What Impacted HP’s Revenue in Its Personal Systems Business?



Stable PC market

After a worldwide decline in the PC (personal computer) market in 2016, PC sales have stabilized this year with shipments declining marginally by 0.5% in 3Q17. The PC market is expected to rise 1.5%–2% YoY (year-over-year) in 2017. HP (HPQ) saw a PC shipment growth of 6% YoY in 3Q17. HP is the largest PC manufacturer with a share of 23%. Other top players include Lenovo (LNVGY), Dell, Apple (AAPL), and ASUS with shares of 21.6%, 16.1%, 7.3%, and 6.2%, respectively.

HP is also increasing its presence in the high-growth, high-margin PC gaming vertical. HP expects PC revenue to rise $6 billion YoY in fiscal 2017.

Pricing pressure

Similar to Hewlett Packard Enterprise (HPE), HP has also been impacted by component headwinds in fiscal 2017. SSD (solid state drive) and DRAM (dynamic random access memory) spot prices add ~$31 per unit in costs for HP. That has meant cost headwinds of ~$1 billion for HP.

According to TechRadar, the average selling price for PCs and laptops rose 30% YoY to ~480 British pounds in July and August 2017 in the United Kingdom. To offset rising prices, HP has decreased its logistics costs by 11% and increased its ASP by 3% in 2017.

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