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Tuesday, May 23, 2006

Computer Business News: Dell and HP Switch Places

Previously, the personal computer business could be easily explained. Dell was the low-cost discount company with great potential growth, and Hewlett-Packard was a giant in the industry that experienced a decreased following because of its high prices.

The past year has seen computer business Dell and HP switch places. HP has increased strength with a new leader and an increased share price, whereas Dell has been scrutinized for a failure to turn a profit and decreased future vision.

Last week Dell announced the first real signs of how bad business has become when it announced an 18 percent decrease in profit. Although this was not more than what was expected, spokespeople from computer business Dell admitted finally that its poor performance could be the result of its failure to respond appropriately to increased competition in the industry. This announcement coupled with the company’s decision to start using AMD chips in some of its corporate servers were signs that the company was perhaps losing some support from major companies such as Intel and even regular customers. Many experts feel that Dell will eventually turn to using AMD processors in some of its PC products.

Dell’s long-term strategy has been very unclear due to its somewhat erratic behavior lately. Recently, the computer business bought Alienware in a surprise move that makes no clear sense given the fact that this company operates at the opposite end of the industry. Many feel that Dell needs to focus on creating a clear plan that addresses problematic issues with its strategies rather than continuing to seemingly ignore them altogether.

Other industry experts feel that the computer business could definitely return to its previous growth, but have to make some drastic changes to once again take a place in the market as an innovator. Using AMD chips is an attempt to do that, and so are some of the company moves recently announced, but it will take some time before results are tangible. Despite its struggles recently, Dell still is the world leader in the world of computer business although its lead is decreasing. Still, HP is becoming more efficient and is in many cases able to match Dell’s prices.

Blogged By: Joshua Feinberg