Nov. 6 (Bloomberg) -- Laptop-computer designers at Hewlett- Packard Co. need special electronic security badges to get into their office in Houston. There, black fabric shields prototypes from latch to hinge.

The secrecy is unprecedented at Hewlett-Packard, better known for engineering personal computers' insides than outsides.

The company learned that ``the value happens on the surface level of these products,'' says Stacy Wolff, director of the notebook-PC design center. ``It's a cultural shift.''

Focusing on design may help drive a 6 percent jump in Hewlett-Packard's PC sales next year to $44.6 billion, according to Sanford C. Bernstein & Co., even amid the threat of global recession. As cash-strapped PC buyers become more selective, Wolff is delivering lighter, more stylish laptops at prices that beat or match those of Dell Inc. With little to separate the machines' performance, design may be the tipping point.

``They're not charging a premium for design -- they're just doing great design,'' said Roger Kay, president of researcher Endpoint Technologies Associates Inc. in Wayland, Massachusetts. ``Of all the PC vendors, they're probably the best-positioned heading into what may be a challenging holiday season.''

Even with that edge, Hewlett-Packard may not be immune to a global slowdown in PC sales. Industrywide shipments may drop 2.4 percent next year to 299.8 million machines, the first decline since 2001, according to UBS AG. New designs won't necessarily prevent consumers from making do with their existing machines, Kay said.

Stock Performance

Hewlett-Packard dropped $2.61, or 7.2 percent, to $33.64 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 33 percent this year.

PCs account for about a third of revenue at Palo Alto, California-based Hewlett-Packard. At Dell, they contribute 60 percent. At both, notebooks represent about half of computer orders, with prices starting at less than $500.

Hewlett-Packard's strategy reflects a wider focus on design in the computer industry, led by Apple Inc.'s Steve Jobs. Cupertino, California-based Apple was among the first with colored computers, aluminum finishes, and ultra-thin models such as the MacBook Air.

PCs should be an ``object of desire and possession,'' said Todd Bradley, who was recruited as Hewlett-Packard's PC chief by Chief Executive Officer Mark Hurd in 2005.

In one of his early meetings with designers, Bradley said a laptop on the drawing boards looked like a Russian truck. A former executive at handheld-computer maker Palm Inc., he told designers to go for form and function, not cost cuts.

``Not only did they have the permission to be creative and design beautiful products, it was a mandate,'' said Bradley, 49. ``We made design a very visible priority.''

Brushed Aluminum

Wolff, 43, switched from plastic to metals such as brushed aluminum and stainless steel for some models. In 2006, the company adopted a technology called imprinting, which is also used to detail cars and mobile phones. The process involves fusing designs, colors and textures directly into laptop cases.

Imprinting is more reliable than painting designs, and the patterns won't flake off. The switch increased yield -- the number of machines that come off the assembly line ready to be sold -- to more than 90 percent from as low as 60 percent.

Wolff says Bradley calls on weekends from Best Buy stores to tell him about cool designs he's seen. Bradley is willing to approve materials such as metals, which are more costly than plastic, and sends designers to the furniture showrooms of Milan to check out fabric patterns, colors, and trends in materials.

Color Swatches

Not only have designers escaped a focus on shaving costs, they're also treated differently. Instead of gray cubicles, home to most Hewlett-Packard employees, Wolff and his Houston team have desks surrounded by Herman Miller frosted panels that open so they can talk without standing up.

Inside, prototype PC parts, made at an on-site shop, are scattered about. Color swatches showing palettes that might be in vogue two years from now decorate one wall. Designers huddle in a conference room exclusively reserved for them, so the latest designs don't leak out.

Hewlett-Packard is working with Best Buy Co. to offer special-edition notebooks with unique designs and combinations of features that are targeted at groups such as women, gamers and students, said Jason Bonfig, vice president of notebook computing at the Richfield, Minnesota-based retailer.

The PC maker also is rethinking shipping materials. Instead of bulky boxes with polystyrene, some notebooks come in slimmer boxes with handles. That means 66 of them fit on a shipping palette, up from 48 previously.

Last month, Hewlett-Packard introduced two mini-notebooks, which cost less than $400 and are designed to appeal to people who want Internet access in a laptop less than 1 inch (2.54 centimeters) thick.

Flamingo Pink

Dell has taken note. Last year, the Round Rock, Texas-based company introduced laptops in colors such as flamingo pink and sunshine yellow. This year, it followed Hewlett-Packard into the mini-notebook market. Dell also plans to redesign all of its consumer products within a year.

Still, Hewlett-Packard has widened its lead over Dell in every quarter since taking the top spot in the PC industry in the third quarter of 2006. The move away from PCs inspired by Soviet cold-war machinery is part of that success, Bradley said.

``It's a world of difference,'' he said. ``It's clear that our major competitors are now trying to mimic us.''

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: November 6, 2008 16:06 EST