Whitman Fires First Salvo in HP Turnaround

I never understood why Hewlett-Packard Co. (NYSE: HPQ) set up its printer and personal computer businesses as separate divisions. Buyers often shop for PCs and printers simultaneously, and since they are both predominantly hardware operations, the synergy should have been obvious to the company's leadership.

It wasn't until now. HP announced today that it would merge its imaging and printing group (IPG) and its personal systems group (PSG) under one executive. The Printing and Personal Systems Group will be headed by Todd Bradley, a long-term executive with the company.

Here's HP's totally reasonable justification for the move:

Combining these two entities will rationalize HP’s go-to-market strategy, branding, supply chain and customer support worldwide. This will lead to a better customer experience and drive innovation across personal computing and printing. This realignment is expected to provide opportunities for cost savings and accelerate HP’s ability to pursue profitable growth and reinvest in the business.

In the past, I have criticized HP for moves that seemed odd, many of which I believe hurt the company deeply and caused it to lose its leadership position in its core PC market. I must also admit I didn't support the decision to appoint Meg Whitman as CEO, but I am beginning to think she may be the one to help get HP out of its funk. (See: HP Needs a Higher Bar for Whitman and Muddled Thinking Sinks HP.)

The two units had combined revenue of $65.4 billion in the fiscal year that ended Oct. 31, making the newly merged division the company's biggest. (HP as a whole reported fiscal 2011 revenue of $127 billion.) Bringing the units together should massively increase purchasing leverage with suppliers and streamline procurement. It should also help HP further reduce marketing costs and create a seamless purchasing process for buyers of printers and PCs.

But that's not the only change HP is implementing. It is also merging some other business divisions and trimming bureaucracy. A newly created HP Enterprise group will combine activities of the global accounts sales division with enterprise servers, storage, networking, and technology services. The company said it is consolidating all marketing operations "to allow for even more effective brand-building."

These moves all sound commendable, but they are only the beginning of an effort to get HP primed for a tough competitive market. "Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency," Whitman said.

I agree. Whitman has shown she can cut through the clutter. Let's see if she can get her new team to deliver on her promise of "a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends."