By Eydie Cubarrubia
When Satjiv Chahil became Hewlett-Packard’s vice president of global marketing for its personal systems group back in October 2005, he faced one constant question: When are you guys going to get out of the PC business?
Fast forward a year and a few months later. HP sold 35 million PC units globally, and squeaked by Dell to become the world’s No. 1 PC vendor for at two quarters in a row (see HP King Of PCs, Again).
HP King Of PCs, Again“Now, nobody asks us when we were going to leave—people acknowledge we have become a leader in the industry,” Mr. Chahil said Monday during an interview at a product launch event previewing the International Consumer Electronics Show (CES).
The senior VP—who has helmed marketing teams at Apple, Xerox, and IBM—credits the global campaign he said was conceived and implemented within six months. Using mottos like “the computer is personal again” and spokespeople like Olympic gold medal snowboarder Shawn White and hip-hop giant Jay-Z, HP has worked to spruce up its image as purveyor of cutting-edge technology used by the hippest of businessmen.
“What we found out was HP was a very respected company, people thought it was reliable, but it was ‘our parents’ company,’” Mr. Chahil said. “So we were missing the youth sector.”
Mr. Chahil explained to Red Herring how his team courted and won that sector. He also talked about how HP’s R&D—at both the personal systems group and HP Labs—have resulted in machines both cutting-edge and resistant to explosions, not to mention HP’s resistance to fallout from the corporate spying scandal (see HP to Pay $14.5M to Resolve CA Spy Case).
HP to Pay $14.5M to Resolve CA Spy CaseExcerpts from the interview follow:
Q: So why do you think you guys finally beat Dell?
A: A fair amount of our success is in the consumer market. Also internationally we have the broadest distribution. When you go outside the U.S., less and less business is done online.
Q: I’m sure the marketing campaign had something to do with it?
A: It’s a combination of having a superb new product line, distribution, and the new marketing campaign…presented through the voice of our customers, whether Shawn White or Jay-Z (see HP Introduces Next-Gen Laptops).
Our campaign message was “the computer is personal again.” When you look at it, you expect more. Usability is vastly improved [such as the Quick-Play button that allows movie or music playability without waiting for the computer to boot]. We have a level of usability that’s better than our competitors.
Q: And it seems your marketing is trying to show off the products as young and hip, like that ad you recently shot with kids using iPaqs to go on a treasure hunt (see iPaqs And Princesses).
A: We wanted to use the ads to inspire people as role models. Even Jay-Z talks of himself as a role model, so when you see him you don’t just see an artist, you see a sophisticated business person.
Consumer trends around the world are driven by sports, by music, and by movies. You can’t find one country where those industries don’t impact social trends. So we said, that’s how we’re going to go at it.
But… lots of companies are associated with “celebrities.” We targeted what we call “achievers” who have an authentic connection with our technology. Shawn White uses that technology to design snowboards.
Q: Do you provide that in your PCs by, say, working with HP Labs as well as the computer R&D team?
A: The consumer is constantly getting very savvy. Our challenge is to introduce what we call “innovation that matters” and introduce it ahead of our competitors. We are very tightly tied to HP Labs.
That gives the company an advantage to introduce innovations that are ahead of the industry. Almost all our competitors in the PC world have much, much less investment in R&D than HP does [HP’s entire R&D budget is about $3.5 billion].
Q: Maybe that’s how you avoided the exploding laptops that plagued every other major computer maker. By the way, why not use that in your ad campaigns?
A: Unlike some of our competitors’ ads, we wanted to take the high road. But again, credit goes to our R&D technologists who actually didn’t qualify certain batteries. We have a very rigorous qualification process. And certain components [on computer] were more robust that prevented the heat transmission [that caused overheating].
Q: With HP’s three brands of computers—HP, Compaq, and Voodoo, the high-end gaming company you recently acquired—people may wonder if you’ll eventually fold everything into the HP brand.
A: In time, we intend to differentiate them more, so we can go after more addressable markets. In some countries, the Compaq brand is huge—in India it’s about 80 percent of the business. Even in the U.S. over 40 percent of our consumer sales are the Compaq brand.
We don’t intend to change anything about Voodoo but will learn a higher level of perfection from them. What HP brings to them and what attracted them to HP was all our technology in our labs. Because we have display technologies that just take the gaming experience two notches up.
So they can commercialize some of these technologies which, in a more mainstream market, don’t seem appropriate. We are very respectful of Voodoo’s pioneering position in the market and center of gravity. Some of their pixie dust on our products will take us a notch up.
usQ: Despite all of HP’s successes this year, the corporate spying scandal had to worry you—as a marketing expert, it could have hurt the brand identity.
A: Fortunately, because of the running of HP, the company was always focused on running the business. [Personal systems group executive vice president] Todd Bradley always kept the pressure on us on doing our business right, and [CEO] Mark Hurd kept the pressure on Todd to run the business. We’ve kept our show on the road.
Q: Ever worry about reports from research firms like Gartner and IDC that say the PC market is slowing?
A: How many times have we gone through thinking, the market is saturated, and then it reinvents? Part of what we’re doing at CES [in January] is showing the next wave of the industry.
What we see here is the PC industry is redefining, the consumer electronics industry is redefining, and a new industry is emerging: the digital entertainment industry.
Consumers are already preconditioned to have MP3 music, to have DVD movie experiences, are now preconditioned to have user-generated content after YouTube [became popular], and so our usage paradigm is very different from four, five years ago. And HP is a frontrunner in this new industry. It’s not the old consumer electronics companies and it’s not the old PC companies.