Asian PC makers Lenovo and Acer stand to benefit from the ongoing uncertainty about Hewlett Packard’s personal computer business, according to Barclays Capital, which upgraded both stocks to overweight.
“With the challenges facing HP, such as its CEO changes last week and uncertainties on its PC business (18% global market share), we see opportunities for market share gains for competitors, such as Lenovo,” the bank’s Hong Kong-based analyst, Kirk Yang wrote in a note to clients.
In mid-August, the Silicon Valley computer maker announced it was interested in selling or spinning-off its PC business, but last week the company’s chairman Ray Lane denied these plans.
Rivals have reportedly been taking market share from HP, and according to Yang it could take HP 6-7 quarters before market share losses are stabilized.
Barclays believes that HP’s problems will help Lenovo gain share in the corporate market, while Acer can gain share in the consumer market.
Andrew Milroy, Vice President, ICT Research, APAC at Frost & Sullivan also believes the lack of clarity surrounding HP’s strategy will cause large corporations to have second thoughts about doing business with “a PC manufacturer that is having doubts about being a PC manufacturer.”
In order for HP to prevent competitors from gaining market share, Rob Enderle, principal analyst at Enderle Group says it needs to become more aggressive on the pricing of its PCs.
“If they price aggressively, they could hold off market share losses but it will cost them,” Enderle noted.
Milroy adds that the tech giant also needs to make a large effort to reassure existing customers that it will maintain its focus on its PC business.