Notebooks a close race for 2004

HP maintains it can consolidate its second-quarter notebook sales lead -- gained last year for the first time in nine years -- despite Toshiba's win in the third quarter.

Sylvia Mills-Vasas, product manager for commercial notebooks and tablet PCs at HP, said there was 'only a few thousand units' separating the top four vendors.

'Realistically, the number one position is up for grabs. Any of the top four could win it. No vendor can afford to be complacent,' she said.

She said six to nine months of 'aggressive' strategies and promotions had netted HP the top notebook spot in the second quarter with 22.3 percent market share reported by IDC.

It was the first time HP had taken the lead in that market for nine years, she said.

However, HP dropped back to 19.1 percent in the third quarter, letting rival Toshiba slip past with 21.6 percent. 'I think the key thing is that the dynamics of the market have changed quite a bit,' Mills-Vasas said.

She denied that HP's second-quarter lead could have been due to channel-stuffing, pointing to successful promotions and the strength of HP's tablet PC sales. IDC has confirmed that tablet PCs were included in its quarterly notebook sales figures.

'Tablet PCs have actually exceeded our ultra-portable notebooks sales and certainly picked up since [November 2002],' she said.

Mills-Vasas said she couldn't quote actual figures but tablet PCs had not cannibalised the notebook market but grown it.

HP's NX9010 and NX7010 promotion -- bundling iPAQ 2210 handhelds with certain notebook models -- had been so successful late last year that HP was extending to the end of January.

'It's a little hard to compare, but [comparing it] with [other] new product launches in the past, it's probably double [the sales] we would expect,' Mills-Vasas said.

She would not be drawn on promotions and notebook releases for February and March but maintained HP's channel would play an 'extremely important' role.

Ralph Stadus, MD at Toshiba Australia, suggested to CRN just before Christmas that HP might have 'artificially' gained its lead in the second quarter of 2003.

'I think it's just that HP had artificially gained the lead the previous quarter, pushing a whole lot of product into the channel. And frankly, they had overdone it,' he said.

However, Imraan Ali, market analyst for personal computers at IDC, said the reason for HP's second quarter success was its strength in Toshiba's traditional speciality – SMBs.

'It was not channel-stuffing. It was more that [HP's] commercial business was very strong,' he said.

Ali pointed out that HP also had two brands -- Presario and Pavilion -- in the retail space. Presario and Pavilion together represented 29.4 percent of the company's notebook sales in the second quarter but 45 percent in the third quarter.

'The home market is where they're doing very well but in Q2 they did a lot of business with SMBs, and probably the other thing was government, which held steady,' he said.

Meanwhile, former leader Toshiba had rolled out some strong sales initiatives in Q3, including new products and discounts.

'They launched a completely new line-up in the volume space, with the Satellite A10. They were extremely aggressive, selling strongly through retail, competing strongly with HP's Evo 9XXX series,' Ali said.

Toshiba's 'aggressive reseller initiative in August' helped drive business hard as had its seven successful promotions and a $300 retail price cut, he said.

'Q3 was a very strong quarter for Toshiba in the SMB space,' said Ali.