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Two tales of technology market fortunes

Business | Technology

Shares in Hewlett Packard fell sharply during after hours trading last night when the company missed analyst expectations but grew revenue by 4% and income by 18% at the same time as cutting the outlook for 2011. Given the current overall economic climate such figures still seem reasonable for a $130bn company. Recent editorial was also suggesting Cisco with a turnover of a mere $40bn is also starting to suffer from slowing growth brought on by both market conditions and impending “middle age” in terms of company size and diversity.

However stock market reaction is perhaps better explained when these figures are compared to the recent results posted by Apple. Also covering the “holiday” season, this darling of consumers and the stock market alike grew revenue 71% and earnings by 78%. And this is also a company approaching yearly revenues of $100bn. Shipments reached record levels for Macs, iPhones and iPads so there is no shortage of buyers or margins.

In a recent interview with Tim Weber on the BBC website, http://www.bbc.co.uk/news/business-12291529, Leo Apotheker, HP’s new CEO was keen to turn HP cool like Apple. Cool is obviously a mixture of many factors that include tangibles like products as well as intangible momentum like innovation, image, marketing and buzz. So the question is can a company manufacture cool at will or can it only come about when the timing is right and all the stars are aligned?

Much of it goes back to basic marketing. It’s not just about buying functional products but equally about the experience and the feel good factor associated with the acquisition and ownership. Peter Drucker originally called it the augmented product, but it’s more than that. It is the clear but misunderstood distinction between what a company makes and what a customer actually buys. Missing this concept is not confined to b2c or even b2b technology businesses, examples can be seen in every product or service based industry. At SQN this is among the first questions we ask clients whether they are embarking on a PR or social media campaign or exploring the power of a global sponsorship programme.

Let see what happens to the share price if Apple do announce new Sandy Bridge based Macbook Pro models this week as is rumoured!

Chris Ritchie

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