HP makes a play for Asian consumer market

Hewlett-Packard Co. (HP) will roll out its “store-in-store” strategy all over the Asia-Pacific region, leveraging its extensive retail network in the region to establish its presence in the digital consumer market.

In line with this strategy, HP will make use of “consumer corners,” located in retail stores around the region, to showcase its latest array of digital products, from laptops to scanners to IPAQs.

The company launched some 80 products that could roughly be divided into two groups – digital photography and entertainment – during a recent two-day regional conference held in Bangkok.

These offerings include new notebooks, digital cameras, printers and scanners as well as entertainment hardware, including a portable Movie Writer (for burning DVDs) and a Digital Media Receiver (which can play various media formats).

The idea behind this strategy is to demonstrate how all these products work together – something HP is hoping would make a lasting impression on consumers who are being overwhelmed by the continuous flood of new digital products entering the market.

“Consumers want to see solutions working together and it helps them appreciate that when there is a knowledgeable person involved,” said Michael Hoffman, HP Imaging and Printing Group senior vice president for Asia-Pacific and Japan.

Hoffman considers his company’s 30,000 retail outlets in the Asia-Pacific as a key “differentiator” in building up HP’s name outside the personal computers and printers market, the company’s traditional niche.

HP will initially roll out its store-in-store strategy in the region’s more mature markets like Australia, Japan, Korea, Singapore and China. Hoffman also sees a lucrative market in countries like Indonesia, Thailand and the Philippines. However, he noted that HP’s retail network in these emerging countries is still developing and there is clearly “much room for improvement.”

“We’re still not present enough in these countries,” he admitted in an interview with reporters from Indonesia and the Philippines. “I think the retail-vendor relationship in these areas is still underdeveloped.” In the Philippines, HP has about 20 to 25 retail partners, which translate to, at least, 100 outlets nationwide that carry its products.

HP is investing US$100 million in this drive to build a name for itself in a market dominated by giants like Sony and Samsung, as well as a throng of smaller yet equally hard-driving Japanese brands.

Roughly half of that will go into creating brand recall and “emotional attachment” among consumers, while the remainder will be invested in “retail development,” Hoffman said.

The Bangkok product launch is a follow-up to HP’s initial salvo last year (which it dubbed the “Big Bang”). HP is hoping that this year’s Big Bang 2 would not only make a big noise in the digital products market but would also eventually bring in big bucks.

See Chin Teik, Asia-Pacific vice president for HP’s Personal Systems Group, pegged the total market for digital consumer solutions in the region at about US$30 billion. IT research outfit IDC estimates consumer tech spending in the region to surge from US$118 million this year to US$155 million in 2006. A sizeable percentage of that market is digital photography and entertainment.

In Bangkok, HP made its own prediction: the eventual convergence of computing and consumer electronics that will be brought about by the explosion of digital content that can be enjoyed outside the PC environment.

“Wireless will eventually take off in the home and HP is looking to take advantage of that trend,” Teik said.

HP is also playing the numbers game by flooding the market with a myriad of products. “It all boils down to customer choice. Consumers are looking for different price points for every category,” Hoffman said.