Hewlett Packard is a leading brand of laptops, desktops, and peripherals. The company has experienced faster growth since its separation from HPE. However, the company’s sales were affected negatively during the pandemic and the worldwide lockdowns that followed. HP is the second-largest global PC brand after Lenovo. It is also the largest PC brand in the US which is its home market and also accounts for the largest part of its net revenue. In 2020, while HP’s revenue from notebooks grew, that from desktop PCs fell. The company’s net revenue in 2020 also fell mainly because of the drop in demand due to the pandemic during the first quarter of 2020. HP’s printing revenue also fell in 2020 as the sales of supplies remained lower than the previous year. Overall, while HP’s business still looks in a robust position, the company’s printing business is facing some significant long-term challenges. The competitive pressure from Lenovo and Dell is also growing and the company may need to focus more on research and development as well as marketing. 

This is a swot analysis of HP highlighting the strengths, weaknesses, opportunities, and threats before the company in 2021.

Strengths :-

Brand image :-

HP has maintained a strong brand image as a maker of computing and printing products. It has advanced a lot in recent years and since its separation from HPE. While the company’s image has continued to strengthen, driven by the quality of its products, the company has consistently invested in customer experience to retain the trust of its customers. HP has remained one of the most trusted brands of PCs, printers and peripherals. The company also invests heavily in product quality as well as research and development to maintain demand and popularity. The demand and popularity of HP products are very high in the global market. Another important factor that has helped sustain its strong image globally is its focus on sustainability. Due to the heavy focus of the brand on environment and sustainability, its image among customers has grown stronger.

Industry leader in computing and printing :-

HP is a well-known industry leader in the computing and printing industry sectors. Apart from being a leading brand of PCs and laptops, it is also one of the largest PC brands. It is among the global leaders, with one of the biggest market shares globally in the PC segment. According to Gartner, HP and Lenovo jointly shared the top spot as the largest PC vendor during the second quarter of 2020, driven by strong growth of HP during the quarter.  The two vendors together accounted for around half of the global PC shipments during the second quarter of 2020. HP has retained its lead in the printer industry too. Its focus on quality and innovation has continued to drive impressive sales of HP printers. 

Largest PC brand in the US :-

HP continues to remain the largest PC brand in the United States. The four largest brands in the US PC market during the second quarter of 2020 were HP, Dell, Lenovo and Apple. HP held the largest share in the US market during the quarter followed by Dell. While HP held around 33% share in the US PC market, Dell held around 26% share. The mobile PC segment in the US experienced impressive growth during the second quarter of 2020 but there was also a decline in the sales of desktop PCs. HP shipped around 5 million PC units during the quarter in the US market which was more than a million higher than its closest rival Dell.

Personal systems are the largest business reporting segment of HP that accounted for around 69% of the company’s net revenue in 2020. This group includes notebooks, desktops, workstations, and other related products. The United States market accounted for around 35.6% of HP’s net revenue during fiscal 2020, a decline of 1.8% (mainly due to the decline in demand as a large number of businesses remained closed and workers stayed at home during the pandemic). However, the US market is among the largest markets for PCs, notebooks, and related products and HP has maintained its leadership position there.

Large range of products and services :-

HP’s product range is well diversified. The company continues to invest in product innovation to cater to the computing and printing needs of its diverse segments of customers with higher effectiveness. Apart from individual customers, the company also sells to small and medium businesses, large enterprises, government customers, and customers in the health and education sectors. While desktop PCs’ demand has declined in recent years, the demand for laptops and tablets has sustained. Particularly during the pandemic, demand for laptops strengthened, driven by growing remote working trends. HP has introduced many products that can cater to the computing needs of various classes of customers, including individual customers and corporate customers. HP sells products in various price segments, from high-performance devices for affordable prices to premium products and gaming PCs. Apart from that, the company also sells printing and imaging products as well as peripherals. The product range of HP is further complemented by the products and services offered by HPE.

The personal systems business segment of HP has grouped its products into the following categories for the purpose of reporting:


This group includes the consumer notebooks, commercial notebooks, mobile workstations, and commercial mobility devices made and sold by HP globally. It is also the largest product segment of HP accounting for the largest part of the company’s net revenue (around 45.6% in 2020).


This group includes the consumer desktops, commercial desktops, thin clients, and retail POS systems made and sold by HP. 


This group includes desktop workstations and accessories. 


Under this group, HP has included consumer and commercial services as well as other personal systems capabilities.

Apart from that, the other significant business segment of HP is the printing segment. In this segment, the largest source of HP’s revenue is the supplies that accounted for around 20.5% of the company’s net revenue during fiscal 2020. The printing revenue of HP also includes the revenue generated from the sales of consumer and commercial hardware. Overall, while the printing revenue of HP declined in fiscal 2020, it still accounted for more than 30% of the company’s net revenue during the latest fiscal.

