Editorial: Two becomes one

Editorial: Two becomes one

Big Blue's decision to sell its PC business to Chinese manufacturer, Lenovo, at the end of last year was an indication of just how difficult it is to generate profits out of making and selling computers these days. But just in case anybody forgot all about that deal while relaxing on the beach over the Christmas break, news out of HP last week should serve as a timely reminder.

While the decision to combine its PC and printer divisions stops a long way short of a sell-off, there was something about the HP announcement that smacked of hiding a little secret. And that secret, if it can be called such a thing, is that big sales don't always translate into big profits. HP might be the second largest PC manufacturer in the world but the return it makes on those huge sales is comparatively puny.

For its fourth fiscal quarter, which ended on October 31, HP announced global PC revenues of $US6.5 billion with an operating profit of $US78 million.

For the same three-month period, its imaging and printing group amassed operating profits of $US1.1 billion from identical revenues. While selling printers will never be as cool as Apple's iPod revolution, they seem to be doing a wonderful job of tidying up HP's numbers.

The timing of the HP announcement, coming as it did just days before analysts at IDC and Gartner totted up PC sales for the year, also served to deflect attentions away from another disappointment. Recent times have seen HP swapping PC sector leadership with archrival Dell, with the months running up to Christmas traditionally a period of strong performance for HP. It might trail Dell's sales figures for most of the year but the Christmas consumer rush has normally been enough to see HP top of the tree by the year's end.

That trend seems to have stopped (for now at least) with Dell shipping 8.8 million PCs in the final calendar quarter compared to HP's 8.2 million. From the final quarter of 2003 to the same period last year, IDC estimated Dell grew twice as fast as HP.

Locally, there's no news yet on whether the Australian HP business will undergo a similar restructure but it seems fair to assume that it will happen sooner or later. As a channel partner, it should only serve to make life a little simpler by reducing the number of contacts needed to source different products.

But one rung down the ladder in HP distribution land, there has been a significant change in personnel following the news that Dicker Data has parted company with its general manager, Angela Coronica.

As seems to be the way these days, neither party was very forthcoming when asked to shed some light on why she left. But the wording of the statement released by Dicker Data suggested that a new face in a well established team had led to some internal issues.

Whatever the reasons behind the announcement, the nature of the IT channel in Australia suggests Coronica will resurface sooner rather than later.

Brian Corrigan is Editor of ARN. Reach him at

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