HP PC & Printer Sales Plunge Now The Company Goes After Online Customers

Consumers are turning off HP PC’s and printers in favour of brands such as Chinese brand Lenovo who has captured over 12% of the Australian PC market in just 18 months, now the Company wants to increase direct sales over the Internet.

Globally demand for HP PC’s and printers is plummeting resulting in net income falling by 38%.

Revenue in the company’s personal systems business fell 9.9% in the second quarter ending April 30 from a year earlier, while revenue declined 15.8% in the printing division.

In Australia HP is bleeding losses.

In 2015 they reported that losses had ballooned out to $229 million for its fourth straight year in the red.

Desperate for volume sales HP Australia has also moved to expand their direct online sales operation, in an effort to cut out the margins and rebates that they have to pay retailers.

The Company recently hired a former Toshiba Australia executive to head up their direct sell operation a move that some retailers have told ChannelNews that they are “not happy with”.

ChannelNews has also been told that direct sales now account for over 23% of all HP consumer PC sales in Australia. The Company is looking to expand this to 30% say insiders.

HP Australia is refusing to comment on the move.

The latest profit and loss report for the Australian operation of HP, means that the local HP PC subsidiary has lost more than half a billion dollars in in the three years prior to the 12 months ended October 31 2015.

The company last made a profit locally in 2011.

Now with Lenovo carving up the market HP has been forced to discount models in an effort to shift stock at retailers such as Harvey Norman.

The HP PC Company is, one of two created last year following the breakup of Hewlett-Packard Co.

HP’s earnings release came a day after its former sister operations, now the separate company Hewlett Packard Enterprise Co., said it would merge most of its technology services operations with those of Computer Sciences Corp.

Chief Executive Dion Weisler said on a conference call overnight that HP was now accelerating its restructuring program and that between now and the end of the year more than 3,000 jobs will be axed including many in subsidiaries like Australia.

the end of the financial year 2016, instead of over three years, as announced initially in September.

Where HP Enterprise focuses mainly on hardware and software for data centres Mr. Weisler’s company’s business is tied to the slower-growing markets for PCs and printers.

He acknowledged that demand for both products has been weak, but said the company continues to target niches where sales are growing and HP can boost its market share.

In addition, Mr. Weisler said, the company has avoided competing for sales in areas where profit margins are low, such as low-cost PCs.

“We are taking share where we choose to play,” he said. “We are also being careful about what not to sell”.