HP India set to Gain from Global PC Unit Spin-off

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Embarking itself towards a dramatic restructuring effort, US based global technology major Hewlett-Packard has revealed plans to spin off its personal computer business, and experts believe that the company�s India operations are set to gain from this global move

Struggling with stiff competition and rising shadow of tablets, PC maker HP's latest plans are aimed at fundamental transformation to provide a big boost to its profitability.

As it gets rid of its PC business, even though it may turn it into a smaller company for a while, Hewlett-Packard (HP) India is likely to be benefited in a bigger manner on the long run. HP�s PC business has been on the down track for quite some time here, especially in the recent quarters. The business constitutes as much as a third of its Rs 23,227 crore India revenues,
as per estimates by CyberMedia�s Dataquest for 2010-11.

As Dell bettered its channel model in India, last year, HP lost its No. 1 position to Dell after being on top for five years. Research firm Gartner's PC estimates for the second quarter of 2011 shows that Acer has now moved up to the second spot, pushing aside HP to the No. 3 spot.

Despite many efforts, HP has failed to synergize its PC business with the rest of its other existing businesses, especially its server, storage and enterprise software group, and the enterprise services group. In the downturn of 2008-09, while its services and enterprise products businesses gained in India, those gains were neutralized by losses in the PC and printing businesses.

HP loses to Acer while Dell remains strong in India: Gartner

While Dell held on to its leading position in the Indian PC market with a marketshare of 17% in Q2 of 2011, there was a changing of guard lower down the order as Acer, with its 12% share, overtook HP to become the second largest PC maker in India, as reported by market research firm Gartner.

Triggered by the emergence of notebook sales, the sales of computers in the Indian market reached 2.5 million units in the same quarter, which grew 17% year-over-year. HP is now at the third position with an 11.2% share of the market and Lenovo comes next with 10.4%. Shipments from the four companies combined constituted 50.4% of all computers sold in India in the second quarter of 2011. Among local vendors, HCL leads the pack with a market share of 6.6% in the Indian market.

In this kind of scenario, HP India will surely gain from this global move to hive off PC business as this will help the company to focus on other profitable segments where there is better scope of increasing the profitability level and at the same time, helping its partner ecosystem in a better way.