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What Dented HP’s Revenues in the Personal Systems Segment?

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HP’s position in the PC market

According to market research firm IDC (International Data Corporation), HP (HPQ) had the second largest market share of 23.6% in the global PC (personal computers) market at the end of the fourth quarter of 2018. HPQ competes with China’s (MCHI) (FXI) Lenovo (LNVGY), Dell (DVMT), Apple, and Acer Group in the PC market.

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HP’s PC declining demand

HP’s personal systems segment has been growing in the double digits for the past eight quarters due to growth in personal computers. However, the company could not post double-digit growth in the first quarter of fiscal 2019 due to economic uncertainties. In the first quarter, the personal systems segment revenue increased just 2.3% YoY to ~$9.7 billion as the demand for personal computers is declining amid the rising demand for smartphones. While commercial net revenue increased 3% in the quarter, consumer net revenue increased 1% YoY. Excluding currency, revenue growth was 3% YoY in the first quarter. Total units sold also declined 3% YoY in Q1 2019 due to a 1% decline in notebook shipments and an 8% decline in desktop shipments.

Innovations

Despite sluggish revenues, the company expects to deliver innovative and premium hardware products and services in the near term to grow revenues in this segment. In the first quarter, the company introduced a wide range of education-centric Chromebooks for the next generation of leaders. The company has also partnered with PayPal (PYPL) to launch a new point-of-sale solution for small and medium-sized retailers and hospitality owners.

In the Consumer Electronics Show (or CES) in January 2019, HP announced the launch of the world’s first 15-inch laptop called Spectre x360 and the world’s first Quantum Dot on Glass display. HP also showcased the world’s first AMD-based Chromebook, which can benefit consumers with cloud applications. HP also unveiled OMEN 15, the world’s first 65-inch gaming display with the integrated sound bar for gamers.

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