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PC Wars

PC Wars. Hewlett-Packard vs. Dell Computer. All images used under US Fair Use for non-profit, educational purposes. Hewlett-Packard. Founded by Bill Hewlett and Dave Packard in 1938 In 1999, Carly Fiorina takes over as CEO In 2002, HP merges with Compaq Computer

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PC Wars

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  1. PC Wars Hewlett-Packard vs. Dell Computer All images used under US Fair Use for non-profit, educational purposes

  2. Hewlett-Packard Founded by Bill Hewlett and Dave Packard in 1938 In 1999, Carly Fiorina takes over as CEO In 2002, HP merges with Compaq Computer In 2005, Carly Fiorina is abruptly fired and replaced by Mark Hurd

  3. Carly Fiorina Fiorina was known for having a “silver tongue and iron will” Her strengths were being a charismatic leader When she took over HP the company had no major breakthrough product since 1984 As soon as she took over she began looking for a big deal to change the company’s image

  4. Compaq Merger In 2002, she engineered the biggest merger in tech history when HP merged with Compaq Computer, thus changing the path of Hewlett-Packard

  5. Results of the Merger Success Failure Walter Hewlett waged a bitter campaign against it with 24% of the vote Personal PC sales remained unprofitable The enterprise-systems group remained in the red, one of the main reasons behind the merger • Employees united behind their new leader • One of the fastest and most effective mergers in history • Personal PC sales rose by 4.5%

  6. HP’s Board Reacts • With HP losing to Dell in personal PC sales and falling behind IBM with corporate clients • When Fiorina refused to cede some day-to-day control the board abruptly fired her in February 2005 • Mark Hurd, a no-nonsense operations oriented leader, was appointed her successor • He turned the company around and in 2006 took over as the largest tech company in the world from IBM who held the spot for four decades

  7. Dell Computer Dell Computer was founded in 1984 in a dorm room by Michael Dell The company focused around the idea that computer systems could be sold cheaper and directly to customers without having to go through large stores or chains Michael Dell is still the acting CEO of the company today

  8. Dell Takes Advantage • While HP was dealing with the Compaq merger complications, Dell regained its No. 1 world ranking as the largest PC maker • Dell also realized HP always dominated the printer market and used this opportunity to partner with Lexmark the No. 2 printer to strike at HP • Dell focused on wooing HP and Compaq customers that were apprehensive about the logistics of the merger and how they would be affected

  9. Dell Changes Strategy • In 1997, Dell made a strategic decision to expand beyond PC’s into the market for servers and enterprise-systems • The problem with these ambitious goals was that Dell would be forced to change assembling goods based on technology developed by others to spending billions developing it themselves • Dell also outsourced its’ customer service creating complaints and issues with their major consumers • In 2002, Dell also decided to open up kiosks in major malls across the country to allow consumers to test out their computers they usually just bought online

  10. Expansion of Retail Stores Hewlett-Packard Dell Computers Michael Dell tried to rectify the situation in 2007 agreeing to a deal with Best Buy to sell in their 900 stores However, while Dell had entered 10,000 retail outlets HP had entered 110,000 Was Dell too late to act? • The company concluded they were in the wrong battlefield and instead of fighting with Dell online they should expand to retail stores, where their competitors had no presence • In 2006, HP spent 55% of its marketing budget in merchandising and store promotions

  11. Current Situation

  12. Current CEO’s Michael Dell of Dell Computing and Meg Whitman of Hewlett-Packard

  13. PC vs. Mac Apple transforms the computer industry

  14. Largest PC Makers as of 2013 Lenovo – 15.7% of market HP – 15.5% of market Dell – 10.5% of market From market-research firm Gartner Inc. 

  15. Adjustments • The computer industry stuck in a rut because of competition from tablets and smartphones • Hewlett-Packard is slimming down to flex its muscle in big data, cloud computing, and security • Dell is working to change their image from a hardware manufacturer to a software and services company • Dell is building its business more vertically, transitioning into a full service business solutions provider taking on clients that are too small for IBM and Cisco

  16. Discussion- Case • Which type of leader is more effective a charismatic or operational? • Was the change in CEO what changed the profitability of HP or was it the economy turning around? • Could Dell have taken better advantage of HP’s struggles following the Compaq merger? What about how they handled the expansion into retail stores?

  17. Discussion- Current Situation • What impact has the emergence of Apple had on the PC industry? • How can companies like HP and Dell combat the rise of tablets that are taking their market share? • Where does the future of these companies lie?

  18. Any Questions? Thank you!

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