Hewlett-Packard just can’t seem to escape the performance challenges that have sapped the company for the last two years. While CEO Meg Whitman and team continue to make adjustments, PC and now enterprise product sales remain weak, postponing any hope for growth until 2014.

Meanwhile at rival Lenovo, which is now the world’s largest PC vendor, saw its most recent quarterly profits jump 23 percent and revenues increase nearly 10 percent, as it now sells more tablets and smartphones than conventional desktop and notebook computers. Moreover, Lenovo sees further growth potential as it continues to expand into entry-level servers and storage, the mainstay of HP’s enterprise division.

The contrast in fortunes and performance is making HP vs. Lenovo one of the best fights in the tech market. Why is Lenovo doing so well and HP continues to struggle? A few factors are making a difference. Let’s break it down.

• Global Revenue Distribution. Lenovo and HP are global companies. HP’s strongest market is North America, where Lenovo gets most of its sales in its home market, China. It’s not by coincidence that part of HP’s problem is struggling sales in China, where domestic competition continues to get stronger. Lenovo has done incredibly well in exploiting opportunities in emerging markets. HP, like other American tech vendors, once relied on emerging markets for growth; that’s shifting as foreign competition is catching up.
• Europe Weakness. The other market HP plays well in is Europe, which continues to suffer from an anemic economic conditions. European markets are hardly in a position to offset challenged sales in Asia, where Lenovo has an advantage. Lenovo is playing well in Europe, too, but the business isn’t so big. Europe’s economic woes are not having the same impact on Lenovo as they are on HP.
• Mobility. HP has all but missed out on the mobile revolution. The TouchPad tablet fiasco touched off its near meltdown and is the source of its continuing troubles. Its previous experiments in smartphones were miserable; and the TouchPad was a disaster. Lenovo is one of the largest smartphone vendors in Asia and is planning on bringing its handheld devices to the U.S. Lenovo is also a serious player in tablets. While HP and Lenovo both offer Windows and Android tablets, Lenovo doesn’t have HP’s spotty history with these devices. And while smartphones are mostly consumer devices, the profits they generate tend to fuel other business development. Where HP is bleeding money, Lenovo is offsetting weak products with smartphone profits.
• Tight Focus. HP is trying to fix multiple problems in vastly different units. The surprise troubles in its enterprise unit underscore competitive challenges HP is facing against companies like Cisco Systems and IBM. HP’s answer is acquisitions, which will – in theory – capture new technologies, customers and revenue. Lenovo, on the other hand, does a few things and does them well. Lenovo is a PC vendor, and it arguably has the best business machines on the market. It’s partnership with EMC to expand into server, storage and backup is creating adjacent opportunities for it and its resellers. In short, Lenovo doesn’t have to support a massive organization and product line; it can devote more resources to its smaller product line.
• Different Competition. HP competes with multiple vendors on different commercial and consumer levels. It has to worry about IBM, EMC, NetApp and Cisco, as well as Dell and Lenovo. And that’s just on the surface. Lenovo’s competitive fronts are more clearly defined, as it primarily competes against just HP and Dell in the North America market. It’s far easier to react and make strategic plans when you don’t have to deal with innumerable contingencies.
• Printers and Ink. HP’s cash cow was its printer division. Even when PC sales fluctuated and enterprise products suffered, the printer unit and its ink sales were enough to cover other units’ losses. No more. Printer and consumable sales are down, removing one of the great advantages HP had. Lenovo never had printers, and likely never will. Its revenue are what they are; no trickery.
• Cloud Computing. Advantage in cloud computing goes to HP, in theory. Lenovo has no real cloud products; although it’s a critical component in cloud utilization. You can’t reach the cloud without an endpoint. HP has invested billions of dollars in building cloud capabilities and software, and it’s one of the pillars of its restoration plan. Unfortunate for HP, those investments have yet to pay off. It could be argued that HP’s cloud ambitions are more a distraction today than a benefit.
• Channel Performance. Lenovo has done a masterful job of engaging and enabling its channel. Lenovo has seen a 30 percent increase in the number of partners selling its products in North America; that increase is coming at the expense of HP and Dell, which is facing similar challenges. The 2011 management fiasco that sparked HP’s woes sapped partner confidence from which it’s only now beginning to recover. If the channel isn’t actively recommending products, it will hurt sales. Today, when it comes to PCs, Lenovo is the preferred vendor; HP is the alternative.
• One Direction. It’s stating the obvious, but HP is trying to fix a broken system. The troubles that started in 2011 were the result of years of management missteps, poor decisions, poor products and false assumptions. It could even be said that HP’s paying for arrogant decisions of the past. Bottom line: HP is trying to restore glory, stop the bleeding and return to growth. Lenovo, on the other hand, has no such legacy. Its only direction is up. Lenovo is about one-third the size of HP, and is doing so with fewer products and services. Every expansion it makes will bring it closer to HP’s girth. HP, on the other hand, will always have a difficult time growing because of its size.

To say Lenovo is doing everything right and HP is in an impossible situation is just wrong. It’s worth noting that Lenovo went through its own near-death experience in 2007, just two years after it bought IBM’s ThinkPad unit. Sales were down, product quality declined and the channel disengaged. Lenovo took corrective measures and embarked on a strategy that has put it in the position it’s in today.

And it’s not all bad news for HP. Turning around a company of that size takes time. When Lou Gerstner took the reins at IBM in 1993, Big Blue was on the verge of bankruptcy and investors were calling for breaking up the company. By the time he left in 2002, the company was thriving because he and the management team made hard choices and strategic investments that took time to unfold and become fruitful.

It’s easy to get caught up in today’s headlines and bad news. HP is now playing long ball, something it forgot to do over the past decade. It’s paying for its mistakes and looking to the future for success. It may come, but it will take time.