Why HP's Turnaround Plan Is Starting to Work
A previous version of this story referred to EMEA as Europe, Middle East and Asia. It is Europe, Middle East and Africa. TheStreet regrets this error.
NEW YORK (TheStreet) -- The fact that the PC market is continuing to shrink is no surprise to anyone. Tablets have continued to eat into consumer, and ultimately enterprise spending for some time now. However, as the market shrinks, it looks as if HP (HPQ - Get Report) is doing whatever it can to grab every last piece of the shrinking pie it can.
Research firm Gartner released its worldwide PC shipment findings for the first quarter, and found that although the PC market continued to shrink, with PC makers selling 76.6 million units, down 1.7% year-over-year, HP looks as if it's started to gain some traction. Thanks to strength in EMEA (Europe, Middle East and Africa), HP owned 16% of the market, selling 12.2 million units, up from 15.1% or 11.78 million in the year ago quarter. That's good enough for second place behind Lenovo, which continues to dominate the PC market (including -x86 tablets, but not other tablets). Lenovo had 16.9% of the market at the end of the first quarter of 2014, up from 16% at the end of the first quarter in 2013.
HP achieved its fastest shipment growth in two years, and the growth in EMEA exceeded the regional average by a wide margin, helping HP's overall position.Rounding out the top five were Dell, with 12.5% of the market, Acer with 7.3%, and Asus with 6.9% of the market, respectively. It looks as if the worldwide PC market is starting to bottom, thanks in part to support ending for Microsoft (MSFT - Get Report)Windows XP, earlier this week. "The end of XP support by Microsoft on April 8 has played a role in the easing decline of PC shipments," said Mikako Kitagawa, principal analyst at Gartner in the release. "All regions indicated a positive effect since the end of XP support stimulated the PC refresh of XP systems. Professional desktops, in particular, showed strength in the quarter. Among key countries, Japan was greatly affected by the end of XP support, registering a 35 percent year-over-year increase in PC shipments. The growth was also boosted by sales tax change. We expect the impact of XP migration worldwide to continue throughout 2014."
"While the PC market remains weak, it is showing signs of improvement compared to last year. The PC professional market generally improved in regions such as EMEA. The U.S. saw the gradual recovery of PC spending as the impact of tablets faded," Kitagawa went on to say in the press release.
Though there are pockets of strength around the world for the PC market, it's still very tough in some areas, including China, which has seen strength in recent years. The long holiday in the middle of the quarter likely affected sales in China, Gartner noted. The PC market in the U.S. looks like it may have bottomed, with shipments actually rising, albeit slowly, year over year. PC shipments rose 2.1% year-over-year to 14.1 million. Despite being a highly saturated market (99% of homes own at least one computer, with 50% having at least one notebook and desktop), the U.S. market looks to be on the rebound. Dell and Lenovo had strong growth rates in the U.S., up 13.2% and 16.8%, respectively. HP is still the dominant player in the U.S. market, owning 25% of the market, selling 3.5 million units during the quarter. Despite the optimism in the U.S. market, one computer maker isn't faring so well, according to Gartner. That would be Apple (AAPL - Get Report), which shipped 1.5 million units during the quarter, good enough for 10.8% of the market, coming in third place. Of course, the statistics don't include iPad shipments, despite factoring in tablets running on -x86 architecture using Windows 8, so it's not really an apples-to-apples (pun intended) comparison. Yet, it is worth noting that Apple lost market share year-over-year, dropping 70 basis points. The data also does not include Chromebooks, which run on Google's (GOOG) Chrome operating system.
The PC maker is rapidly changing, and with more and more players selling the same devices, it's forced some competition out of business. Sony (SNE) stopped selling PCs, continued to be tough for many vendors. Judging by these statistics, it appears that HP, under CEO Meg Whitman, is slowly, but surely, starting to turn the corner on the company's restructuring and turnaround plan. One PC at a time.
--Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia