HP will fight Dell to retain top PC spot, says executive

NEW YORK: Hewlett-Packard Co. isn't going to cede its recently attained spot

as the No. 1 personal computer maker to Dell Computer Corp. without a fight,

HP's general manager for personal systems in the Americas Mike Larson said on

Friday.

Palo Alto-based HP took the top spot when it bought No. 2 personal computer

maker Compaq Computer Corp. earlier this month. The merger unseated Dell, which

gained the No. 1 PC spot last year through an aggressive price war with Compaq.

The deal's closure came after an extended, often nasty battle for shareholder

votes between HP management and Walter Hewlett, a dissident shareholder and son

of a founder. Hewlett said Compaq's PC business would weigh on HP's growth while

HP management said it needed scale to compete better.

A spokesman for Dell, which Dell has a reputation for using its efficient

business model to slash prices and win market share, said it would continue to

be aggressive.

When asked what he would do if Dell tries to recapture the No. 1 spot in the

PC market, Larson said he'll fight back. "We are not going to let Michael

Dell have this one easily and we are going to be very, very aggressive back

right at Michael Dell," Larson said during a conference call with

reporters.

That said, Larson also emphasized that HP, which has set strict targets for

revenue and earnings in the next few years as a result of its purchase of

Compaq, won't be able to turn its back on profits.

"Marketshare is a very important measure of our success in the

marketplace, however profitability and earnings per share is an even more

important measure of our success," Larson said.

Sacrificing profits to gain market share is a tactic that some PC makers have

used as the sector has become increasingly commoditized and PC prices have

dropped dramatically. No. 3 US computer maker Gateway Inc., for instance, has

said it will win share even though it is booking losses.

Duane Zitner, who is in charge of the overall personal systems business, said

that the company has decided to keep both the HP and Compaq brands for its

desktop computers so that it can retain the spots where Compaq or HP currently

dominate.

HP announced its roadmap for the new combined company earlier this week.

Zitner said that the two companies' integration plan that was created in a

"clean room" -- with a limited number of executives input -- is

turning out to be close to reality. In high-tech jargon a clean room is where

the smallest electrical circuitry is built, in which air is highly filtered to

keep the air clear of particles.

Zitner said the plan has gone well during the past few weeks as the combined

companies has begun working on the details. "The bottom line is that (the

integration team) has done such fine work that we're not seeing many variants

that would change the trajectory that we're on," Zitner said.