June 26, 2000 5:35 AM PDT

HP focuses e-commerce services on small businesses

Hewlett-Packard today updated its small and midsize business strategy with new products and services.

The returning emphasis on businesses with fewer than 500 employees comes as HP sales soar in broader consumer and commercial PC markets.

The Palo Alto, Calif.-based company is honing in on what it sees as an untapped revenue source: small firms' need for extended e-commerce services. The company today introduced personalized portals, online faxing, backup wireless networking, and new PCs and portables tailored for this market segment.

HP faces competition from Compaq Computer and IBM, which have more experience selling to small businesses. But the strongest rivals are unseen. Analysts estimate that as many as 70 percent of small businesses buy no-brand, or "white box," PCs and portables from independent dealers.

Established PC systems and services companies also face a new class of competitors: the "nothing-but-Net" firms, according to market researcher Summit Strategies. These start-ups focus on delivering the goods and services of small businesses over the Web.

"We believe that the nothing-but-Net firms are leading a charge that will significantly affect how many (small businesses) procure (technology) solutions--and will create ripples throughout the industry," Summit analyst Laurie McCabe said in a recent report. "This is a development that all (technology) vendors need to be vigilant about because it has the potential to impact them all."

Recognizing small and midsize businesses' thirst for cheaper and simpler products and services--as well as their desires to generate e-commerce revenues--HP has made the Web the centerpiece of its announcement.

Beginning today, HP will offer new services tailored for small businesses on its Business Customer Center site. Companies will be able to work with personalized portals that deliver online data backups and inventory management, among other services.

On the client side, the PC maker will offer its e-center on systems unveiled today. Small businesses will be able to use e-center to access additional Web-based services such as fax, business travel and data synchronization.

While HP's refocus is a good beginning, other companies have a head start in the sector. Compaq's MyWorkspace, for example, offers a broader range of services and support, partly leveraging its relationship with CMGI.

Still, HP is positioning the new services and systems to woo small businesses that want to jump into e-commerce but lack the necessary skills and support.

HP also refreshed most of its line of small and midsize business systems, including Brio PCs, Pavilion N330 and OminBook XE2 portables and the Netserver E 800 server. In addition, the PC maker introduced a small-business version of the Orinoco wireless local-area network (LAN), co-branded with Lucent Technologies, and a wireless wide-area network (WAN) with Sierra Wireless.

International Data Corp. estimates that the number of small businesses engaging in e-commerce activities will reach 2.8 million in 2003, up from 400,000 two years ago. Of the 7.5 million U.S. small businesses, 11 percent used e-commerce in some way last year.

But less than a third of those companies have Web sites, and less than 20 percent are selling online, according to IDC. That is a growth opportunity HP and its competitors would like to tap.

HP's strategy comes as it successfully invigorates its PC business. In February, the company stole the retail sales crown from perennial leader Compaq, according to PC Data.

During the first quarter, third-ranked HP had more than double the PC shipment growth of leader Dell Computer and triple that of second-placed Compaq, according to IDC. Worldwide, HP gained 58 percent year-over-year and 67 percent in the United States.

 

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