HP restructure an attempt to sync with growth segments

Recent changes of senior executive positions underscore company's focus on shifting strategy toward software and services to tap growth resurgence in these segments, says research firm.
Written by Eileen Yu, Senior Contributing Editor

A series of changes this week in Hewlett-Packard's senior executive positions underscores the company's focus on moving its strategy toward high-margin areas encompassing software and services.

According to Ezra Gottheil, senior analyst at Technology Business Research (TBR), HP CEO and President Leo Apotheker was hired in October last year to steer the company toward market segments that yielded higher margins, while retaining momentum in high-volume standard computing hardware including servers, storage, networking and PCs.

The changes in senior appointments removed a layer of management between Apotheker and several business units, Gotthei said in a statement late-Tuesday.

HP on Tuesday announced several major adjustments to its executive team including Ann Livermore, who will be stepping down as head of the company's enterprise business unit to take up a new seat on its board of directors, as well as the immediate resignations of CIO Randy Mott and chief administrative officer Pete Bocian.

Current executive vice president of enterprise servers, storage, networking and services group, Dave Donatelli, will report directly to Apotheker. Bill Veghte, executive vice president of software and Jan Zadak, executive vice president of global sales, will also do likewise.

The search for Livermore's replacement is currently underway, as is the successor of Mott's CIO position which role will be "broadened", according to HP. It also said the changes were in line with a corporate structure needed to support the company's strategy which was outlined in March. Then, Apotheker had said HP will focus on three key areas: cloud services, software and connectivity between devices.

Gottheil said: "The company's WebOS mobile operating system, obtained through acquisition of Palm, also gives it the opportunity for higher margin, differentiated mobile device hardware.

"In the past, TBR believes software and services were given the role of supporting the hardware lines of business, resulting in slower growth and lower margins in these segments than in HP's largest competitor, IBM."

The analyst noted that sales in enterprise software and associated services had flat-lined during the global recession, but are now starting to see a resurgence in the economic recovery.

"HP is hurrying to structure itself to join the party and still must fill the services position, and move the company forward to take advantage of the momentum," he said.

New Asian appointments, too
In a separate statement Wednesday, HP announced the promotion of David Caspari, to senior vice president of enterprise services for Asia-Pacific and Japan, who will report to the company's global senior vice president and general manager of enterprise services, Tom Iannotti.

Caspari was previously vice president of HP's enterprise services for South Pacific.

Editorial standards