DVD MOVIE WRITER
Richard Drew  /  AP file
Hewlett-Packard's DVD Movie Writer is one of hundreds of new products unveiled this year. The device transfers VHS or other analog tapes and creates digital copies on long-lasting DVD discs.
updated 12/17/2003 3:01:48 PM ET 2003-12-17T20:01:48

Two companies dominate the personal computer business: Dell, with 17.4 percent market share, and Hewlett-Packard with 17.1 percent. Indeed, Dell and H-P are rivals in just about every market. And while Dell is, by almost every measure, winning at every turn, Hewlett-Packard is working overtime to catch up with its younger, stronger rival.

If you want to tick off Hewlett-Packard CEO Carly Fiorina, ask her, as CNBC's Larry Kudlow did recently, if H-P can compete with fast-growing, low-cost rival Dell.

"It's not about whether how are we going to; we are,” she replied. “The interesting question is where is Dell's growth going to come from, because it's not desktop PCs."

DELL OFERS CONSUMER ELECTRONICS FOR THE HOLIDAYS
Dell via Business Wire file
Dell's LCD TV is one of several consumer electronics products the company is offering. The LCD TV functions as both a computer monitor and a display for television, video games and other multimedia applications.
Fiorina is going head-to-head with Dell in desktops as well as almost every market.

While Hewlett-Packard boasts in its corporate ad campaign that "H-P invents,” Dell spends relatively little on research and development -- just 1.1 percent of revenues. H-P is spending 4.6 percent on R&D.

But avoiding the "cutting edge" gives Dell a competitive edge, according to US Bancorp Piper Jaffray Analyst Ashok Kumar.

"I think that Dell's advantage, right from the onset, is that is process driven as opposed to product driven,” he said. “And I think that's what I would consider a sustainable advantage for Dell."

Dell applies that cookie-cutter model to every new market it enters. What began with personal computers spread to servers. Now it's offering consumer electronics, televisions and, ominously for H-P, Dell printers, targeting one of H-P's core product lines.

Hewlett-Packard finds itself in virtually every business arena as Dell, but with much higher fixed cost. A merger with Compaq has helped. But a breakdown of Hewlett-Packard today reveals the company has changed little in the last five years. The company is in many businesses, but most of the profits still come from printing.

Video: PC makers' tale of the tape Like Dell, H-P sells PCs and servers and offers services. Financing and a big printing business round out H-P's broad offerings. But in terms of profits, printing contributes 65 percent of H-P's earnings; personal computers bring in only 1 percent

Still, Silver Lake Partners venture capitalist Roger McNamee says that consumer electronics could become a bright spot for H-P.

"Dell has a massively better business model than Hewlett-Packard,” he said. “And the consumer category will not fix the issues that Hewlett has relative to its supply chain and relative to its distribution channel. That said, I think that the consumer opportunity is a lot better than is generally recognized by analysts on Wall Street and its investors."

© 2011 MSNBC Interactive

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.40%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.70%
13.70%
Cash Back Cards 17.66%
17.91%
Rewards Cards 17.05%
17.17%
Source: Bankrate.com