"The PC division has to have been hurt by the turmoil [caused by] HP's executives, especially since much of the rancor was over the future of HP's PCs," said King. "I expect that uncertainty impacted the company's PC sales, though things should have calmed down by now."
To get out of its predicament, HP needs to first reassure customers that it is in the business for the long haul, King said. "Second, [they need to] do whatever's necessary to get the PC product development to create new, compelling products," he added. "Third, they need to hope, pray, even sacrifice the occasional virgin for the success of Windows 8."
The problem, though, is that while HP struggles to regain its footing and reputation, Lenovo is firing on all cylinders.
"While most of the other major vendors have increasingly outsourced manufacturing and even design of their PCs to reduce costs, Lenovo has gone the opposite way and brought more manufacturing and design back in house," said Olds. "This gives Lenovo the ability to innovate quicker and get a jump on competitors in bringing new features to market."
He also pointed out that Lenovo is the home team in the burgeoning Asian market and that gives the company a big advantage in global sales.
"And don't forget that Lenovo inherited a reputation for high-quality products that came with being the former IBM Thinkpad unit," Olds added. "They've managed to hold on to and even improve on quality, while innovating and revving products faster than IBM did. More importantly, they can do this while hitting the same price points as their biggest industry competitors - something that IBM was never able to do in PCs."
Patrick Moorhead, an analyst with Moor Insights & Strategy, agreed that Lenovo is on the right track with various aspects of its business. And that will make it difficult for HP to fend off this competitor.
"Lenovo is leveraging its low overhead with refreshed industrial design to attack the consumer market and [is] picking up significant traction in emerging regions," said Moorhead, adding that HP needs to move fast. "They need to reinvest in ground-breaking innovations they were recognized for a short five years ago to bolster their brand as a leading client PC brand."
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