Why there is still hope for HP’s PC and printing business
Key takeaways from Hewlett-Packard’s 4Q14 earnings (Part 9 of 11)
New technology provides hope for HP’s sustainability
The printing business, just like the PC market, has been badly impacted by the ever increasing adoption of smart phones and tablets. HP’s (HPQ) long standing expertise in this space and its laser jet device launches have helped the company to an extent. HP’s Printer segment delivers healthy margins and cash that HP Inc. currently needs to operate and function in the long run.
If HP’s business performs well, it will benefit the PowerShares QQQ Trust ETF (QQQ) that has significant exposure to the company.
Tablets and smartphones do not offer platforms for content creation
With the arrival of cloud computing, consumers have shown a preference towards tablets for their ease of use as an information consumption device. However, these devices are not practical and feasible for content creation, which is the core requirement of most business users. Cloud computing is garnering greater importance as a medium of mission-critical business applications.
New desktops and notebooks offer endpoints that are reliable and optimized for the cloud experience. As the above chart shows, there has been a 6% decline in PC sales in 2014. At this rate, global PC sales are equivalent to 300 million units, which is still nearly twice the number of tablets sold annually.
Commercial PC sales have reported an increase
According to Channelnomics, Google Inc.’s (GOOG) (GOOGL) Chromebooks, manufactured by Samsung (SSNLF), Lenovo, Hewlett-Packard and Acer, topped 2.1 million unit sales in 2013. Google expects sales to reach 11 million unit sales annually by 2019.
Adoption of new desktops and notebooks has increased as Chromebooks now offer touch capabilities, higher speeds, better power consumption, and greater reliability. So, it’s not only the demise of Microsoft (MSFT) XP that has initiated increase in Chromebook sales. According to market research firm NPD, commercial PC sales in the entire North America channel increased 14.5% in 2013.
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