In the twilight of his life, one of the founders of Hewlett-Packard, David Packard, crafted a management philosophy in his influential work, “The HP Way,” which fundamentally emphasized the importance of treating employees with kindness and respectThis philosophy has formed the bedrock of HP’s operational principles for decadesHowever, in this era marked by fierce competition and mounting pressure on performance, even the venerated principles of putting people first have been forced to yield to the harsh realities of cost control.

In fact, as early as 2022, HP announced plans to cut 4,000 to 6,000 jobs over three years, a move that was primarily aimed at saving costsThis decision highlights not only the growing pressure to improve performance but also indicates a significant shift in the corporate landscape—a notable restructuring in its research and development departments and the involvement of senior leadership symbolize HP’s ongoing transformation strategy

Once a symbol of stability in the global PC market, HP's relevance and presence have been steadily dwindling in recent years.

The last time HP captured headlines was in August 2023, when British billionaire Mike Lynch tragically died in a boating accident, which also unearthed an $8.8 billion fraud caseBeneath the sensationalism of this narrative lies the reality of HP's declining market position, a trend mirrored in the overall industry dynamics.

The announcement of the layoffs coincided with the release of HP's financial report for the fourth quarter and the entire fiscal year of 2022, which painted an alarming pictureThe report revealed that the net revenue for the quarter was $14.8 billion, an 11.2% decrease year-on-year, with a reported net loss of $2 million—a staggering shift from profit to lossMoreover, adjusted net profit, excluding specific accounting standards, plummeted to $900 million, a decline of 21% compared to the previous year.

In the years that followed the layoff announcement, HP’s profitability continued to stagnate

Since the third quarter of 2022, the company's operating revenue experienced a continuous decline, reflecting broader trends within the PC industryFor example, the third quarter of fiscal year 2024 reported revenues of $13.5 billion, a slight improvement of 2.4% compared to the previous year, but the net profit for that quarter still contracted by 16% year-on-year.

The financial turmoil faced by HP resonates with the chilling trends observed across the entire global PC marketAccording to IDC, from the first quarter of 2022 to the second half of 2023, global shipments of traditional PCs—including desktops, laptops, and workstations—have consistently declinedThis downturn can be attributed to numerous factors: the global economic slump triggered by the pandemic, the slowing pace of innovation in the PC market, the encroachment of mobile devices substituting certain PC functions, and escalating competition within the industry.

However, HP is not the only major player grappling with these challenges

Lenovo reported significant declines in its smart device revenues, down 20.77% in fiscal year 2023 and 9.67% in fiscal year 2024. For the first half of 2023, the company’s net profit attributable to shareholders had plummeted by 57.2%, reaching just 285 million yuanLenovo attributed these declines to the complexities and uncertainties in the global economic landscape, which have adversely affected profitability across its operational sectors.

Similarly, Dell, which has generally fared well in profitability in recent years, has also encountered revenue growth challenges since 2022. Even Intel, the dominant player in the semiconductor industry and a primary supplier of PC processors, is rumored to be contemplating a buyout, with reports suggesting negotiations with Qualcomm regarding a potential acquisition.

Against this backdrop of a cooling industry, layoffs and strategic transformation appear to be the unified response among these giants to alleviate performance pressures

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Dell planned a 5% reduction in its workforce in 2023, which amounted to about 13,000 workers, but later confirmed that a new round of layoffs could cut as many as 12,500 positions, paralleling HP’s actions to streamline operations through market team restructuring.

Furthermore, Lenovo disclosed that it had reduced its global workforce by 7,500 employees compared to the previous year's fiscal report, with concerns about industry challenges leading to $55 million in severance and related costs.

Amid these drastic corporate maneuvers, a rise in domestic competition is further complicating the landscape for HPThe Chinese market, a critical component of HP’s global business strategy, has seen rapid growth since the company’s entry in 1985. For nearly 40 years, HP thrived in China as one of its fastest-growing subsidiariesHowever, with the tides of industrial reform sweeping through China, HP now faces mounting pressure from both established and emergent domestic brands.

