Team 9: Hewlett-PackardAshvin Jasvantlal ∙ Yizhao Tan ∙ Aniket Patankar

MS&E 274 – Final Presentation

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Current HP

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Causes of Stagnation – Personal System Segment

Two sided network effect reduced to zero

Many similar competing platforms carried by Retail channels

Supporting Ecosystem Shared with Competitors

No disruptive innovation. Incremental innovation can be easily imitated

Desired Form Factor Rapidly Changing

Platform: HP

Laptop/PC

Users

Software / OS

Developerse.g.

Microsoft

Chipset manufacture

rse.g. Intel

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Causes of Stagnation – Printing Segment

Value Chain Business Model

Diminishing Value for Downstream Customers w/o rapid Innovation

Old Vision + Weakening Holder -> Eroding revenues

Shrinking Customer Base

HP Printers

Cartridges Vendor

Printer PageManufacturers

Distributors/Retailers customers

upstream

Value toDownstreamcustomers

Value added by agents within the value chain

Supply chainlogistic

Continue improvingAlong this pathLeads to stagnation

Printer PartsManufacturers

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Core Competencies - VRIN

HP’s Core Competencies

Valuable Rare In-imitableNon-substitutable

Personal Systems Group

• Profits & Revenues.

• High Quality. • Broad portfolio.

• Unmatched products.

• PSG’s R&D Capabilities that is underutilized

• Knowledge in markets.

• Portfolio is diverse• Knowledge is well kept

and acquired with industry experience.

• Diverse products and partnerships are unique.

• Printers have little substitutes.

Enterprise Systems

• Major share of revenue and growth rate of 11%.

• Valuable direct sales channel.

• High Efficiency and client satisfaction.

• Strong Holder.

• Strong technical and knowledge base.

• Direct sales of products to partners are also more streamlined than competitors.

• ES’s technical knowledge base is accumulated with years of industry experience.

• It will take years for an outsider to gain these knowledge and intellectual capital.

• Strong support network to enterprise customers

• ES: Enterprises continue to rely on vendors like HP’s ES to provide solutions , systems and troubleshooting.

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Bright Side for HP PC & Printers

One of the top performing product lines still are from Personal Systems & Printing

Desktop Sales UP 10% Y/Y, Consumer Grade Printers Revenue UP 15% Q/Q

Continuing Product Demand & Recognizable Value in the Market

Perhaps the only company that offers products in every segment of computing from data center to devices

Customer’s feedback: Want to see HP as a single / un-split company so long as they prove “Together is better”

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Knowing Your Customer’s Changing Needs

Personal Computing

Printing

Tablets, Portable Smart Devices

Books/Content on Demand

Current PCs to become commodity PC, like TV

Integration With Digital Content for publishers

Wearable Devices, information appliances

Flexibility, permitting last minute changes

High Customization, Embedded Computing in

appliances

High definition Media / 3D

Gesture Based I/O, Advanced Human

Computer Interaction

Growing multimedia printing footprint

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SWOT Analysis

Strengths Weaknesses

ThreatsOpportunities

Inte

rnal

Ex

tern

al

• Globally Recognized Hi-tech Brand • Expertise in developing personal

systems, printing & enterprise hardware

• Well established supply chain • Web technology based product

marketing and sales• 24/7 Customer support

• Volatile Management & historically wrong business decisions

• Lack of in-house management consulting division

• Underutilized intellectual capital

• No aggressive investments in R&D

• Less global coverage• Growing demand for smart devices & information appliances

• Need for one stop shop for integrated software & hardware

• Target the aging market segment – their generation knows HP

• Joint Ventures in new areas

• Incumbent Competitor with lead in time & customer base

• Competitor’s superior technology and pricing

• High availability of substitutes• Ecosystem Partners turning

competitors e.g. Microsoft

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Recommendations

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Maintain HP as One

Two different strategies:

A. Maintain HP as single company and further develop new areas (Whitman)

B. Split HP Personal Systems Group and Enterprise Systems (UBS Analyst)

Current strategy by Meg Whitman is “Together is better”

Our team agrees on:

Recommendation A – Keep HP as One

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Strengthening Grabber-Holder Structure

