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Main / Articles: HP to quit DC biz in Asia-Pacific region

Hewlett-Packard (HP) announced yesterday that the company is to withdraw its digital camera (DC) business from the Asia-Pacific region, and focus on the household photo printing market.

"The strategy adjustment will enable us to concentrate our investment so as to bring the maximum business return, as well as providing valuable services to customers," HP (China) Ltd said in an statement available to China Daily yesterday.

However, the timing of the DC pull-out in the region will vary from country to country, in line with local distribution situations and the life cycle of the digital cameras.

"We will continue to sell our DC products in the Chinese market as it is still quite competitive. But we are not going to launch any new products onto the market," it said.

HP ensured yesterday that its existing DC users would continue to have a first-class warranty service.

"Also, we are going to build up alliances with other DC makers and handset makers to enable our customers to enjoy end-to-end digital imaging solutions," it said.

"In spite of the adjustment, there will be only small job losses."

In another development, HP stated yesterday that it would continue to enhance its DC business in Europe, Africa, the Middle East and Latin America.

"We have reaped success in these areas, and enjoyed sustainable development," it said.

Analysts believed that HP's pull-out is the result of fierce competition in the Asia-Pacific region.

"In the Chinese market, for example, competition is becoming increasingly ferocious," said Dai Churong, an analyst with China Securities.

Competition is from both international and domestic digital camera makers, including Canon, Sony, Kodak, Olympus, Nikon and Lenovo.

HP knifed into China's digital camera market in July last year with the introduction of the Photosmart R707, its first digital camera in China.

Back in July 2004, HP was confident in its ability to establish a strong stake in the Chinese consumer electronics market. It claimed this was due to it being "a unique company" which provided a full line of products.

"I believe HP's withdrawal is no surprise, as it realized that the profit margins from digital cameras are becoming razor thin," Dai said.

Figures showed that the average price of a compact digital camera will decline 15 per cent this year, and is expected to drop another 15 per cent next year.

Dai also believed that the spread of mobile phones equipped with powerful cameras is also a threat, as some consumers feel they do not need to buy a separate digital camera.

Analysts also believe HP's withdrawal from the Asia-Pacific region is in line with HP's latest plan, released last month, to simplify its structure, reduce costs and place greater focus on its customers.

The company expects these actions will save US$1.9 billion annually, driving growth and increasing business performance.

The programme simplifies HP's structure by embedding sales and marketing efforts directly into the business units, providing a tighter link with customers.

It cuts expenditure by restructuring support functions and eliminating redundancies, thus freeing funds for reinvestment in the business.

"After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential," said Mark Hurd, HP chief executive officer and president.

HP's sales revenues reached US$83.3 billion during the past four fiscal quarters ending April 30.

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