Tougher Decisions Lie Ahead for HPBy Eric Lundquist | Posted 2005-07-19 Email Print
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Opinion: Are the laid-back California technology community and Hewlett-Packard stockholders ready for someone who can out-Carly Carly?In his conference call Tuesday outlining the 14,500 employee cutbacks and the restructuring of Hewlett-Packard into three main groups, recently installed CEO Mark Hurd indicated that he will be intent on finding new efficiencies at HP in existing market segments rather than pulling back or dropping out of any of the company's broad market offerings.
Under ousted CEO Carly Fiorina, HP expanded its product lines to include consumer, corporate and service-based market segments. Critics said even a company the size of HP was not big enough to take on the likes of Sony, Dell and IBM all at once.
Fiorina said she could find efficiencies by taking what the company learned in, for instance, consumer products and transferring that knowledge to the corporate and enterprise business. Before she was ousted, Fiorina was meshing more activities, including merging the printer and PC businesses.
Mott's hiring with a compensation package of $15.3 million is an indication that Hurd expects to use data analysis and tracking as a competitive weapon. Last year, Hewlett-Packard executives suffered one of their more embarrassing public moments when they announced that computer shipments were being delayed because of the difficulty they faced in integrating their supply-chain operation.
Of course, Dell and Wal-Mart (which are heavy users of NCR's Teradata systems) are well-known for their supply-chain management and expertise. But that type of data development and integration takes a lot of upfront investment in time and money before the results become apparent.
As HP becomes a more data-driven, metrics-based company, the question is what happens if after all of that performance-driven management, sales and productivity just don't measure up to the competition?
The employee cutbacks (which represented about 10 percent of the company), the changes in retirement benefits and the dissolving of the customer solutions group were wrenching and required, but will not spur new growth.
The printer business, the PC business and services are all seeing new competitors. The corporate technology purchasers are getting far smarter about getting the most mileage they can out of their technology budgets.
In a year or less, will Hurd have to make the tougher decisions on exactly which businesses HP should remain in and which would be better off either as a stand-alone operation or a child of another parent? I think so.
eWEEK magazine editor in chief Eric Lundquist can be reached at email@example.com.
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