Fiorina: HP expects PC sales boost from Windows XP
"We are hoping for and preparing for a jump in the (PC sales) category with the launch of XP," Fiorina said at a news conference during an otherwise dour meeting with financial analysts Wednesday.
The expected boost could be significant. The arrival of Windows 95 and Windows 98 sent unit growth rates for PC sales up by double digits for several months, said Pradeep Jotwani, president of HP's consumer business organization. "I certainly expect that" growth to occur again, he said, with Windows XP, the first operating system designed for home users that's based on the Windows NT and Windows 2000 code base instead of the DOS and Windows 95 code base.
But while unit sales may pick up, it's not clear whether the demand would ease the pressure squeezing PC prices. "Whether prices go up or not is a different question," Jotwani said. "We would like to see it, but we're not counting on it."
The news comes amid difficult times for the PC industry. Researcher IDC on Wednesday lowered its predictions for PC spending, projecting that the slump will last until 2003.
Windows XP is a key product for Microsoft as it tries to drive upgrade revenue and move customers to less crash-prone software. But in releasing XP, which is geared for businesses as well as home computer users, Microsoft risks stepping on the toes of the adoption of XP's predecessor, Windows 2000.
HP's PC business is at breakeven or slightly profitable, and HP won't cut prices further to compete in the price war that has erupted among Dell Computer, Compaq Computer and Gateway, Fiorina said. "We are not pricing our PC business to gain share. We will not engage in bloody price battles," she said.
In her presentation to analysts, Fiorina downplayed the importance of PCs to the company. "I would not describe the PC business as strategic in the same way printing and imaging is or the way the always-on Internet infrastructure is or the way services are," she said.
HP considers consumer PC sales a bellwether for the rest of the computing industry, Fiorina said. The drop in U.S. consumer PC sales late last year presaged a much broader computing spending slowdown, she said. HP saw the same pattern repeat itself in Europe starting in February, and it's now happening in Asia, she said.