No Back-to-School Blues for HP

As classes begin across the country, No. 1 computer maker HP
said it has recently closed a bevy of million-dollar deals with
schools and universities

HP bragged the 40 deals, inked with school districts and universities in 22
states and two Canadian provinces, each total over $1 million. Further, the
company said two out of three, in the United States, came against bidding
from rival computer makers Dell and IBM.

“We’re experiencing solid growth in the education market beyond what we
projected prior to the merger,” Jim Milton, a senior vice president of HP
Enterprise Systems Group, said in a statement. “School districts and
colleges are looking at HP and obviously liking what they’re seeing, turning
this into a strong back-to-school season for us.”

HP said the contracts include everything from notebook and desktop PCs to
printers to wireless local area networks.

With computers increasingly ubiquitous in classrooms, the education market
is an attractive target for computer makers, since much of it offers the
stability of government financing. IDC estimated that U.S. public schools
alone would spend nearly $2.5 billion on computer hardware in the 2005/2006
academic year.

The education industry’s splurge on computer equipment could make up for a
persistent sluggishness in overall IT spending, particularly spending on
computer hardware. After solid double-digit growth during the boom years of
1999 and 2000, spending on computers and peripheral equipment plunged 20
percent in 2001, according to Giga Information Group. The researcher expects
spending will continue to fall, albeit only incrementally, before rebounding
in 2003.

Gartner Group reported that second-quarter PC shipments dropped slightly to
29.9 million from 30 million shipments in the same period of 2001. The
decline was more notable compared to first quarter, when the industry showed
signs of recovery with tk million shipments.

According to a recent research report by Deutsche Bank analysts George
Elling and Steven Grossblatt, PC sales are unlikely to increase greatly in
the second half of the year, as the key enterprise market remains cautious
with its IT budgets.

On top of a stagnant PC market, HP is dealing with fierce competition from
Dell, which continues to steal overall market share and threaten HP’s
industry leadership. Based on the second quarter, HP remained the top PC
maker, but its market share dropped to 15.5 percent from 18.3 percent in
2001. Dell’s market share climbed to 14.9 percent from 13.1 percent over the
same period.

News Around the Web