Successful business model :-

HP’s business model has endured successfully over time. The company has benefited from the separation of HP and HPE since each of the two units can now focus on its individual business area. The separation took place in 2015, and HP is now focused on its core business areas that include PCs, Mobile PCs, and printing products.  Apart from gaining higher agility and flexibility, HP’s growth momentum has also accelerated as HP successfully aligns its business model with its growth objectives. Despite the impact of coronavirus, HP could retain sales and revenue to a large extent, which shows its business model’s strength. The company’s revenue from notebooks grew this year despite the impact of the pandemic. With time, the company’s focus on quality has only grown stronger, and its focus on research and development has also grown.

Strong free cash flow :-

In fiscal 2020, the company generated $4.3 billion in net cash provided by operating activities and $3.9 billion of free cash flow. The free cash flow of HP includes net cash provided by operating activities of $4.3 billion adjusted for net investments in leases of $152 million and property, plants, and equipment of $577 million. HP repurchased approximately 166 million common shares in the open market using $3.1 billion of cash. Including the $997 million used to pay cash dividends, HP returned 105% of its free cash flow to shareholders. 

According to HP’s fourth quarter and full year results, its cash flow grew by 359% in the fourth quarter of 2020 compared to the previous year, rising to $1.8 billion from $0.4 billion. While total free cash flow of HP for the fiscal 2020 decreased 2% compared to the previous year, it is still impressive and that is a positive sign.

Higher Focus on Sustainability:

HP is leading the way in terms of sustainability and adopting sustainable business practices. Its higher focus on sustainability aims to increase its operating model’s efficiency and grow the positive impact of the business in the environment. It follows sustainable practices in all the aspects of its business, including operations, supply chain, sales, marketing, and other areas. From planting one million trees to recycling and growing the use of renewable energy in its business operations, HP is leading in terms of sustainability in several areas. According to HP’s sustainability report for 2019, its total electricity use included 43% renewable energy. It also used 25,560 tonnes of postconsumer recycled content plastic in its products. The company’s sustainable impact strategy is built on three important pillars: the planet, people, and community.

Research and Development:

Both the computing and printer industries are faced with myriad challenges. While HP’s laptop sales sustained well in 2020, its printing business faces a bigger set of challenges. Moreover, growing competitive pressure, changing market dynamics, and consumer behavior also necessitate a higher focus on innovation. To drive faster innovation organization-wide, the company has established HP labs, a part of its corporate investments segment. As of fiscal 2020, the company invested $1,478 million in research and development. It also holds more than 27,000 patents. While growing digitalization industrywide and changing consumers’ lifestyles affect HP’s business, the competitive pressure from leading rivals like Lenovo, Dell, and Apple is also growing. As. the cloud industry is also making the situation more challenging for HP, innovation is the only solid path to faster growth. HP’s focus on innovation has helped the company retain its leadership position in the US market.

Weaknesses :- 

Decline in demand for computing products :-

The demand for computing products and mainly desktops has been steadily declining, driven by mobile computing and cloud technology growth. Another major factor that gave a sharp blow to the PC industry in 2020 was the pandemic. According to Gartner, PC demand fell sharply in the first quarter of 2020. As per Gartner’s research, PC demand was down 12.3% in the first quarter of 2020 compared to the first quarter of the previous fiscal year due to the pandemic. However, while the number of shipments fell by more than 1.5 million, HP’s market share in the global PC market remained relatively unchanged from the first quarter of 2019.  HP shipped only 11.11 million units in the first quarter of 2020 compared to 12.6 million during the same period in 2019. During the first quarter of 2020, the sales of desktop PCs faced the sharpest decline since 2013. However, for the three consecutive quarters preceding the 1st quarter of 2020, HP had enjoyed growth in PC shipments. However, the first quarter of 2020 was especially challenging for the company when its PC shipments declined by 12.1%. HP experienced double-digit declines in PC shipments in all the key market regions. The Asia Pacific and Japan markets were hit very hard, where the company experienced the worst declines in desktop PC sales.

Growing Long term Debt :-

HP’s long term debt has grown in 2020. According to HP’s annual report for 2020, the company’s total debt grew to $6.2 billion in 2020 compared to $5.1 billion in 2019. The long-term debt of the company includes a short-term debt of $674 million and a long-term debt of $5,543 million. While the short term debt of the company increased by $0.3 billion, the long term debt of the company grew by $0.8 billion. HP’s total debt increased mainly due to the issuance of unsecured senior debt in June 2020 in principal amount of $3.0 billion, partially offset by the payment of $1.6 billion for the cash tender offer (“Tender Offer”) and the redemption of existing notes maturing in 2020 and 2021 (HP Annual Report, 2020).

Declining printing revenue:-

The printing revenue of the company has been steadily declining over the last three years. HP’s net printing revenue in 2018 stood at $20.8 billion and fell to $20.07 billion in 2019 and again to $17.6 billion in 2020. The revenue from supplies that constitute the largest portion of HP’s printing revenue has also been falling continuously since 2018. In 2018, its revenue from supplies was $13.58 billion and fell to $11.6 billion in 2020.  In 2020, the printing net revenue of HP declined by 12.1% compared to the previous fiscal. Revenue from commercial printing hardware also declined in 2020, while the revenue from consumer hardware remained flat in 2020 compared to the previous fiscal.

