Monday, August 23, 2004

Economist.com | Hewlett-Packard: Losing the HP way

Economist.com | Hewlett-Packard: Losing the HP way "Her problem, in a nutshell, is that HP is trying to be all things to all kinds of customers, and is leaving more and more of them plain confused. HP dominates in the market for printers, both laser and inkjet, and both for consumers and companies. It is also strong in handheld computers and some other consumer electronics items, such as digital cameras. In desktop personal computers and notebooks, HP runs neck-and-neck with Dell as the world's biggest supplier.
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Ms Fiorina's best option is to address the “conglomerate discount” in HP's share price—in other words, to break up her company, says Mr Milunovich. Many of HP's investors would prefer to own only its stellar printing and imaging business, which need not apologise to anyone. This would also free the printer business to parry the distant threats from rivals such as Lexmark and Dell.
The remaining computer and storage businesses could then be further divided by customer focus—corporate versus consumer—or merged with rivals. The result would be several well-targeted companies that would either be genuine leaders (printers) or potentially profitable runners-up in corporate computing, the “Avis to IBM's Hertz”, as Mr Milunovich puts it."
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