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PC Makers

PC Makers. Sean Li, Susan Liu, Raymond Tao, Ray Szutu. Introduction. PC makers assemble and sell desktops, notebooks, workstations, and other peripherals Serves individual and enterprise / business customers. Outline. History of the industry Nature of the industry Products and customers

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PC Makers

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  1. PC Makers Sean Li, Susan Liu, Raymond Tao, Ray Szutu

  2. Introduction PC makers assemble and sell desktops, notebooks, workstations, and other peripherals Serves individual and enterprise / business customers

  3. Outline • History of the industry • Nature of the industry • Products and customers • Industry trends • Key measures • Recent developments • Individual company analysis

  4. History of the Industry • First personal computer (PC) released in 1975. • Change in competitive landscape. • Explosive growth over the past 20 years.

  5. Industry Competition • Initially, small number of manufacturers • Highly concentrated • IBM, Commodore, Apple • Different architectures and models • Incompatibility • Shift to IBM architecture • Dominates today

  6. Sales Growth since the 80’s

  7. Sales Growth Now

  8. Worldwide Sales * EMEA = Europe, Middle East, and Africa

  9. PC Market Share (2004)

  10. PC Market Share (2002)

  11. Industry Sales Components As of Nov 2004: 78% - Desktops, notebooks, and peripherals 20% - Servers and networking 2% - Workstations

  12. Industry Performance • NASDAQ Computer Index (IXCO) • Composite of all companies in computer hardware industry

  13. Performance since 2000

  14. Long-term performance

  15. Industry Statistics

  16. Nature of Industry

  17. Supply Chain

  18. PC Business Cycle • Third quarter • Back to school sales • Fourth quarter • Holiday shopping season • Thus, the 2nd half of calendar year is stronger

  19. Business Models • Big Box • Direct • White Box

  20. Big Box Strategy • Rely on retailers • To purchase assembled products for resale • Contractual relationships • Use own stores to distribute • Most common approach

  21. Direct Strategy • Avoids retail process • Sell directly to end users • Low mark-ups, savings passed to customers • JIT inventory system • Counters obsolescence • Flexibility

  22. White Box Strategy • Combination of Big Box and Direct • Have own retail distribution • Assembles PCs • Meets many niche markets • Video gamers • “Techies”

  23. Regulatory & Legal • Patents & Trademarks • Licenses • Restrictions on pollution • Restricted substances in electronics products

  24. Products • Networking Equipment • Peripherals • Handhelds & Accessories • Mass Storage Systems • Personal Computers • Servers & Mainframes • Specialized Systems • Supercomputers • Workstations & Thin Clients

  25. Customers • Business / Institutional • Individual • Or, mix of both • Also can be categorized by region • North America, EMEA, Asia, etc

  26. Industry Trends • Technological • Price / Cost • International Expansion

  27. Technological Trends • The Internet • Movement to wireless • Mobile computing • E-commerce • Slowing advancement

  28. Price / Cost

  29. International Expansion • Highly saturated US market • Rapidly developing countries • India & China • Growth rate outside of the Americas

  30. Key Measures • Profit margin • Sustainability to falling PC prices • S&P core earnings • Sales growth outside of North America • Asia and Europe • Business capital spending • Large portion of sales from businesses • Consumer Confidence Index • Valuation Ratios

  31. Recent Developments • HP & Compaq merger • Dell enters printer and scanner market • Gateway purchases E-machines • Michael Dell steps down as CEO • HP fires CEO Carly Fiorina • Apple on fire • The iPod phenomenon • IBM exits PC business

  32. HP

  33. HP History • Was founded in 1939 by Bill Hewlett and Dave Packard. • First product was an audio oscillator • First customer was Walt Disney Studio

  34. Executive Team • Carleton S. Fiorina: Chairman and Chief Executive Officer • Robert P. Wayman: Executive Vice President and Chief Financial Officer • Ann O. Baskins: Senior Vice President, General Counsel and Secretary • Gilles Bouchard: Chief Information Officer and Executive VicePresident, • Debra L. Dunn: Senior Vice President, Corporate Affairs • Jon E. Flaxman: Senior Vice President and Controller • Brian Humphries: Vice President, Investor Relations • Allison Johnson: Senior Vice President, Global Brand & Communications • Vyomesh Joshi: Executive Vice President, Imaging and Printing Group • Shane V. Robison: Executive Vice President and Chief Strategy and Technology Officer

  35. Business Segments • Personal Systems Group (PSG) • Imaging and Printing Group (IPG) • Enterprise Storage and Servers (ESS) • HP Financial Services (HPFS) • HP Services (HPS) • Software and Corporate Investments

  36. Personal Systems Group (PSG) • Commercial PCs • Consumer PCs • Workstations • Handheld Computing • Digital Entertainment

  37. Imaging and Printing Group (IPG) • Printing and Imaging Devices and Systems • Digital Imaging • Supplies

  38. Enterprise Storage and Servers (ESS) • Business Critical Servers • Industry Standard Servers • Storage

  39. HP Services (HPS) • Technology Services • Consulting and Integration services • Managed Services

  40. HP Financial Services (HPFS) • Value-added financial life cycle management services • Leasing, financing programs and asset recovery services, as well as financial asset management services for large global and enterprisecustomers. • Specialized financial services to education and government entities. • Customized alternatives

  41. Software • Provides management software solutions • Delivers comprehensive, carrier-grade platforms for developing and deploying next-generation voice • Services to network and service providers

  42. Business Strategies • Provide superior products, services and overall experiences • Deliver the best return on IT investments in the industry • Build world class cost structures • Provide customers complete IT solutions.

  43. Revenue Composition

  44. Revenue Composition

  45. Revenue Composition

  46. Operating Profit Composition

  47. Operating Profit Composition

  48. Operating Profit Composition

  49. Cost Structure

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