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Now, Hp Stands For Hot Products

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The buzz at the recent Comdex personal-computer trade show in Atlanta was all about a whizzy new ultraportable PC called the OmniBook. Due to be introduced on June 7, the $2,000 sub-notebook weighs just under three pounds but manages to offer a full-size keyboard, lots of data storage, and--in a first for a portable--built-in popular software for easy access. All this, and it can run up to an amazing 10 hours on four AA batteries.

Must be the latest from a powerhouse, say Compaq or maybe Apple, right? Guess again. The OmniBook comes from Hewlett-Packard Co., a perennial also-ran in the PC business, known mainly for its minicomputers, workstations, calculators, and measurement equipment.

Suddenly, HP is one of the fastest-growing PC companies around. Although its PCs have done well in Europe, HP's PC sales in the U. S. have been dismal until recently, leaving it with just 1.5% of the world market. But domestic shipments soared last year, to 210,000 from just 70,000 in 1991, according to Boston-based market researcher BIS Strategic Decisions. That's still a long way from the 570,000 systems Compaq shipped last year. But BIS predicts HP's PC shipments will be 78% higher in the second half of 1993 than in the first half, thanks in large part to the OmniBook. That should push HP onto the top 10 list of U. S. computer sellers for the first time.

RADICAL MAKEOVER. The engineer of this turnaround is Robert J. Frankenberg, a 24-year HP veteran who was named general manager of the Personal Information Products Group two years ago. At the time, it didn't seem an enviable assignment. Frankenberg admits that HP priced its PCs about 30% above average, its distribution was a shambles, and it spent a too-long 18 months bringing out new products.

But Frankenberg quickly lit a fire under the organization. First, he split it into three divisions: mobile products, which includes HP's popular palmtop computers; desktops; and high-end servers. He also cut the staff by 40% and ordered up new products, with a six-month deadline for introduction.

The changes began to pay off last summer, when HP trotted out a low-cost line of PCs, the Vectra 486/U series. Sales skyrocketed, despite Frankenberg's risky call to sell only through traditional dealers, such as MicroAge Inc. and ComputerLand USA, eschewing the fast-growing mail-order market. He turned out to be right on: When Compaq and IBM--struggling with severe parts shortages and the demands of multiple distribution channels--cut back shipments to dealers, HP was a well-known brand the stores could count on. Its best-selling line of PC printers was well-established, and its reputation for top-notch engineering made its product an easy sell to corporate buyers. "Despite HP's past missteps in the PC business, today it's a hit," says ComputerLand President Edward R. Anderson.

The bottom line is better, too. Revenues from HP's personal products group, which come mainly from PCs, should jump 50%, to $1.5 billion this year, Frankenberg says. And PCs turned profitable in 1992, after several years of losses.

SHIPSHAPE. HP hopes to keep the momentum going with a batch of nifty new products at competitive prices. On June 1, it introduced an overhauled Vectra line that includes a unique, infrared signal that can transfer data without a cable to a nearby printer or portable computer. The new Vectras also are the first desktop PCs in the industry to include slots for credit-card-size plug-in devices that can contain modems, hard disks, or additional memory. These cards are relatively uncommon now, but are widely expected to become ubiquitous.

And then there's the OmniBook. Analysts estimate that HP could sell anywhere from 40,000 to 100,000 units this year and predict it will take six months or more for a rival to develop a comparable system. "HP seems to have a better understanding of what the user wants in this market than any of its competitors," says BIS analyst Jeff Henning. That's the kind of buzz that HP hopes will make it a powerhouse in PCs.Catherine Arnst in New York

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