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.