HP Execs Say Channel Helps It Beat Dell

Duane Zitzner, executive vice president of HP's Personal Systems Group (PSG), told financial analysts attending the company's semiannual meeting with the financial community in San Jose, Calif., that PSG's direct business grew 40 percent in the first half. Channel revenue grew 16 percent during the same period, he said.

But HP Chairman and CEO Carly Fiorina said the balance between direct and indirect is helping HP best rival Dell. "We are going to keep doing exactly what we are doing. Their numbers are their numbers and our numbers are our numbers," she said in response to a question about Dell's presence in the SMB market. "This is a place where you need to look at the facts. All of the capabilities that we bring to the SMB market--growing direct channels, a network of partners that is as broad and deep as anyone's in the industry--we have more presence in the SMB market than literally any other player."

Fiorina said HP has been growing its notebook and desktop PC business faster than Dell's for the past three quarters, while growing profitability four times faster than revenue.

The key to growth in the IT market going forward is in "unlocking horizontal growth" within organizations by leveraging the entire HP portfolio, she said. In talking about emerging horizontal opportunities, Fiorina said internal processes are going "digital, mobile, virtual and personal" and HP is better equipped than IBM to seize new market growth because "IBM is a back-office company."

In addition, Fiorina said Palo Alto, Calif.-based HP sees high-single-digit revenue growth rates for the next two to three years as well as 20 percent growth rates in earnings per share.

"Dell's business model is to distribute the products of others," she added in noting why HP should reap growth opportunities in emerging IT markets. "There is limited opportunity for profit leverage in that model. Dell is not a market maker; they follow into a market."

HP shares were up 34 cents, or 1.6 percent, to $22 per share in Tuesday's trading.