HP SWOT ANALYSIS

Abhijeet Pratap
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A SWOT ANALYSIS OF HEWLETT PACKARD (HP)

Hewlett-Packard (HP) is a multinational information technology company that operates in various segments of the tech industry. Established in 1939, HP has grown into one of the world’s leading providers of personal computing devices, printers, and imaging products. The company is renowned for its focus on innovation and has experienced significant growth and expansion over the past several years. HP’s Personal Systems segment includes a wide range of laptops, desktops, workstations, and other related products, catering to both consumer and business markets. In addition, HP’s Printing segment encompasses a diverse portfolio of printers, supplies, and imaging solutions, positioning the company as a key player in the global printing industry.

In this swot analysis of HP, we will analyze the key strengths and weaknesses of HP as well as the main challenges and opportunities before the company.

HP SWOT ANALYSIS 2024Strengths:

  • Leading PC Vendor:

HP is among the leading players in the PC sector. Apart from being a major player in the PC sector, the brand has also held a leadership position in the printing industry. The company has a strong market share in the PC market and is currently the second largest player based on the annual number of PC shipments. According to Gartner, HP held an around 22% market share in the global PC market in the fourth quarter of 2023.

  • Large product portfolio:

HP has a comprehensive product portfolio, including personal computers, laptops, printers, imaging devices, and a range of IT services. This diversity contributes to revenue stability and market presence across various technology segments. The company offers a diverse range of computing products for individuals, and businesses. Its computing products are targeted at diverse customer segments including students, professionals, developers, and businesses. The company has also introduced an attractive range of gaming laptops for the gaming community. Apart from that, the company is a leading provider of printing solutions. HP also sells a nice range of computing and gaming accessories.

  • Strong brand image:

HP has maintained a strong brand image. The company is known to operate its business ethically and responsibly throughout various geographical regions. Moreover, it is known as a customer focused company, placing a strong emphasis on innovation and customer service. HP offers a nice range of innovative computing and printing related products. The company’s popularity and brand awareness in several corners of the globe are high. Its brand image is a key driver of demand for HP products globally.

  • Global presence:

HP is a global leader in the PC and printing sectors. The company has operations in 185 countries and operates its global business through a network of thousands of channel partners. HP has a strong distribution system and uses both online and offline channels for sales and distribution. Its global distribution system enables the company to cater to the needs of a global consumer base efficiently.

  • Significant focus on innovation:

HP is a well known tech brand operating in an intensely competitive environment. The company places a significant focus on innovation to maintain its competitive edge and market share. Innovation is the leading factor driving the competitiveness of HP and its leadership position in the global PC industry. HP invests a very large sum in research and development each year to create new products and improve its existing product line. In 2022, the company invested around $1.6 billion in research and development.

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Weaknesses:

  • Revenue depends on PC and printing businesses:

One of the main weaknesses of HP is that it depends heavily on its PC and printing businesses for generating revenue. As a result, any decline in PC demand heavily affects the company’s revenue. HP faced revenue decline in both 2022 and 2023. In 2023, its net revenue declined 15% compared to the prior year mainly because of the global decline in PC demand. As PC shipments fell in 2022 and 2023, HP and other leading PC brands like Lenovo also reported decreasing revenue.

  • Heavy reliance on third party suppliers:

HP depends heavily on third party suppliers for various components and parts. The global PC supply chain has been heavily affected since the pandemic. While supply chains have slowly improved since the pandemic, the shortage of certain critical components still prevails. HP depends on third party suppliers heavily and therefore is significantly affected by supply chain disruptions and geopolitical issues.

  • Weak position in tablet market:

While HP rules in the PC and printing sectors, the company is lagging in the tablet segment. It has discontinued some of its tablet models. However, the company still makes some convertible laptop models that can also be converted to tablets. Apple, Samsung, Lenovo, Huawei and Xiaomi are currently the significant players in the tablet market. HP has a very small market share in this segment.

Opportunities:

  • Diversification and Acquisitions:

The company depends heavily on PCs and printing solutions for revenue. However, it can diversify into new areas including software business and other computing related solutions. It can also strengthen its product and services portfolio through acquisition of smaller businesses.

  • Invest in modern technologies:

Innovation must remain a central focus for HP to build stronger growth momentum. As technology has advanced, people’s computing and technology related needs have also evolved. They want computing solutions equipped with modern technologies and features for complex tasks. HP must invest in AI and Machine learning as well as other modern technologies to strengthen its competitive edge and product demand.

  • Demand for remote work solutions:

The demand for remote work solutions has remained strong since the pandemic. Companies around the world allowed their staff to work from their homes. While employees are returning to their offices, several businesses globally have chosen to let their staff work from their homes fully or partially. As a result, the demand for remote working solutions continues to remain strong.

Threats:

Market Saturation and Slow Growth:

The mature markets for PCs and printers may experience saturation, leading to slow growth. HP faces the challenge of finding new avenues for expansion and revenue generation. The company depends heavily on PC and printer sales for revenue. However, PC demand has continuously fallen for eight consecutive quarters and saw a slight recovery in the last quarter of 2023. According to Gartner, total PC shipments in 2023 were 14.8% lower compared to 2022.

Cybersecurity Concerns:

As a technology company, HP is vulnerable to cybersecurity threats. Increasing instances of cyberattacks pose risks to the company’s reputation, customer trust, and overall business operations. These attacks have continued to grow more sophisticated and as a computing giant, HP can be a significant target. HP acquired Bromium in 2019 to strengthen its cybersecurity capabilities.

Supply Chain Disruptions:

Global events, natural disasters, or geopolitical tensions can disrupt the supply chain, impacting production and distribution. HP needs to proactively manage these risks to ensure a stable supply chain. The pandemic had disrupted PC industry supply chains globally. While supply chains continued to solidify since the pandemic, the shortage of several PC parts has continued. The PC industry continues to be affected by supply chain and logistical challenges.

Price Wars and Margin Pressure:

Intense competition in the technology industry may lead to price wars and margin pressure. Maintaining profitability while offering competitive pricing is a constant challenge for HP. The competition in the PC sector has continued to intensify. All the leading players are investing heavily in innovation to maintain their competitive edge. The main competitors of HP include Lenovo, Dell and Apple. Emerging gaming PC brands are also challenging the company’s position. The intensifying competition will continue to create price and margins related pressure.

Technological Obsolescence:

Rapid technological advancements can render existing products obsolete. HP must stay ahead in innovation to avoid the risk of its products becoming outdated in the market. The company must invest in the latest technologies like AI and Machine learning to strengthen its existing capabilities. It can equip its products with modern technologies and technological solutions for differentiation. Since technological advancements are happening at a fast pace, adding new technological features to its products will help the company maintain demand and popularity.

Conclusion:

In conclusion, HP has a strong foundation with a diverse product portfolio and a well-established brand. However, the company faces challenges related to market saturation, competition, and potential disruptions. By leveraging opportunities in emerging markets, diversifying into new technologies, and addressing sustainability concerns, HP can navigate these challenges and maintain its position as a leading player in the technology industry.

HP’s strong focus on innovation is a key driver of its market leading position and global brand recognition. The company has maintained a strong competitive edge. However, it is also dealing with a large number of challenges including supply chain disruptions, decreasing PC demand, increased competition and so on.

HP must invest in the latest technologies like AI and machine learning to equip its PCs and laptops with the latest features. Investing these technologies can help the company accelerate its growth rate. HP can also diversify into new and related segments. However, acquiring smaller businesses can also help expand HP’s business.