Hewlett-Packard and Dell, the world’s two largest computer manufacturers, are reporting that their business has taken a hit from a slowdown in consumer sales in the first few months of the year.
According to The New York Times, companies like HP and Dell are vulnerable to changes in consumer spending because of the fragile economy. But while consumers are hesitating to make big purchases, tablet computers are soaring in popularity, which some analysts believe is partly to blame for the drop in PC sales. The current state of the economy and an overall lack in PC innovation is also deterring potential buyers.
Léo Apotheker, the HP CEO, said in a conference call with analysts, “The PC market continues to be bifurcated,” adding that “even though our consumer PC expectations had been cautious, the steepness of our Q2 decline is greater than what we had anticipated.” Sales of HP PCs in the quarter ending April 30 fell 5 percent, to $9.4 billion. Although there was a 13 percent increase in PC sales to businesses, it was greatly outweighed by a 23 percent decline in sales to consumers.
Similarly, for Dell, sales to businesses are helping to offset the decline in the consumer division. Dell CFO Brian Gladden said that the consumer market is even weaker than the company had anticipated for the quarter. Cconsumer sales, however, make up only 20 percent of Dell’s total market, which Gladden called “a dynamic that is really good for us.”
But some analysts aren’t very optimistic about the future. According to Rodman & Renshaw analyst Ashok Kumar, “The consumer market is very weak and that situation is not going to improve.”