HP needs to rebuild brand to retain top spot

Lenovo's strong growth signals its ambition to be top PC vendor, which heaps pressure on current PC market leader Hewlett-Packard to rebuild its brand value and recover from its missteps, says analyst.

Lillian Tay, principle research analyst at Gartner, said Lenovo's past growth has "impressively" exceeded worldwide averages and it was clear that the company aimed to take the top spot. However, as the research firm had a policy of not commenting on the vendors' future market share, she was not able to discuss if the Chinese PC vendor would indeed surpass HP in the near future.

Koh Kong Meng, general manager and executive director at Lenovo Asean, confirmed the company's ambition to take over the top spot. "There's never been a better time for Lenovo than now to challenge the No. 1 position. We recorded our highest-ever worldwide market share of 14 percent and grew faster than the industry for 11 consecutive quarters," he said in an e-mail.

In the third quarter of 2011, Lenovo leapfrogged Dell to become the second PC vendor. The growth is expected to drive Lenovo up the ranking to surpass the current No. 1 vendor, HP, said Beau Skonieczny, research analyst for computing practice at Technology Business Research (TBR), in a note about Lenovo's latest quarterly results.

According to Gartner's preliminary figures for worldwide PC vendor shipments for the fourth quarter of 2011, HP saw a 16.2 percent year-on-year decline but remained the top PC vendor with 16 percent market share. Lenovo trailed at No. 2 with 14 percent market share but saw a growth of 23 percent. In third place was Dell with 12.6 percent market share and a growth of 7.8 percent.

HP needs to win back credibility
Tay noted that HP's indecision about the direction of its PC unit during its ex-CEO Leo Apothekar's reign caused it to lose credibility in the computer business.

"Now, they need to rebuild with their channel partners, end customers and even partners in their supply chain," she said.

In contrast, Lenovo's growth in the market was boosted by different factors, said the Gartner principle research analyst. The company's acquisition of Medion in Germany and its partnership with NEC in Japan has helped it add more market share, she said.

The Chinese PC maker also offered very aggressive price points, she added, pointing to the ThinkPad line which was targeted at professionals as a premium brand.

"On the consumer side, Lenovo successfully built solid partnership with retailers. Lenovo took the top position in the worldwide desktop PC market, replacing HP in the fourth quarter of 2011," she added.

HP needs to rebuild brand
According to Gartner's Tay, for HP to win back market share, it will need to "quickly rebuild its brand value". The company will need to differentiate itself by delivering a seamless and ease of use experience across different hardware platforms, software and services to its customers, she added.

Such plans according to HP have already been put in motion. A Singapore-based HP spokesperson stressed that the company was the worldwide market leader for PCs during the fourth quarter of 2011 based on research by IDC and Gartner. "We participate in the PC market at a global scale--serving more than 1 billion customers in more than 170 countries on six continents--across hardware, software, services and solutions," he said.

Besides bundling different product types, Gartner's Tay noted that HP would need to come out with products that appealed to users at a "visceral, functional and reflective level".

The HP spokesperson also added that it would continue to give customers and partners the advantage of product innovation on a global scale across a portfolio of devices that was the industry’s broadest.

The Lenovo spokesperson shared the same sentiment for his own company. He noted that the company's growth was a result of its focus on "product and technology innovation, commitment to quality and reliability, and strong customer support".