'Made-in-Asia' strategy propels HP to pole position in Asia

Hewlett-Packard's approach of customizing products for the Asian market allows it to leapfrog its competitors in the consumer space.

SINGAPORE--Hewlett-Packard's Made-in-Asia-for-Asia strategy has pushed the company into pole position in the Asia-Pacific and Japan for PCs and handhelds, according to a company official.

Adrian Koch, HP's Asia-Pacific senior vice-president of personal systems group, says the company is ahead of competitors such as Dell Computer and Lenovo in this part of the world. This leading market position has been sustained in the last two quarters, he noted.

"If you look into the market figures for the first quarter, we've been able to grow more than twice the market," Koch said.

Year-on-year, HP's market share grew 27 per cent for the consumer desktops and handhelds category, while the overall market only grew 11 per cent, he said, citing figures from research firm IDC.

The success of HP's ventures in Asia was the result of its Made-in-Asia-for-Asia strategy, where products are designed and made for Asian users only, he explained.

Since last year, HP has established research labs in China and Korea which employ local talent to better understand the needs of Asian customers, he added. "In the old days, it was just one roadmap for a worldwide set of products. What we have done is to take those products and see which ones fit the needs of people in Asia-Pacific."

For example, the needs of Australians are closer to those in the United States and Europe, while Chinese and Koreans, together with some countries in Southeast Asia, have similar needs, Koch said. Preferences differ again in Japan, where users want smaller form factors.

So far, the products that are sold exclusively in Asia include desktop PCs for Chinese consumers as well as smartphones that are designed and available in Korea only. "That (Korean) product represents about 70 per cent of our handheld business in Korea."

On whether HP will release a Linux-based PC in China, given the popularity of the open-source operating system in the country, Koch said: "From an operating system point of view, HP is open to what customers want. About 30 per cent of our servers already run Linux."

So, if Chinese customers want to work with Linux on their desktop PCs, HP will sell machines that run on Linux, he said.

The company's investments in China and India "have also been working well consistently," he said. Both countries are expected to contribute more than 50 per cent of HP's home PC sales in the Asia-Pacific region within the next six to 12 months.

PC buyers in the two Asian giants have become more quality and brand conscious, putting a handful of multinational companies in the leading pack, Koch said. As a result, growth in the Indian white-box market--unbranded PCs assembled by local computer shops--is beginning to flatten out even though the overall Indian PC market is growing at more than 25 per cent, he added. This has allowed companies such as HP, to grab market share from this segment, he said.

In China, HP is selling 100,000 home desktops every quarter to mostly first-time PC users in rural areas, who are forming a completely new target group for the company, Koch said. "These are the important trends that will play in our favor, and we are confident that we will grow and scale above the market," he said.

HP has also managed to grow by 30 per cent last year in Korea, a market which is growing minimally due to the economic slowdown for the last 12 months, he added.

Southeast Asia is also a region where there is room for greater growth. "Countries like Indonesia, for example, could be the next China of Southeast Asia," he said, adding that other markets with similar potential include Pakistan and Bangladesh.