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Thursday, October 12, 2006

Lewhovo? (HPQ)(DELL)

By William Trent, CFA of Stock Market Beat

Despite the boardroom spy scandal, Hewlett Packard (HPQ) has had an easy time of late both in the PC market and the stock market. The troubles at DELL (DELL) have been widely reported. But the third big player in the market has largely gone unnoticed since IBM sold its PC division to China’s Lenovo Group.

Any large merger can be expected to have its rough patches. However, when the byproduct of the merger is to remove what is perhaps the best-known brand in the business there can be further issues:
Lenovo Earns a Mixed Report Card from VARs

Despite some recent strides to engage the channel, Lenovo is still receiving mixed reviews from VARs as the PC vendor prepares to battle titans Dell and Hewlett-Packard.The Raleigh, N.C.- based company has earned some points with the channel, especially on price, but many resellers remain troubled by the vendors lack of name recognition among end-users, especially in the Small and Medium Business, where it had hoped its low-cost 3000 series would play well against Dell and HP.

Most believe it will take some time for Lenovo to establish itself as a world-class solution within the channel and separate itself from IBM. Still, several VARs said the wanted to company to keep the IBM name since it still resonates with SMB and enterprises customers.

“You still get a sense that they are stumbling through the woods,” Brain G. Deeley, the manger of Graymar Business Solutions in Timonium, Md., told Channel Insider.

With competition like this it sort of makes you wonder how DELL is doing so poorly.

The author may hold a position in the securities discussed. A current list of the author's holdings is available here.

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