Recently, during the announcement of its financial outlook for the third quarter of the fiscal year 2024, HP disclosed its struggles in China, noting a dip in sales for products such as PCs and printers

In the printing sector, competitors like Canon and Tsinghua Tongfang, as well as new entries like Razer, are clawing away at HP's market shareIn its core PC segment, which constitutes over 60% of its revenue, the pressure on HP is particularly pronounced.

Lenovo, deeply rooted in the domestic market, wields a competitive edge with a more substantial Chinese identity compared to HP, allowing the former to maintain a leading position in domestic salesMeanwhile, rising homegrown brands like Huawei are rapidly intensifying their market presenceAs international brands falter, national brands are on the rise, presenting a unique challenge for HP, which is caught between two fronts.

Data reveals that the market share of international brands has plummeted from 22.4% in the second quarter of 2023 to 15.7% in the third quarter of 2024. A report by Canalys stated that in the second quarter of 2024, Lenovo topped the charts with 3.071 million shipments and a market share of 34%. In stark contrast, HP trailed behind Huawei with just 817,000 units, capturing a mere 9% market share.

Moreover, emerging brands like Xiaomi and Mechanical Revolution have also introduced high-performance laptops equipped with self-developed chips, attracting considerable attention from consumers and indicating robust growth statistics

In this evolving landscape, companies like Huawei and Xiaomi, which primarily focus on mobile technology, hold a distinct advantage due to their successful forays into related product ecosystems, propelling them into competitive positions against traditional PC brands with standout advertising slogans like “Breaking Barriers” and “Opening All-Scene Smart Living.”

Despite criticisms regarding the software and hardware quality of devices from brands like Huawei and Xiaomi, it is irrefutable that new players are striving to reshape domestic market dynamicsAdditionally, HP’s declining performance in China may also be linked to deteriorating trust among consumersFactors such as geopolitical tensions and the persistent discourse on the “decoupling” of American tech companies have added to the uncertaintiesIn August, rumors circulated that HP was seeking to relocate over half of its PC production from China to countries like Thailand.

The clock is ticking for HP as it navigates these turbulent waters.

The emergence of AI technology has inevitably reshaped the contours of competition across various sectors, including PCs

While AI offers a promising avenue for growth, HP’s entry into this space comes with mixed expectationsEven as AI applications become ubiquitous in technology products, the timeline for PC manufacturers to integrate AI capabilities has been slower compared to their smartphone counterparts.

In September 2023, Intel unveiled the concept of the AI PC, launching the industry’s first acceleration program tailored for these devicesShortly thereafter, Lenovo showcased its AI PC offerings in October and followed up with the release of several models, including the Lenovo Legion and Lenovo Xiaoxin, by January 2024, while also introducing commercial AI PCs targeted at government and enterprise clients in AprilDell has also kept pace with AI development, launching several new products equipped with AI processors in December 2022 and February 2023.

HP entered the AI PC fray in May 2024, presenting a range of products—including high-end AI business notebooks for large enterprises, AI business models for small to medium-sized businesses, and new mobile workstations

However, when HP’s products hit the market, they lacked the revolutionary appeal expected by consumers when compared alongside Lenovo and Dell's offerings.

As companies enthusiastically herald AI PCs as fresh fuel to ignite industry potential, skepticism pervades discussions about their actual impact—addressing concerns regarding technological innovation, consumer usage frequency, and cost considerationsJust as HP's ambitions for AI PCs seem to provide embellishments rather than necessities, the competition remains fierce, leaving HP with limited leverage in this transformative arena.

The strategic layoffs within HP reflect a painful yet necessary step toward optimizing cost and redirecting the company’s trajectory in response to performance pressuresAs this stalwart of the PC industry seeks to evolve, it must confront the longstanding challenge of shifting gears without disturbing its massive structure