How to fix HP's problems


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  • Go after Dell

    I agree that HP can cut out a niche if they wanted to as far as digital imaging goes, but the only really big chance that they have to survive in the long term is to acknowledge that Dell is the problem, and formulate a strategy to go after them.

    Even if HP was to specialize in digital imaging, remember that Dell is just one outsourced manufacturer/supplier or acquisition away from competing with them in this strategy. I think that HP needs to ask themselves the following 10 questions (not in any specific order).

    1. Are they in the position to compete in Asia against Dell and what do they have to do if they aren't?

    2. Are they in the position to compete in North America and in Europe against Dell and what do they have to do if they aren't?

    3. Are they in the position to change all, most or some of their business processes to compete with Dell?

    4. Are they in the position and/or do they want to compete in the market not based on anything but price? (Lets face it, PCs, Servers, PDAs, copy machines, digital cameras, storage and printers are now a commodity)

    5. Are they willing to cut out or sell anything that isn't making a profit?

    6. Do they have the atmosphere and the financial commitment to continue to invest in Research and Development with the goal of getting new products in the pipeline?

    7. Do they have the proper strategy for marketing, sales and advertising focus in order to take on Dell?

    8. Are they willing to standardize and centralize management of processes, suppliers, components and support in order to keep a hold on costs while maintaining quality?

    9. Are they in the position to maintain their market share in the segments that they already have a strong foothold in?

    The 10th question is biggest question of all. Can HP afford to be good at what they always were good at?which is being an innovator? HP is at a crossroads and is probably at the same crossroads that IBM is at now. Dell is good at nothing except making a profit from a commodity, which wouldn?t be a commodity if it wasn?t for innovators such as HP. So you develop the next ?big thing?, at some point Dell figures out how to basically make the same ?big thing? makes it cheaper and then sells it cheaper. How do HP and IBM compete against that during a products life cycle? Personally, I see that current environment has many things in common with the airline industry a few years ago. Will you be the Southwest airline? Or will you be the United Airline? If HP cannot be a Southwest as far as PCs, Servers, PDAs, copy machines, digital cameras, storage and printers go, then they should either sell these product lines to someone who can or spin it off as a separate company.

    There is always one more choice...either buy or be bought by Dell, Toshiba, IBM or someone else.
  • Kill the silos

    Visit HP's home page and you'll see pretty much how HP defines its customers - home & home office, SMB, enterprise, etc. But from the customer's perspective there isn't just one HP. No, there's the enterprise storage HP, there's the industry standard servers HP, there's ProCurve and printing and imaging and so on.

    There is no single face to HP that a customer can leverage to get the information and products they need. In fact, a customer with an HP SMB account (making direct purchases from HP) cannot purchase an EVA SAN or Integrity server direct or even get information from their SMB sales team. Or the education customer that standardizes on ProLiant servers but doesn't know about ProCurve networking because the rep handling the server sales isn't compensated on the networking sales. And worse, the server rep may be offering special pricing and the imaging rep or networking rep don't see the client as being important enough to warrant the same consideration.

    Each HP business area and field rep has their own silo to play in. And their management and individual's self interests won't let them play as a team.

    HP also needs to look at its product silos. Recently the blade server folks announced that they had a new switch that ran Cisco software. I'm sure that's a great strategic decision for the enterprise market where Cisco networks are the market leader. But HP has a networking business - ProCurve. Neither the old switches for the blade servers or the new switches apparently had any input from their own company. And why is it that any home user can purchase a Pavilion or Presario that comes standard with media card slots, DVD/CDRW, front mounted USB and Firewire ports and optical mouse while schools that need and really, really want these features can't find one standard sku in the business line of PCs built this way?

    So my free advice to Mr. Hurd is simply "tear down those walls" between all the silos and internal kingdoms. Find a way for all the business groups to present a single face to any customer and for those internal businesses to work in concert with one another.