HP Is Killing Dell With a Smile

Hewlett-Packard (NYSE: HPQ  ) is crushing archrival Dell (Nasdaq: DELL  ) with a nonchalant smile. The enterprise-class storage and servers division reported a 13% sequential sales boost to $4.2 billion, and the personal systems group saw 17% higher sales over last quarter. By way of comparison, Dell's best-performing division -- small and medium business systems -- reported a 5% sequential gain last week.

The conclusion is obvious: HP is following Intel's (Nasdaq: INTC  ) lead to serious regrowth, while Dell is falling behind and losing market share. Dell's deal with Perot Systems is starting to look smart, because that business plugs into the services sector -- and Dell might need a Plan B if it can't sell systems anymore.

The trend couldn't come at a better time for HP -- or a worse one for Dell. In case you forgot, Microsoft (Nasdaq: MSFT  ) released Windows 7 a few weeks ago, and it looks ready to fuel a massive rebound in corporate IT spending -- starting in the next couple of quarters. Not a good time to show weakness, but great timing for flexing your biceps in front of prospective customers.

And with the purchase of 3Com (Nasdaq: COMS  ) , HP moves into the networking arena. I can't help but think that Cisco Systems (Nasdaq: CSCO  ) broke the camel's back here when the networking giant overstepped its boundaries with a line of Cisco-branded server-class computers. HP is paying back in kind, and I'm just waiting for IBM (NYSE: IBM  ) to do the same.

HP is kicking butt and taking names, thanks to a disciplined version of the time-honored strategy of growth by acquisition. Where's the next big buyout in technology -- and will HP be the buyer? Share your thoughts in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Dell, Intel, and Microsoft are Motley Fool Inside Value picks. Motley Fool Options has recommended buying puts on Intel and a diagonal call on Microsoft. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (6) | Recommend This Article (12)

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  • Report this Comment On November 25, 2009, at 11:23 AM, scidan wrote:

    I'm amazed that people still buy computers from Dell or HP or any other big name brand for that matter. With all the boutique style of custom computer manufacturers, people are in a better position to get a truly good system. I purchased mine from ACS Custom Creations and it came with the same standard 1 year warranty as the other guys computers. Good thing I never needed it. It was much faster than what I had tested at the big retail stores and looked much cooler too, especially since they let me pick my own case. And, the system came with only top of the line components, not just parts that fit into the profit margins. Too bad all the boutiques don't just join forces into one company and take down these bloated companies trying to make shareholders happy. Anyways, look around for a new computer but stay away from systems in the stores.

  • Report this Comment On November 26, 2009, at 6:54 PM, sharktrade wrote:

    Asus is better than HP and DELL ...

  • Report this Comment On November 27, 2009, at 5:03 PM, nwjh wrote:

    I've been happy with Apple for years, and at the risk of starting another Apple-PC flame war, rather prefer it. Link in to the story on innovation (1 Stock to Rule the Recession), and while Apple remains a niche player in computing based on volume, it has a big influence via its innovations.

    In the PC world, there are advantages to boutique systems (they can be very good, in my experience), and to big-name systems (you've got someone to blame and can usually find them).

    As always, caveat emptor and due diligence are important buying modes.

  • Report this Comment On November 27, 2009, at 5:27 PM, nwjh wrote:

    I've been happy with Apple for years, and at the risk of starting another Apple-PC flame war, rather prefer it. Link in to the story on innovation (1 Stock to Rule the Recession), and while Apple remains a niche player in computing based on volume, it has a big influence via its innovations.

    In the PC world, there are advantages to boutique systems (they can be very good, in my experience), and to big-name systems (you've got someone to blame and can usually find them).

    As always, caveat emptor and due diligence are important buying modes.

  • Report this Comment On November 28, 2009, at 3:15 AM, korz1 wrote:

    You misunderstand... this is about *servers* not desktops or laptops. Neither of the companies you've mentioned make servers: neither ASUS nor Apple. Enterprise-class means business servers.

    When it comes to desktops, I build my own, with the best parts and they cost me roughly what I would pay for an HP or Dell or Lenovo with middle-of-the-road components. I can get twice the power for the same price.

    But at work, I buy both Dell and HP servers. I must say I'm leaning towards buying more HP because lately, we've been much happier with the HP's than the Dells, on several levels.

  • Report this Comment On December 01, 2009, at 9:37 AM, MallRon wrote:

    Korz1 it is not only on business servers, HP made growth on Personal System Group PSG which represents desktops notebooks workstations and monitors, however replying to the previous comments, you cannot compare white box system to HP, maybe you can get a white box system for home use, however when dealing with a 1000 user company the 1 year support a white box offers is not good at all, they will be looking at 3 years at least, and can you guarantee any testing on those systems? HP guaratee certain hours of testing before any release not to mention the Temperature, dust, humidity tests to make sure they can fully function in certain conditions. There is a reason why HP is number 1

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