Selling HP's ongoing reinvention

Selling HP's ongoing reinvention

Summary: On his way to becoming the next Lou Gerstner, the no-nonsense, conductor of IBM's turnaround in the 1990s, HP CEO Mark Hurd was busy setting Wall Street expectations. And unlike his predecessors--Carly Fiorina and Lew Platt--there would be no overpromising and underdelivering.

TOPICS: Hewlett-Packard

On his way to becoming the next Lou Gerstner, the no-nonsense, conductor of IBM's turnaround in the 1990s, HP CEO Mark Hurd was busy setting Wall Street expectations. And unlike his predecessors--Carly Fiorina and Lew Platt--there would be no overpromising and underdelivering.

Hurd was extremely prepared and on message at the securities analyst meeting in New York, which Larry and I covered this morning. If you are judging HP on their execution this shindig was very well executed--almost too much so. The way Hurd handles the numbers and has turned the company around; Wall Street has to love him...even with the cloud of the pretexting scandal hanging over his head.

Several HP executives gave presentations, which were carefully orchestrated to continuously repeat and reinforce the themes Hurd laid out at the beginning of the event. The main message is that since Hurd took over as CEO about two years ago, HP has gone from "surviving to thriving." Hurd said that the pools of revenue are clear and that HP will take care its cost issues and process opportunities. It's all about execution on the strategy, he added, and layered on the theme that HP is a company that is transforming, but is not transformed. "Don't get too over-excited about 2006 [performance]," Hurd told the financial analysts. Another iteration of Hurd's reduce expectations theme, echoed by other presenters: "HP still has a lot of work to do." 

  HP CEO Mark Hurd and soon to be ex-CFO Bob Wayman

Every presenter talked about operational efficiency. "There's significant opportunity to improve. We've spent our time trying to understand what the highest scale company in industry should look like in 2009. We're not there yet," Hurd said. 

Sales execution, Hurd said, is a key area of focus for growth among all customer segments. Ann Livermore, executive vice president of HP's Technology Solutions Group, said her division, which targets the global 2000, is focusing on sales improvement, getting denser coverage of sales people across the customer base and applying serious discipline interconnecting sales, planning and analytics. Sales and employee compensation will be tied back to margin performance, Livermore said.

Part of HP's growth strategy is to attach services to every product in the portfolio, she said, increasing HP's share of wallet. "We have a strategy and portfolio advantage because we can blade everything," Livermore said, noting that blades sales can effectively lead to attachment of software as well as assessment and design services.

On the personal technology front, Todd Bradley, executive vice president of the Personal Systems Group, said, "As we look at how we drive efficiency in our model, you will see us continue to price very aggressively and continue to drive profitable growth that is so important and to invest in spaces that are critical for growth like client virtualization." Bradley said his group shipped 35 million devices in fiscal 2006.

During a Q&A period Bradley was asked about the impact of Vista: "There is no impact on holiday demand with the delay of Vista," Bradley said. "From a cost perspective, Vista is a bigger memory footprint, and it has made the memory market somewhat tight in the short term. I dont think we expect to see Vista as a growth driver in the enterprise. Consumers will see it as an advantage as the product gets launched. It will be a very smooth transition, create some exciting in the space in the spring, but I don't expect any huge anomalies or supply issues."

Topic: Hewlett-Packard

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  • They lost ME as a customer!

    Competitive pricing alone IS NOT IT. I bought one of their Media Center systems from Sam's Club -- my second HP Media Center in a row -- BOTH DVD drives turned out to be defective to one degree or another -- particularly the Lightscribe drive -- yet when I called Tech Support about it after the PC Diagnostics software THEY SHIP with the computer, some guy in India named "John," who spoke English with such a THICK ACCENT I kept having to ask him to repeat himself, told me the DVD and two CDs I'd ruined testing the drives in the process of the Disk Doctor 5 diagnosing the drives meant nothing, because the program didn't really know how to properly diagnose the drives and would report erroneous errors, and he was SURE they were fine...

    He FURTHER berated me for buying a display model from Sam's, wanting to know why I did (because it was a BIG savings, of course), then had me go through all sorts of procedures including tweaks to the System Registry and had me put in an AUDIO CD and when it played a few notes, assured me my drives were fine and bid me a good day, essentially (after also telling me that my warranty wouldn't be good for the full year, but only for the length of time since the unit was opened for display in the store UNLESS I faxed a copy of my sales receipt to HP)...

    I was soooo fed up, I just took his word for it for a few weeks, UNTIL I actually needed to burn some photo CDs to take to a family reunion... After trying 6 CDs in a row -- three Maxell, three TDK (I don't use the cheap ones, because I want them to last), I hooked up an EXTERNAL Lightscribe drive I bought on sale last January before I had a system with a DL drive in it and they burned right away (Oh, by the way, when I sent that fax to HP, I also let them know how displeased I was with my experience with John, and got NO RESPONSE to that).

    So, I decided I'd return the system to Sam's and get a new one, but I was STILL considering another HP Media Center, but ended up deciding I wanted something personalized (i.e. factory-ordered). Eventually, as I HAD come to have some misgivings about HP, I also looked into Gateway (they think their computers have GOLD in them) and Dell. It came down to a choice of a Dell system or an HP system, and frankly, the HP system WAS a bit more competitive...

    But frankly, I ALSO think HP's quality has come down since I bought my FIRST HP Media Center on Black Friday 2003. They HP system was almost $100 less, BUT -- and get this -- just as I WAS about to go ahead and order from them, they COMPLETELY LOST MY INFORMATION in their system... They COMPLETELY LOST ME as a customer in their system... and so... they DID lose me as a customer, and I now have a new Dell XPS Media Center system, with which I'm very happy.

    I can't say everything in the purchase process went as smoothly with Dell as I would have liked, either, but at this point I still think they're at least TRYING HARDER.

    HP has A LOT of work to do -- in both customer service AND in bring the quality of their components back up -- if they REALLY expect to be tops in the retail computer market... regardless of where they are now!

    They not only lost a customer in me; they've created an enemy.
    Jeff Hayes
  • HP has also lost me as a customer

    3 1/2 years after I purchased my HP laptop and 6 months after the extended warranty expired, my laptop stopped working. After many, many telephone calls to their customer service in India and being charged first $99 for an extended warranty software tech support and then $300 with HP's promise that they would completely reburish my laptop, I received the exact same laptop back ... with only a new harddrive. I could have replaced the harddrive myself for about $60 so HP made a profit of about $240 off of me and now I can't even get customer service to return my calls. I even sent a letter to Mike Hurd himself hoping it would get at least some response from the company but so far nothing. My next computer WILL NOT be an HP and I'll continue to tell everyone I know to avoid HP like the plague.