is necessary. "They'll have to use aggressive pricing and promotions to get the direct retail channels to increase product shipment."
HP's Koch agrees that aggressive pricing and promotions will continue to play a key role in sustaining China's business momentum. However, this needs to be balanced against the firm's bottom line imperative, he said.
"It's not easy," Koch admitted. He emphasised HP's success is not all about product and pricing. "Today, we have 24x7 service support capability in 38 cities. Our growth is possible because of our presence, people and partners," he added.
But looking at its latest report card, the regional head honcho is bullish about the coming year. "We embarked more than 12 months ago with a systematic growth plan for China, and now we've significantly outgrown everyone else in China," said Koch. "Q3 has shown that we're on the right track."
To better HP's market position, Koch plans to accelerate growth plans for the country. "Four to five months ago, we were present in seven cities. Today, we're in 20 cities. Definitely through 2004, we expect to increase that to a three-digit number," he told CNETAsia. Responding to critics who predicted the HP-Compaq merger wouldn't work, Koch quipped: "One plus one is clearly more than two."
