HP Still Building Direct Efforts

"It is fair to say our efforts in the U.S. around direct have not yet plateaued," said Carly Fiorina, chairman and CEO. "What you're seeing is that we continue to manage a combination of direct and channel partners. That gives us maximum reach and the right profitability."

HP's direct business has been more effective in the United States than in Europe, Fiorina added.

"It's fair to say that direct in Europe is moving slowly because of how customers want to buy. Our goal is not to drive customers to buy in a way they don't want to, but to respond to meet the demands on how they want to buy."

HP CFO Bob Wayman noted that the company's commercial profit margins are lagging behind margins for consumer products and that the company realizes higher average selling prices for direct sales than sales through the channel.

"On the commercial side, our direct capabilities in the U.S. are still lagging," said Wayman. "Where we go direct, the average selling price is higher than through the channel. This is an advantage of the Dell model. We need to move on it going forward."

Competitive pressures continue to erode gross margins on the commercial side, Fiorina said. One of HP's main focuses on the commercial side in the new fiscal year will be to increase commercial profit margins through direct sales and also through add-on sales, she said.

"What we clearly now have done in the last year is put a competitive [commercial] product portfolio out there with competitive pricing across the board. We are gaining share in areas like notebooks. At the same time, we have lowered our cost structure to under 10 points. The focus going forward is on gross margin and effective upselling around the fundamental product," she said.