HP big on buzz and bottom line. Next up: market share

BRAND IN DEMAND: Builds hype and cuts costs to boost revenue

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Two years ago: Still absorbing the $25 billion Compaq merger, CEO Carly Fiorina and marketing executive Allison Johnson put millions behind big-brand advertising with their "One Voice" approach. HP also relied heavily on co-branding with partners such as MTV, Dreamworks and Starbucks. Market share hovered around 15% worldwide and 20% in the U.S.

Today: Market share is about the same, at 16% worldwide and 20% in the U.S., but margins and profits are up, and analysts like the company's momentum. The big-branding effort has been shelved, thanks to companywide cost-cutting, and product marketing has been greenlighted, with HP's consumer-PC division leading the way. Entertainment, including the Dreamworks and MTV partnerships, is an integrated part of overall marketing.

Old tagline: "Everything is possible."

New tagline: "The computer is personal again."

What's changed: New CEO Mark Hurd has made the cost and staff cuts necessary to deliver a healthier bottom line, and has undertaken a major reorganization. In HP's third-quarter report last week, the company said shipments of computers were up 14%, with desktop revenue up 5% year over year and and laptop revenue up 14%. Overall revenue was up 5.4%.

Who's changed: Mr. Hurd took over after Ms. Fiorina and Ms. Johnson left in 2005. Apple marketing vets Satjiv Chahil and David Roman joined HP's Personal Systems Group last year and have brought in plenty of Apple's coolness.

Brand champions: A cadre of Wall Streeters, and celebrity endorsers such as Olympic-champion snowboarder Shaun White, hip-hop artist Jay-Z and reality-show producer Mark Burnett.

Brand detractors: Dell.

Role of advertising: Major. Operational changes freed up money for marketing, but execution has been the difference between same-old and sizzling. HP's buzz is flat-out great right now, and the company is making an impression on even the youngest and most fickle buyers. Ads from HP's "Hands" campaign show only celebrities' midsections as they use their hands to demonstrate what they do on their PCs. Consumers can make "Hands" ads of their own. HP's agencies are Goodby, Silverstein & Partners, Publicis and Zenith Optimedia.

Role of customer service: Growing.

Marketing spending: $833 million in 2005, down 8.7% from 2004.

Who's on the hook: It will be up to the Chahil/Roman team to keep things fresh without going over the edge. And while detractors give Mr. Hurd credit, they say cost-cutting can only go so far, and he may not be the visionary HP needs. Ms. Fiorina is actually getting some belated credit for starting the HP revival.

Prognosis: Momentum is key, and HP has it. Its market share hasn't increased yet, but its bottom line continues to improve, with revenue and profits rising quarterly.
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