HEWLETT-PACKARD Co is drawing inspiration from Milan designers to maintain its lead over Dell Inc in the personal-computer market.
Instead of building workhorse machines in utilitarian cases, Hewlett-Packard strives to create sleeker, more stylish PCs by looking to the fabrics and shapes in Italy's furniture showrooms, said Stacy Wolff, director of notebook-computer design.
"The notebooks are a lot slimmer and a lot nicer than the big bulky boxes people lugged around three years ago," said William Fearnley Jr, an analyst with FTN Midwest Securities Corp in Boston. "Hewlett-Packard's designs have helped them."
Demand for PCs, which account for about a third of Hewlett- Packard's US$104.3 billion in annual sales, may help the Palo Alto, California-based company post an 8.1-percent gain in third-quarter revenue when it reports later today, according to the average estimate of 21 analysts in a Bloomberg News survey.
Chief Executive Officer Mark Hurd cut about 15,000 jobs, or 10 percent of the total, to save US$1.9 billion a year. He combined data centers to save another US$1 billion and aims to cut real estate expenses by one-third by 2010. Those reductions allowed Hewlett-Packard to match or beat Dell's PC prices while improving designs.
Putting form and function before component costs mirrors a strategy by Apple Inc Chief Executive Officer Steve Jobs, whose aluminum-clad desktops and notebooks have propelled the company to its highest PC market share in at least a decade.
In January, the company introduced the MacBook Air, which is less than 2.5 centimeters thick. Hewlett-Packard and Dell announced their own ultra-thin notebooks after that.
Hewlett-Packard had 19 percent of worldwide PC shipments in the second quarter, compared with Dell's 16 percent, according to technology researcher IDC. Hewlett-Packard has increased its share every quarter since taking the lead from Dell in 2006. Apple had 3.6 percent, IDC said.
Hurd is counting on PC sales and international demand to overcome a slowdown in technology spending in the United States. In May, Hewlett-Packard said sales might rise as much as 8 percent to US$27.4 billion in the quarter that ended July 31, and profit to as much as 77 cents a share from 66 cents a year earlier.
The company declined to comment on earnings ahead of the report, said spokeswoman Emma McCulloch.
Hewlett-Packard fell 99 cents to US$44.60 in New York Stock Exchange composite trading yesterday. The shares have declined 12 percent this year, compared with a less than 1-percent gain at Texas-based Dell.
Third-quarter PC sales at Hewlett-Packard may jump 13 percent to US$10 billion, according to Maynard Um, an analyst at UBS AG in New York. Revenue from laptops has risen more than 30 percent in each of the past six quarters, Um wrote in an August 4 report.
Hewlett-Packard introduced 16 notebooks in June, describing them as "frameless," "elegant," and "satin, reflective." The company investigated Italian tapestries and patterns, and then used a printing technology that stamps designs onto the computer's case rather than painting them on, creating a more durable finish, Wolff said.
The focus on design is a break from the past, when the cost of parts and materials would have dictated the product's look, he said.