- The transition to Windows 10 allowed HP Inc. increase revenue from the sale of computers in the corporate segment by 7 percent, this factor will continue in the second half of the year
- The shortage of Intel processors hit the sales of inexpensive laptops the hardest, but the company is now more interested in promoting expensive products.
- Direct shortage of Intel processors may continue until the end of July or September, both options are possible
- China remains for HP Inc. a strategically important market, but she is in no hurry to succumb to the general panic - especially since revenue growth in it slowed down even before the aggravation of relations with the United States
Regularly vying with Lenovo for the status of the world's largest PC maker, HP Inc. this week reported on the results of the second fiscal quarter, which ended on April 30 in the manufacturer's calendar. It has long been known that the personal computer market is declining, and even in the laptop segment there is no longer the same dynamics, although the majority of new computers sold today have reason to be called mobile. Taiwanese laptop manufacturers have firmly established themselves in the niche of gaming devices, and giants like HP Inc. it remains to collect dividends from the corporate segment.
If the revenue of HP Inc. managed to maintain at the level of the second quarter of the previous fiscal year, net profit declined markedly. Moreover, over the past couple of years, the growth rate of HP Inc. almost approached zero, and if it were not for active measures to reduce costs, the current level of profit would not have been achieved. Like many market players, HP Inc. Against the backdrop of a decrease in sales, it tries to maintain a profit margin by releasing more expensive products, but this type of business does not provide a significant “margin of safety”, and it is not so easy to maneuver in this regard.
Migration to Windows 10 feeds all year round
In real terms, sales volumes of the Personal Systems division for the year decreased by one percent, in the notebook segment there was a decrease of 5%, the revenue in the latter case decreased by 1%. But in the desktop segment, both sales volumes (by 6%) and revenue (by 7%) increased. In other words, revenue grew at a faster rate, which indicates a shift in the sales structure towards more expensive computers. In general, revenue from the sale of finished PCs and laptops in the corporate sector grew by 7%, but the consumer segment showed a decrease of 9%. The company tends to explain the latter trend as “general weakness in demand”, but the rise in the commercial segment is explained by the ongoing migration to Windows 10. In the second half of the year, the latter factor will remain in effect, but in 2020 HP Inc. he advises not to rely on him anymore.
According to the results of the first quarter of the calendar year 2019, HP Inc. occupied about 23,2% of the PC market, which is 0,5 percentage points higher than the same period last year. Gartner specialists have already noted this dynamics and made an important explanation: the shortage of Intel processors helped to strengthen their positions for large PC manufacturers, as they received Intel preferences when fulfilling orders for the supply of components compared to small market players.
It doesn't matter how long the shortage of processors lasts, what matters is which
In general, in their assessments of the impact of the shortage of Intel processors on their own business, representatives of HP Inc. draw unambiguous conclusions. On the one hand, they confirm that the shortage of processors has limited sales of low-cost laptops in the past quarter. They also believe that the deficit will remain until the end of the third fiscal quarter, which in the company's calendar will last until July. On the other hand, representatives of HP Inc. in their forecasts for the duration of the shortage, they tend to refer to the forecasts of Intel itself, which speaks of the persistence of problems with the availability of processors until the end of the third calendar quarter - that is, until September inclusive.
One can recall how two other component vendors, who recently published their quarterly reports, commented on the shortage of Intel processors. AMD, for example, said that the existing “local distortions” did not open up significant opportunities for capturing the market, but third-party analytical agencies note that AMD has strengthened its position in the laptop segment over the past year, and the jump in the low-cost laptop sector was especially sharp. under the control of Google Chrome OS, since Intel could not provide the required quantities of their processors from their manufacturers.
NVIDIA spoke about the shortage of Intel processors in the context of the early stages of the expansion of Max-Q gaming laptops, which cannot be classified as cheap, if only because of the use of discrete graphics. The head of the company believes that most of the problems with the availability of Intel processors are already behind, but in the quarterly report on the 10-K form, the corresponding risk extends its effect until the end of the second fiscal quarter - again, somewhere until the end of July.
Thus, even if the shortage of Intel processors continues until the middle of the year or early autumn, HP Inc. it will suffer less than smaller producers. The scale of production has always allowed it to negotiate with Intel on special terms, and the desire to produce more expensive computers makes it less dependent on the supply of cheap processors, which are most limited in the current conditions.
Not by China alone
All attempts by the experts present at the quarterly reporting conference to find out the attitude of HP Inc. to trade sanctions and the tensions between the US and China were met with cold judgment. First, in the Asia-Pacific region as a whole, HP Inc. receives no more than 22% of total revenue. Although the company considers China to be a strategically important market for itself, a slowdown in revenue growth has been observed there recently, and Japan, for example, comes out ahead in this indicator. On the other hand, HP Inc. gaming products are popular in China, and the market in this country has good growth potential.
Secondly, the corporation's management urges not to rush to conclusions about the impact of US sanctions on Chinese-made goods. The company can organize the assembly of its computers for the US market in many other countries, since this type of activity is not highly concentrated in China, like some other manufacturers. It is not yet possible to say with certainty which list of goods will be subject to increased duties, when they will come into effect, and whether they will be introduced at all. HP Inc. prefers to take action based on the results of specific steps of the American authorities and has not yet undertaken to assess their impact on their own business.
Source: 3dnews.ru