HP Outlines Strategy For Personal Systems Group

The PC market is clearly the priority for HP. PSG officials touted the forthcoming new version of the HP Media Center PC, which integrates live television along with digital music, video and photographs. The popular model was released last fall and demand quickly outpaced supply during the holiday season.

Duane Zitzner, executive vice president of PSG, says the PC market was essentially down to two major players: HP and Dell. Zitzner said that HP's PC business grew faster than Dell's in the last quarter. "We're extremely pleased coming off Q1. The last three quarters, we've continued to show improvement in the business," Zitzner says. "We've realized tremendous cost savings by bringing these two great companies together in this space."

HP's PSG saw 2 percent sequential growth in the last quarter with $5.1 billion and a $33 million profit. The unit had been suffering losses for a number of years, according to PSG officials. One of the keys for PSG's recent performance, Zitzner said, was aggressive pricing to match Dell and other competitors. "We plan to continue to price aggressively. We priced aggressively [last quarter] and our margins went up," Zitzner says.

PSG officials also promoted a soon-to-be-unveiled new line of mobile workstations, as well as recently released iPaq Pocket PCs and tablet PC model, emphasizing HP's growing commitment to wireless and mobile technology. Jim McDonnell, senior vice president of marketing for PSG, says the company expects the tablet PC model to be a winner in Europe, where it was recently released, after getting good traction in the U.S. market. McDonnell also highlighted the tablet PC as key differentiator between HP and Dell. "We're driving innovation in this industry," he says. "We're not Dell, and we don't plan to be Dell."

In addition to new technology, Zitzner says the channel was going to be an important asset for the PSG business. "The channel is very important for us and we're doing much work in this space to help re-engineer the channel through PartnerOne [HP's new partner program]," Zitzner says. "This program rewards channel partners for demand generation and it's working extremely well."

HP executives didn't say how much PartnerOne and channel partners had contributed to the PSG's performance, but they did stress that the company was happy with the progress PartnerOne is making. "Overall commercial business [which includes channel sales] helped boost the PSG's 2 percent growth," McDonnell says. "It's early but we're beginning to get good uptake and good reaction."