6 - I’m OK, Could Be Better

alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/75c211c1df6728be123d5f220089bf162809da304feef4396783a8c67a534064.jpg (2669 bytes)" align="right" border="0">

alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/8dd3163ab1d5b2477d99963754c9420018dda937170bbb7d398c484f2bcf64bb.jpg (11782 bytes)" border="0" hspace="2" vspace="2" align="right"> COLOR="#000000">MD: RAMESH D GROVER

S SIZE="2">o Hewlett-Packard India has arrived. In the Indian PC scenario. A growth of 50

percent in the number of desktops sold–from 9,860 Vectras in 1996-97 to 14,826 in

1997-98. Well above the market growth rate. Thus the company, which didn’t have any

clout in the PC market, is at last gaining fast recognition as a formidable player from

being a ME-TOO. Though the number is still small, it might just be the beginning of the HP

juggernaut in PCs. The company’s strategy of pricing its systems 5 percent lower than

arch rival Compaq seems to be paying off, with the Indian market embracing the HP brand

name, till now strongly associated only with printers.

How did it happen? Well, for one, the breakup of the JV

with HCL was a boon for Vectras. With that HCL started focusing on the distribution aspect

of the PCs more strongly than before. And the HP brand name came into being as a strong

independent brand for PCs, as opposed to the earlier weak push for Vectras by HCL HP. This

led to the second factor of clarity in channels. HP has long been a smart channel manager

in printers and the alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/b030368718be9bf32f8fd6d8413906c1c100d7c6318a80baa1ab536feb9c9e9f.jpg (11894 bytes)" border="0" hspace="2" vspace="2" align="right">JV was proving

to be a thorn for the growth of its PC business. The HCL HP breakup gave the much-needed

impetus to the PCs by clearly defining the role that HP India and its distributors would

play. The third factor, again owing its birth to the HCL HP breakup, was the enterprise

solutions group coming into existence, which focused on selling solutions to the corporate

market. As a strategy the Vectras were made to piggyback on the servers–a realization

that it is the corporate market which is the most important target for PCs.

Talk to any HP guy and he will tell you how their

PC servers are doing in the market. HP has already taken the # 1 slot for PC servers in

Asia-Pacific, and is on the road to replicating this performance in the Indian market. It

sold 1,734 PC servers at a value of Rs 58.35 crore, a unit growth of 26 percent and value

growth of 32 percent. And this in a year when non-Intel servers fell dramatically in unit

growth and also registered negative growth in value. With the parent company’s

partnership with Intel for the Merced microprocessor, the company is clearly betting a lot

on the Intel architecture. This was seen in the largest Indian order bagged by HP India

for Intel servers for running SAP R/3 from Mahindra & Mahindra.

The classic HP way of foraying into the market later

than others and steadily inching upward is what is being practiced in PCs. Though the

Indian PC market was the cause for much angst among the top HP brass in India as well as

the Asia-Pacific, the company was still debating the option of setting up a plant in India

as was indicated to DQ in September last year. Though the company is one up on price

against Compaq, however, it still has to reach the logistics efficiency and mindshare the

latter has.

Finally, early this fiscal, HP bit the bullet in

announcing its configure-to-order plant in Bangalore—a testimony to its seriousness

in going the full way as far as volume PC market in India is concerned. It remains to be

seen whether HP is able to replicate its printer success story in India.

But if you win some, you lose some. And the portable is

proving to be an eyesore for HP India. This could be attributed to the company’s lack

of aggression coupled with the growing popularity of IBM ThinkPads, Compaq Armadas,

Toshiba Satellites and Tecras, and AcerNotes which are clearly entrenched in the market.

The dilemma with HP OmniBooks is that they are neither a premium product like ThinkPads

nor a VFM product like AcerNote.

The printer story has already been written. Though the

company enjoys the numero uno position in lasers and inkjets, it is still hammering

into the market, with new products every quarter. Here the sad para of the story relates

to the OfficeJet products



(a combination of any three of scanner, printer, copier, and facsimile). These products
did not even create a ripple in the market. However, with printers last year, HP India

went retail, opening shops in Delhi and Mumbai. Not only that, the company roped in

glamor, and, with film stars inaugurating its retail outlets, it was able to increase its

reach into smaller pockets in metros and mini-metros.

alt="https://img-cdn.thepublive.com/filters:format(webp)/dq/media/post_attachments/138b07d20b49f9d6563e90d4215c5cb21eae853f60ea3989160b0fdbecf2fae0.jpg (21952 bytes)" align="right" border="0">The king of the printer market is the

inkjet. HP inkjets grew by 55 percent in 1997-98, to cross the one-lakh mark. HP India

sold 1,15,000 units of DeskJets last year, with ‘DeskJets’ becoming synonymous

with ‘inkjets’. Laser printers sold 37,800 units, a growth of 63 percent.

Lasers, long been the rich man’s stuff, are now being accepted in the mainstream,

courtesy HP’s focus on driving the prices down.

Similarly in scanners and plotters, where the same

strategy pushed 123 percent more scanners and 37 percent more plotters as compared to the

previous year. HP India through its strategy of bringing the prices down, and pushing the

products through a well-oiled channel, has reaped benefits in this area.

Overall, last year has been very eventful for HP India.

Not only in the sense of gaining share in the PC bazaar and literally making the

peripheral market its fiefdom, but also obtaining the CII-Exim Award for Excellence (HP

India is the first company to ever win the coveted felicitation). But the flip side is

that HP does not yet figure anywhere in the boom segments of Home and SOHO. And that will

be this year’s acid test.