HP, Dell Post Consumer PC Revenue Growth High Into Double Digits
HP and Dell each reported quarterly consumer PC revenue growth high into double-digit percentages on sustained demand for remote work and learning connectivity tools. The two top-five computing brands indicated Thursday that year-on-year growth likely would have been even higher if not for the global chips shortage and other supply-chain disruptions that impeded order fulfillment. HP’s fiscal Q2 and Dell’s Q1 both ended April 30.
Quarterly PC revenue in HP’s consumer segment grew 72% despite “industry-wide component shortages and supply chain challenges,” said CEO Enrique Lores on a Thursday call. “Currently there is not enough supply to keep up with the robust demand.” The “resurgence” of COVID-19 in Southeast Asia “is creating additional pressures on our supply chain,” said Lores. “We expect supply constraints to continue at least through the end of 2021.” HP is “taking actions to navigate through the challenges,” enabling the company to upgrade its outlook for the second half, he said.
As HP copes with “delivering in the short term, we are equally focused on capitalizing on the attractive long-term opportunities,” said Lores. “It is clear that the world will not simply go back to the way it was prior to COVID. There has been a fundamental shift in the way people work, learn, play and create, and this shift is here to stay. The future of work and education will be more hybrid.” Recent surveys found more than 60% of employees canvassed “want flexibility in where and how they work,” he said.
In the education market, where HP is the top vendor, PC sales have more than doubled in the past year due to remote learning, yet the number of PCs per 100 students “remains in the single digits,” said Lores. “As an industry, we still have a long way to go to close this digital divide and as a company, we have a big opportunity to be part of the solution.”
The PC also has become “the entertainment center of the home, from streaming and content creation to the rise of gaming and esports,” said Lores. HP's quarterly PC revenue growth in gaming “outpaced overall consumer PC growth,” he said. “We are building on this strength to expand into attractive adjacencies, including peripherals.” HP is “on track” to close its $425 million HyperX peripherals buy in Q3 and expects the acquisition to be “accretive in year one,” he said.
Consumer revenue in Dell Technologies’ Client Computing Group was up 42% in fiscal Q1 to $3.5 billion, said the vendor. Consumer online business orders were up 58%, including a 21% increase in XPS notebook orders and Alienware notebook orders up 76%. “These results are driven by the do-anything-from-anywhere economy where technology enables connectivity and outcomes for all of us,” said Chief Operating Officer Jeff Clarke on a Thursday earnings call. “Instead of going to work, school, entertainment or shopping, it all comes to us through our PCs. That need for connectivity was demonstrated in the record demand last year and has continued into this year.”
Dell projects its total addressable market will expand to $750 billion by 2025 from $600 billion in 2019, said Clarke. More PCs per household will drive that growth, as will shorter replacement cycles with a “higher notebook mix,” he said. “Our investments are focused on making the PC more personal and intelligent,” plus delivering consumers the experience “that allows them to be connected, productive and effective no matter where they are,” he said.
Supply “has not kept up with the demand environment as we think about the need for semiconductors,” said Chief Financial Officer Tom Sweet. That’s “clearly an issue that the technology industry is dealing with,” he said. Component costs likely will be “inflationary in the second half” as the shortages persist, especially in laptop displays and memory chips, he said. Customers aren't yet adjusting their “configuration frameworks” to adapt to hikes in memory costs or components pricing, but “it’s clearly something we’re watching,” he said.