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.
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.
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.
Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.