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Whitman Fires First Salvo in HP Turnaround

I never understood why {complink 2376|Hewlett-Packard Co.} 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.”

7 comments on “Whitman Fires First Salvo in HP Turnaround

  1. Barbara Jorgensen
    March 21, 2012

    It is refreshing to see HP taking action finally! If they can trim enough fat from the combined group, it makes a lot of sense.

  2. Cryptoman
    March 21, 2012

    Besides the positive sounding changes introduced by HP, I think it definitely needs to work hard on the quality of items it offers.

    I am one of former professional and home users of HP laptops and I had quite a few disappointments with the declining quality of the HP products. I am not sure if I am the only one to experience this but I want to share a few HP experiences here.

    I have seen 3 HP laptops fail badly (motherboards had to be replaced) at my workplace within one month. All of those laptops were less than a year old. Similar thing happened at home with my wive's HP laptop. That also broke down and never started up despite all our efforts. The worst part of it all was when I took the broken laptop to the HP service, they had no clue what was wrong with it. They simply said that they would charge me $400 to find out what was wrong with it but they could not give any guarantees to fix it at all. This shows that HP needs to put its technical services into shape as well. I hope they also have some changes in place for this particular area.

    Let's talk a bit about HP printers and scanners.

    Has anyone also experienced the failures with the scanner function on HP multi-function printers? They seem to come as standard these days! I experienced the same scanner problem with the two HP printers of different models in the last 2 years. The HP OfficeJet 4500 I have does not offer an alternative such as an SD Card into which the scanned images can be transferred in case of USB driver and firmware failures as such. (Let me also mention that the HP online support and driver updates do not resolve this issue either) Unfortunately, I am still stuck with this new HP printer/scanner that cannot scan. I currently use my good old digital camera for all my scanning purposes until I have the budget to replace the multifunctional HP printer with a better alternative.

    I personally think HP needs to do much more than just working on restructuring and merging departments in order to restore customer confidence. The quality and the longevity of the HP products need to improve.

     

     


  3. FLYINGSCOT
    March 21, 2012

    Sounds like HP is starting to make some sensible decisions and I look forward to HP returning to where it should be given its fine lineage.

  4. Himanshugupta
    March 23, 2012

    It is true that combining two relatively close hardware can benefit HP but IMO HP should focus more on customer service as well as providing new product options. If HP wants to expand in emerging markets such as BRIC nations then they need to provide cheaper options in both computing and printing. I have seen HP promoting their printer in media and i think that the campaign is stupid. 

  5. Mr. Roques
    March 23, 2012

    Which are HP's strongest divisions? In which one are they #1 or #2? 

    They also have a IBM-type approach division forstrategic technology – business solutions?

  6. elctrnx_lyf
    March 26, 2012

    I wish this move will bring more profits to HP and let them come out with more product innovations in the future. Few years ago HP sounds like a strong company but now a days after their tablet product failure they look like a small. Hopefully yhe new CEO will change the course of action to protect the company and employees.

  7. Mr. Roques
    June 22, 2012

    Well, they have diversified their segments, and moved away from less competitive, higher margin markets. It makes a lot of sense.

    Although their HP tablet had a comeback when they reduced the price.

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