Opportunities :-

Product Innovation :-

The computing needs of consumers and corporate customers are evolving, and while the demand for Desktop PCs has taken a hit due to the rise in the demand for mobile computing and the pandemic. While the demand for notebooks also declined during the pandemic, the impact was less on notebooks than desktop PCs. More and more people were working remotely during the pandemic, which has led to growth in notebooks’ sales. However, as internet technology has proliferated, and the cloud industry is gaining ground as a game-changer, both individual and corporate customers’ computing needs have grown. The focus is now more on efficiency. HP will continue to gain by investing in product innovation. In 2020, the company spent $1.48 billion on research and development. Focusing on product innovation helps the company maintain sales and demand. Apart from that, it also helps reduce competitive pressure.

Digital Marketing :-

Another key area where HP must focus its efforts is in marketing. It is the digital marketing era, and investing in digital marketing will help grow demand, generate sales, and maintain stronger customer relationships. Lenovo and Dell are the closest rivals of the company. While Lenovo has successfully retained the number one position as the largest PC brand globally, Dell has experienced a continuous surge in demand over the past several quarters. 

Digital marketing can help the company grow brand awareness stronger as well as beat the competitive pressure in key markets. The other PC brands are also investing in marketing and promotions to maintain their growth momentum. Moreover, since the focus has shifted to mobile computing and cloud technology, the company must focus more on marketing to maintain the demand for its PC and laptop as well as printing products.

3d printing and other latest technologies :-

There are several emerging areas where HP has opportunities of business expansion and faster growth. It is already a leader in printing and focusing on 3d printing which is a fast growing area, will help HP grow its business and revenue. Apart from it, HP is a technology brand and it needs to focus on latest and emerging technologies to avoid letting competition ruin its sales and profits. It must also invest in areas like AI and machine learning which will help it expand its portfolio as well as grow its profits. Gaming is also a hti area where HP’s focus has sharpened in recent years and it could also help the company grow the sales of its notebook and desktop PCs.

Threats :-

Heavy competitive pressure :-

The competitive pressure on HP has continued to intensify. The two leading competitors of HP are Lenovo and Dell. While Lenovo took over as the global leader in desktop and notebook PCs some years ago, Dell has also continued to strengthen its position in the PC segment over the recent years. As its competitors continue to gain ground, there is pressure on the company to maintain its growth momentum. Both of its leading rivals, Lenovo and Dell have continued to cement their position in the PC industry. While HP must continue to grow its investment in innovation, it also needs to focus more on marketing. Apart from the two leading rivals including Lenovo and Dell, other competing players like Apple, Acer, and Asus are also investing more in innovation to grow their sales of PCs and laptops. However, while HP is while an industry-leading player in the computing industry, it is still facing a formidable challenge from the competing players.

Regulatory pressures:

The tech industry is facing heavier government scrutiny and legal oversight in recent years. Big tech in the US has especially been facing heavier regulatory challenges.  Apart from the leading tech players like Apple and Google, there is also immense pressure on the hardware brands like HP to focus on customer concerns like data security and consumer privacy. However, HP has maintained the image of an ethical and responsible technology business. It has been able to avoid any major legal tussles until now. Growing regulation of the tech industry is still a major challenge for companies like HP that may experience reduced sales and growth in operating expenses due to it.

Fast changing market dynamics and consumer behavior:

Changing market dynamics and consumer behavior are also going to pose a challenge before HP’s business. As the PC industry and global PC markets are evolving, companies are faced with some major questions. Mobile computing has challenged the sales of desktop PCs. Apart from that, the growth of cloud technology has also affected the sales of computers and printers since people do not always need to carry a PC in order to carry on minor tasks. Most of the daily tasks can be easily performed using a smartphone. The pandemic has also brought lasting changes to consumer behavior and a larger number of consumers have switched to digital channels for shopping and entertainment. However, that has mostly benefited the smartphone industry and online sellers like Amazon. Due to these factors, while HP will need to invest more in research and development, it will also need to focus more on marketing and creating products that suit the needs of their customers’ digital lifestyles better. 

A few last words about HP and its future:

While there are several challenges before HP, including falling sales of desktops and growing challenges before its printer business, the company has sustained its performance level through a higher focus on innovation. HP’s financial performance in 2020 was impressive even in the face of the pandemic that had caused demand to fall and growth to slow in the first quarter of 2020. The pandemic has also brought some lasting changes to the industry environment and consumer behavior that can affect HP’s business. People are now increasingly relying on digital technology for a large variety of tasks, including shopping and entertainment. These changes are here to stay, and with growing remote working trends, the sales of notebooks have sustained, but the demand for desktop PCs was hit. Particularly, the demand fell heavily in the Asia Pacific and Japan. However, HP has been able to handle some of the challenges quite well. Except that its revenue from printing has continued to decline, its personal systems business has performed well. HP will need to focus on the latest technologies like AI and ML (Machine Learning) to create new channels of growth. It continues to lead in the US market, where it has a strong lead over its nearest rivals. However, Lenovo is the largest brand globally, and the competitive pressure from Dell is also mounting. So, the future may be full of challenges for HP, but with its strong cash flow and investment in research and development, it could achieve accelerated growth momentum in the post-pandemic period.