3 steps HP should take to turn itself around

By Rob Enderle, CIO |  IT Management, HP

The remaining parts of the company focus on enterprise computing. Execution here is mixed, with hardware doing reasonably well but services and software struggling for different reasons. Fixing this division is also a complex problem. At the core, though, is that the apparent weakness of HP has virtually all competitors focused on mining HP's customer base. HP isn't competing against one of them, or even part of a pool. The company is overmatched trying to defend against all of them-and many are at a similar scale or even bigger than HP.

Triage: Get HP Out of PCs and Personal Printers

Of HP's four industries, two show upside potential against the company's existing resource base. The first, as noted, is industrial printing for coverings. The market is nascent, and HP's scale could allow it, with focus, to dominate. However, doing so would result in eliminating most of the company, which suggests that a better path might be to sell off the industrial printing business and use the money to strengthen the rest of HP.

Enterprise computing, the second industry, would capture much of what HP is right now. Here, IBM represents what a focused, well-run company in this segment could accomplish. HP offers technologies in networking, storage, servers and even software that give it potential competitive advantage, but the company suffers from past decisions about software and services that need substantial work and focus.

Fixing this component of HP is in line with turning around IBM, but HP is in better shape now than IBM was when its turnaround started. Based on HP's existing makeup, it makes the most sense to make this business the core of the new HP.

Commentary: At Financial Analyst Meeting, HP Impresses With Plans for Turnaround

The other two businesses are either in decline or under-executing badly. The personal and business printer market is in decline, while the supply side is under attack by cheap third-party suppliers. HP's consumer electronics business is under-executing in the market, as the growth companies that own it are far closer to pure plays.

Lenovo, one of the fastest-growing consumer electronics companies, resulted from the spin-off of IBM's PC division, and both IBM and Lenovo are more successful as separate entities. On the other hand, Sony, another combined company in the segment, is also underperforming. This suggests that consumer electronics firms need a tight focus-which, for HP, would mean a spin-off.

Prioritize and Execute: Image Is Everything


Originally published on CIO |  Click here to read the original story.
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