Dell

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Don't let the name change fool you. Despite the decision to drop "Computer" from its name, Dell remains the world's #1 direct-sale computer vendor and competes with Hewlett-Packard for the worldwide PC title. In addition to a full line of desktop and notebook PCs designed for consumers, Dell offers network servers, workstations, storage systems, and Ethernet switches for enterprise customers. The company also sells handheld computers, and it markets third-party software and peripherals. Dell's growing services unit provides systems integration, support, and training.

Entrepreneurial wunderkind Michael Dell pioneered the direct-sales model for computers and took the company from his dorm room to the top of the PC heap by keeping it focused on a simple formula: Eliminate the middleman and sell for less. Dell's built-to-order boxes allow for lower inventories, lower costs, and higher profit margins -- elements that leave Dell well armed for the PC price wars and IT spending recessions.

With the industry-standard Wintel platform (Microsoft Windows operating system and Intel microprocessor) as its foundation, Dell faces intense competition from Hewlett-Packard, whose market share increased dramatically following its acquisition of perennial PC leader Compaq. Dell generates about 80% of its sales from desktop and notebook PCs. The company diversified its PC offerings in 2005 with the launch of XPS, a line of high-end desktop and notebook PCs for gamers and others willing to pay premium prices for top performance.

Not content with its success at grabbing PC market share, Dell continues to attack new markets. It has put increasing emphasis on server computers and storage devices for enterprises. Furthering its push beyond PCs, Dell has introduced a handheld computer, a line of Ethernet switches, and consumer electronics such as digital music players and LCD televisions. It originally partnered with Lexmark to develop a line of Dell-branded printers, and it has formed additional partnerships to quickly grow its printing line. On the services front, Dell has mirrored its straightforward approach to hardware sales, embracing a fixed-price model for offerings such as data migration and storage systems implementation. Dell augmented its storage line when it reached an agreement with market leader EMC to resell that company's enterprise systems. The company is also looking to international revenue to supplant sales in the PC-saturated US market. Though perhaps best known for its domestic consumer business, Dell only generates about 15% of overall sales from that segment.

Hewlett-Packard
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While Hewlett-Packard may be known for product innovation, the company's corporate development is a tale of reinvention. HP provides enterprise and consumer customers a full range of high-tech equipment, including personal computers, servers, storage devices, printers, and networking equipment. Its software portfolio includes operating systems, print management tools, and OpenView, a suite that encompasses application, business, network infrastructure, and product lifecycle management. HP also boasts an IT service organization that is among the world's largest.

Years after its acquisition of Compaq Computer -- a deal valued at approximately $19 billion -- HP continues to integrate its operations. The company's personal systems unit has continued to sell both HP and Compaq products, and it has jockeyed with Dell for the PC crown since the merger. HP's enterprise systems group includes servers, storage systems, and software. The company vies with IBM, Dell, and Sun Microsystems at the top of the server market, with products based on the Microsoft platform, as well as UNIX and Linux-based offerings. The Compaq acquisition also provided HP with a competitive boost in storage, where its products compete with those of IBM and the allied powers of Sun/HDS and Dell/EMC.

Though no longer its largest segment, printing and imaging products still make up a large portion of HP's revenues. The company's 2002 acquisition of Indigo added high-end digital printing presses to its comprehensive line of printing and imaging equipment. HP clashes with PC rival Dell in the printer market as well, as the direct-sale specialist now sells Dell-branded Lexmark printers. HP moved into the high-end copier market in 2003, introducing a line of high-volume, multifunction devices. It also acquired the the assets of wide-format printing specialist Scitex Vision (a unit of Scitex Corporation) in 2005.

While managing the challenge of merging operations and maintaining customer focus, HP has continued to make acquisitions. It bought Consera Software and Novadigm early in 2004, and shortly after it purchased TruLogica. The company expanded its international services business with its acquisitions of Triaton, the IT services unit of Germany's ThyssenKrupp, and UK-based Synstar. It acquired online photo service Snapfish in 2005. HP augmented its HP Technology Solutions Group with the purchase of AppIQ (storage network management), and it has agreed to acquire Peregrine Systems (asset management). It also made a move to expand its Linux portfolio, acquiring RLX Technologies, a developer of blade server management software.

HP's reinvention has not been free of turmoil. The Compaq acquisition met with heated opposition from many HP shareholders, including members of both the Hewlett and Packard families. The purchase was championed by former CEO Carly Fiorina, who argued that a deal that improved market share across HP's hardware lines and doubled the size of its services unit was essential to compete against IBM. Fiorina's efforts to transform the company didn't begin or end with the historic merger. She championed a push to grow HP's service offerings, and prior to the Compaq deal she consolidated what had been a sprawling corporate structure with more than 80 units into four major business groups: personal systems, imaging and printing systems, enterprise systems, and services. The company streamlined further in 2004, combining the enterprise and services units to form a Technology Solutions Group, and it combined its printer and personal systems units the following year.

Debate over to the wisdom of the Compaq merger and the possibility of spinning off certain divisions of HP has continued in the years since the acquisition. Fiorina's differences with HP's board over strategic direction finally came to a head early in 2005, and she stepped down as chairman and CEO. HP's CFO, Robert Wayman, was named interim CEO, and director Patricia Dunn took over as non-executive chairman. Mark Hurd, formerly CEO of NCR, was named to lead HP in March 2005.

Hurd has been charged with streamlining HP's operations, and soon after his appointment he split the printer and personal systems units that Fiorina had combined only months earlier. Other restructuring measures include the dissolution of its Customer Solutions Group, and a workforce reduction of roughly 10%.
evin Rollins filled the position; Dell remains chairman of the company.