When Todd Bradley was appointed to lead Hewlett-Packard’s $28bn personal computer division in 2005, the conventional wisdom was that PCs were a rapidly commoditising business that held little potential for innovation.

Bruising competition from Dell, HP’s biggest PC rival, and three difficult years spent trying to manage the integration of Compaq, the PC maker HP bought for $19bn in 2002, had dented morale and left the group with slumping margins and slowing sales growth. Bradley, a gruff, no-nonsense manager said: ‘I didn’t fundamentally believe the rhetoric that was in the marketplace about PC commoditisation’, he says. ‘I was pretty confident that, with awesome people, awesome technology focused on turning that technology into innovation that matters to customers, that we could reset the marketplace.’

In the spring of 2006, HP launched an advertising campaign called ‘The Computer is Personal Again’ featuring celebrities demonstrating how they used their HP computers to manage their digital lives. The campaign, which featured artists including Jerry Seinfeld, the comedian, and Jay-Z, the rap star, drew rave reviews and helped kick-start a sales revival.

‘We were laser-focused on taking a leadership position from a product and a thought perspective, and that campaign was really the rallying point’, Mr Bradley says.

HP built on the success of its ad campaign by unveiling new designs for its PCs. The designs, which feature a distinctive ‘piano-black’ finish, were meant to bring a sense of ‘timeless elegance’ to the often dull world of the personal computer, according to Mr Chahil. Taken together, the results have been impressive: last year, HP overtook Dell as the world’s biggest PC maker by sales. The group’s operating margin 3 a vital measure of profitability 3 has jumped from an anaemic 3.9 per cent to 5.8 per cent.

But not all of HP’s PC revival can be attributed to its successful ad campaign or improved design, according to Richard Gardner, an analyst at Citigroup. Even before Mr Bradley arrived on the scene, HP had embarked on a revamp of its PC supply chain. Jim Burns, the former head of HP’s supply chain operations and now chief of investor relations, developed a system that allowed HP to outsource its notebook manufacturing to Taiwan while retaining internal control over procurement. By keeping procurement in-house, HP was able to get better prices on components.

QUESTIONS

1. Critically evaluate what is happening in the PC market.

2. Based on the HP scenario, how would you compare the impact of marketing or technology on the PC market?

3. Carry out your own further research to consider that question in relation to other technology-based products.