HP to focus on software and services this year

Consumers are looking at upgrades of product lines where the payback time is short. (AP)

Technnology major Hewlett Packard (HP) plans to increase focus on the services and software business this year as product sales declined in 2009.

The company managed to increase market share last year in spite of a slowdown in sales. This was mainly through driving investments and the local team to focus on local markets and solutions.

John Hoonhout, Managing Director at HP Middle East, is positive about the firm's prospects in the region and said customers are looking at IT infrastructure and investments. They are open to matured technologies to bring down operating costs.


What are the growth areas for HP in 2010?

Looking back at 2009, the product business declined, services showed a year-on-year increase and the software business showed solid growth. In the Middle East, the market as a whole declined in the first two quarters of last year but our market share increased. This means in a smaller pool of the market we were able to capture a larger share. For HP, that is a good sign of market coverage.

Product revenues were down on a y-o-y basis across SMB, enterprise and consumer segments.

How did you manage to increase your market share in such difficult market conditions?

Product, price points and engaging in the right opportunity to gain a fair market share were all part of the strategy. In the blade product business, HP held a 60 per cent market share across three quarters last year and in the industry standard product survey we had 45 per cent share for five quarters. HP has either held or grown its market share, which is a good sign.

PC manufacturers globally faced a shipments decline. How did you hold up in this area?

It's a mixed bag as the server technology units shipped were low on a y-o-y basis. Even analyst figures from IDC stated the decline. In the consumer space, the average unit price was declining with actual unit sales slowing down.

This price decline was because of the high penetration of netbooks. In previous years, the average price was between $800 (Dh2,938) to $1000 for a notebook. With the netbook the price level came down to $400.

How do you plan to get back on track in the personal computer business?

Buying activity has started showing some positive signs on both the consumer and corporate levels. The second half of 2009 showed movement and we are expecting this to continue this year and into 2011.

The Windows 7 launch is another factor that contributed to sales.

At the corporate level, where do you see investments happening?

It varies, as it depends on the industry segment. There is pressure on the service provider to continue to be competitive. On the other front, technology updates have to happen, as business gets compelling.

Consumers are looking at upgrades of product lines where the payback time is short. In old equipment they are paying for the maintenance, while the new comes with a warranty.

You have mentioned the relevance of services for HP. What will be the main focus?

The key focus is data centre transformation, which is helping customers manage and transform environments for better business outcome. Reducing operational costs and mitigating costs will be priority. Delivering service levels with the combination of adaptive infrastructure is key while looking at server technology. Storage, consolidation and virtualisation with a focus on software will help customers attain operational management.

What about managed services? Is that a big focus for HP and do you see that maturing in the Middle East?

Global clients such as P&G are managed service customers. Therefore we become "points of presence" for such customers.

Locally, the managed services market has matured but will take more time to be completely accepted.

However, CIOs are also realising that it is becoming part of core business. A manufacturing or an aviation company will need an expert to run their IT environment enabling them to focus on their core business.

Is there a focus on selling a particular type of solution to gain market share and increase sales?

It's not about working on a particular product line but providing business critical solutions. When we sell IT infrastructure, part of it will be mission critical services.

Even when while installing software, it's not about loading a CD – there are processes involved. It's not about selling a licence but a solution with best practices.

 

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