Strategising for two

Hewlett-Packard chalks out a common strategy for India and China.

A new strategy specifically for the high-growth markets of India and China "" that is what computer-to-printer company Hewlett-Packard (HP) is working on.

To begin with, HP is all set to come up with products to suit the environment and climatic conditions in these countries, which present similar markets.

"Both India and China are witnessing good growth in GDPs as also personal incomes. And with growing population in both the countries the potential is immense,"says Adrian Koch, senior vice president, Hewlett-Packard Asia Pacific.

Besides, the company is aggressively looking at introducing high-end imaging and printing sets in Asia Pacific countries.

While HP scanners have potential use in strategic departments like immigration, police and crime detection, the printers are expected to overtake offset printing in a big way, with substantial cost savings.

The company is also introducing a new range in notebooks "" both in the consumer and business segments "" in line with Indian tastes and environment.

Again, in India, it is increasingly looking at spreading its wings to tier II and tier III cities, focusing first on its range of personal computers, followed by laptops.

For this, HP has been organising road shows and awareness campaigns. For instance, it had its Smart Office roadshow in Indore in March this year to promote its product and solution portfolio.

These roadshows also provide a platform for small and medium businesses in each city to be part of a broad range of informative presentations, demos and discussions.

Cities like Nasik, Coimbatore, Jaipur, Ludhiana, Guwahati, Mysore, Vizag and Surat are the other potential cities for such roadshows.

"We have done some rethinking for the Indian market and our current strategy is to focus on the tier II and tier III cities. Getting a good geographical spread is what HP needs now,"says Koch.

Besides consumer awareness, it will lay equal focus on retail network, service centres and providing a range of solutions in these cities.

Cracking the price-sensitive market in these cities would be a challenge for HP since its desktop products are in the higher price bracket.

Koch, however, feels that people's purchasing powers have gone up and HP products will sell because of quality and longer life cycles. He is clear HP will not bring down prices.

"I would say HP personal computers are competitively priced. Besides, we are not in the game of promising customers a PC for Rs 10,000 or so," he says.

Government and bank policies on computer loans and schemes with retailers will help HP get a better market presence.

Like rival brands IBM, HCL and Dell, HP is also focusing on institutional sales in metros and smaller cities. According to the company, HP's advantage on this front is that it is a complete solution provider.

In portables, HP is introducing a new range of notebooks in both the consumer and business segments. And according to Koch, mobility is what will govern HP's strategy as more customers want to go wireless.

According to IDC figures, shipment of notebooks in Asia Pacific (excluding Japan) are expected to grow over 20 per cent on a year-on-year basis between 2006-08.

IDC also suggests that HP is already number one having grown over 220 per cent in 2005 over 2004, followed by Acer, Dell and Toshiba at 206, 93 and 92 per cent respectively (figures for Lenovo not available). Koch, however, accepts there is a scope for price erosion in this segment across the industry.

According to IDC figures for the last quarter (Q4) of 2005 there was 25 per cent growth in the PC market over 2004 in China. And HP's growth was close to 43 per cent. In portables, while the industry grew by 52 per cent during this period, HP witnessed a growth of over 90 per cent.

For India, while the PC market grew by 19 per cent in Q4, 2005 HP grew at 70 per cent, and in portables while the market grew by 169 per cent, HP grew by 221 per cent.

However, despite the potential of the market and rising purchasing powers in these countries, local as also international players are resorting to increased price undercutting and offering free add-ons.

The question is whether HP will be able to maintain its leadership position in this intensely competitive scenario.

(Adrian Koch met BS on the sidelines of HP's Asia Pacific press conference in Seoul. The trip was sponsored by HP)