By Matt Burns
Depending who you ask, Lenovo (OTCPK:LNVGF) topped HP (NYSE:HPQ) in 2012′s third quarter to become the top worldwide PC supplier. Research firm Gartner reports Lenovo shipped just slightly more PCs than HP to hit a 15.7% marketshare, besting HP’s 15.5% marketshare. But IDC reports an additional segment and therefore different numbers; HP is still on top per IDC.
But arguing the minutiae is silly here. The time is near. HP’s reign on the top of the PC hill is about to come to a close. HP is crashing while Lenovo is rapidly growing.
This story is about two computer giants, one faltering under its own weight and the other one rising to the top, fueled by gumption and ambition. HP lost its way over the last 10 years thanks to a dizzying amount of executive turnover. But Lenovo seized a massive opportunity and charged forward.
There was a time when HP was the only PC maker in town. No one else could make the company’s marketing or distribution in both the consumer and enterprise world. An HP computer wasn’t any different from a Gateway or Dell; they were all packed with a boatload of adware. But yet HP computers sold like mad thanks to a competitive price and constant marketing.
HP has been the top computer seller quarter over quarter since 2006. Continuously. Said another way, for the last six years HP sold more computers than any other company.
But starting in 2010 things started to break atop HP’s machine. The company burned through several CEOs rather quickly, each of whom had a different vision for the company. Long time CEO Mark Hurd was suddenly ousted amid a sex scandal. The HP board replaced him with Leo Apotheker but fired him just shy of his one year anniversary last September. Former eBay CEO Meg Whitman took over, who just announced her five-year recovery plan, a plan which Wall Street did not like at all.
Meanwhile, while HP’s ship was on cruise control, Lenovo started growing on the back of IBM’s former PC business. Lenovo purchased the rights to the ThinkPad and the rest of IBM’s computer business in 2005. Using that branding as springboard, Lenovo launched the major product lines including the IdeaPad, IdeaCentre, and several tablets under similar branding. Lenovo smartly embraced developing markets rather than focusing primarily on HP’s and Dell’s home turf of the North American Market.
Quarter over quarter, year over year, Lenovo made strides. Starting with a major expansion in its home continent of Asia, the company became the dominant computer supplier. In 2011 it was the third largest computer maker in the world, topped by just HP and Dell. But now, in the last part of 2012, Lenovo is neck and neck with HP.
The analyst report different numbers. Gartner states Lenovo sold 13.767M computers where IDC includes workstation sales, bumping the total to 13.824M. Likewise, Gartner says HP sold 13.550M PCs against IDC’s reported numbers of 13.946M. But these shipment numbers aren’t the most telling. It’s the year-over-year growth that matters.
Per IDC, Lenovo saw a 10.2% year-over-year growth where HP declined 16.4%. Gartner reports similar numbers. There is no way to spin this in HP’s favor. HP is crashing. CEO Meg Whitman doesn’t promise growth until 2015. But to her credit, a realistic and obtainable goal is far superior to the promise of a quick turnaround.
If the trends follow through, by all accounts, Lenovo will be crowned the top PC maker next quarter. It will take time to fix HP. As a founding member of Silicon Valley, none of us want to see the company fail. It needs to correct its course, ignore the noise, and move forward — a task easier said than done as HP watches Lenovo assume the throne.