HP and Google Keep Cozying Up

As Hewlett-Packard's (NYSE: HPQ  ) PC business continues its decline, the company hopes Google (NASDAQ: GOOGL  ) can bring some coolness back to its brand on the consumer side -- and hopefully some solid demand, too.

HP needs Google
Though HP's unit shipments are up both worldwide and in the U.S. in the third quarter of 2013 from the year-ago quarter, the company's personal-systems business has seen pricing pressure in a tough environment for PCs; the company's personal systems revenue is down 11% from the year-ago quarter. Though segment's enterprise clients continue to hold up fairly well, with commercial revenue declining just 3%, its consumer segment was hit hard, down 22% from the year-ago quarter.

The new HP Chromebook. Source: Google Official Blog.

Recognizing the company's fallout with the consumer, HP CEO Meg Whitman recently said this past week in a meeting with analysts that the company plans to cozy up with customers. And, by the looks of it, the new HP Chromebook may be a prime example. Not only is the laptop branded with Google's colors, but a close collaboration between the two companies is clearly evident in the laptop's slogan: "Made with Google."

The relationship between the companies makes sense. As the world's second largest PC manufacturer, and given its desperate need to reinvigorate consumer demand in its personal-systems segment, HP is likely able to provide Google the low-cost hardware it needs to sell laptops in the sub-$300 Chromebook price range. Meanwhile, Google's brand can hook up HP's floundering PC business with a bit of coolness.

A solid attempt
HP's Chromebook looks solid. And that's good news considering the unfortunate state of the company's personal-systems business, which accounted for 27.5% of the company's total third-quarter revenue. Though the laptop unquestionably has entry-level specs in memory and storage, its display is impressive -- especially considering the $279 price tag. The bright IPS screen with a 176-degree viewing angle even beats Apple's 11" MacBook Air TN panel. The choice to focus on the display as a differentiator seems like a smart route.

HP Pavilion Chromebook. Source: HP website.

The new HP Chromebook differs immensely from the HP Pavilion Chromebook, which looked much like a typical HP laptop. Even more, it used the lower-quality TN panel. The new, very-Google branded HP Chromebook is a drastic departure from its clunky predecessor. HP even ditched its usual Intel processor for a Samsung Exynos 5250 GAIA processor -- maybe a decision inspired by Google. The "Made with Google" slogan certainly seems to be literal.

The move supports HP's multi-platform approach as part of its half-decade turnaround strategy. As HP cozies up with Google's Android and Chromebook products, it continues to diversify away from Microsoft and Intel.

If the new HP Chromebook is a sign of what is to come, there may be some hope for HP. Even so, it's far too early in the game to bet on the revival of a suffering business segment.

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