How HP Views the Hardware Market

In the first nine months of fiscal 2017, HP (HPQ) saw revenue growth of 12% YoY (year-over-year) in its Personal Systems segment with an operating margin of 8%. HP has experienced growth in all product categories, driven by a wide portfolio of products. HP is currently the leading PC (personal computer) player worldwide. The company has increased its share in the PC market from ~20% in 3Q16 to ~23% at the end of 3Q17.

HP has now outperformed the PC market for the 14th consecutive quarter. Management believes there’s more room to grow market share by identifying growth pockets such as the premium gaming segment. HP had a negligible presence in the gaming market in 2015. However, since the gaming space is one of the fastest growing segments, HP has invested in this high margin product. According to DigiTimes, more than 4.5 million gaming laptops were sold last year.

Contrary to expectations, HP has grown its Printing segment revenue in the last two quarters. HP’s CEO (chief executive officer) Dion Weisler stated, “Supplies revenue stabilized during our third fiscal quarter, a quarter earlier than we said it would. The team did an excellent job managing the transitions in our supply sales model and our focus on the 4 box model drivers is really working for us.”

HP expects the total available market (or TAM) to be ~$300 billion for its core businesses. It has estimated TAM at $220 billion and $40 billion for its high-growth segments and future opportunities, respectively.