Leverage Strategic Assets to provide Pivot• Financial Strength : $40 Billion in cash• Industry Knowledge & Expertise, Large Workforce• Infrastructure: buildings, equipment, production facilities• Extensive pre-sales & post-sales support

Keep Committed Agents• Ecosystem Partners with Strong relationships e.g. chip manufacturers,

suppliers and software vendors: Intel, Microsoft, others• Trusted Suppliers, Distribution Channel Partners, production

Incentivize Opportunistic Agents• Build New Customers: Brand Aware customer base outside of US • Build New Suppliers: New Chipmakers, Other OS Vendors• Provide Platform for New Software Developer Community

New Value Proposition based on Innovations• Disruptive Innovations in design based on new chips and new OS e.g.

Wearable Devices• Incremental Innovations in production & distribution of new products

Beach head to validate the idea: HP Slate 7 Chromebook

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(1) Latecomer's Strategy: Tablets, Smart Devices

Strength of Apple Trademark Design World Class User Experience High Price Point for Exclusivity Closed Platform: iOS High end hardware features

Strategic assets to support Design, Engineering

High Production Cost High Operational Expenses on

Marketing, Sales, Retail High Requirement to improve

rapidly Market Share, Brand value

High Market Visibility & Subject to constant scrutiny

Huge Expectations, High sensitivity towards product defects

High fluctuation

Flip Side of Incumbent's Strength Customizable Designs, Variety of

form factors Platform for Software As A Service Low cost, Lightweight Open for Multiple OS Support

Strategic assets to support Strong partnerships

Integrate services from various vendors

Become Marketing, Sales for each other

Build New Suppliers, Customers relations

Unknown suppliers that make quality chipsets

Help them to design and distribute new products suitable to your platform

Leverage knowledge in traditional PC customers to create excitement

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(2) HP Personal Computing:New Vision, New Platform

HP PC

Microsoft Windows, Intel

(Old Platform)

USConsumers

HP Personalized /

Wearable Devices

(New Platform)

New Vision: Platform For Software As A Service

Stagnant

Old Vision: Desktop, Notebooks For Consumers

Global Consumers,Enterprises,IT Decision

Makers

+HP Services

Multiple OS Vendors

Multiple Chipsets

App Developer Community

+

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HP PC : Dynamic Support and Push Cycle

Chip producer(performance) Pivot

(Assets inPC, Notebooks)

Growing Market Interest + Investment in Tablet, Wearable computing chipset startups

Applications Developer

Community

Supporting

Applications Developer

Community

Tablet peripherals,Touchscreen, Camera

Electrical components

Multi Vendor/ Open Source

OSSupporting

Growing Market Interest + Investment in operating systemsFor smart, personalized devices

HP Smart Devices

Supporting

HP Investment in R&D forIncremental innovation inPersonalized tablets / smart devices

Wearable Devices(performance and

coverage)

Repeat cycle

Supporting

HP Investment in R&D forHuman Computer Interaction To design gesture oriented / Wearable devicesDisruptive Innovation

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(3) Develop 3-d Printing

Forbes predicts this to be a $ 3.2 billion industry by 2016.

Existing infrastructure could allow HP to reduce retail price (effective grabber)

Reduce stagnation by entering the growing segment

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Optical component

makers

Software suites

Multimedia enhancers

suppliers

HP Smart Printing Platform

HP 3D Printers

Manufacturing Industry

Personal users Retailers

(Customization)

HP Printing Business Model Transformation

Two Sided Market

HP Printerssuppliers customers

Media

Personal users

Film productions

Multimedia

personal

High Def/ Special effect

Value Chain

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Applying Grabber-Holder to 3-d printing

Vision:Bring 3-d

printing to the mainstream

Brand recognition

in an unproven market

Effective ecosystem between

designers and customers

Use existing infrastructur

e to keep price

relatively low

Decreasing price will encourage

investors to enter certain segments

of industry

Strong Grabber

Holder structure

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HP Printing : Dynamic Support and Push Cycle

Chip producer(performance) Pivot

(Assets in HP Printers)

Investment in Tablet chipset, Wearable computing startups

HP 3D Printers

Supporting

Investment by IBM

HP Smart Printing Platform

Repeat cycle

SupportingInvested by IBM

Software vendor(applications)

Supporting

Microsoft andVC investors

PC peripheralsPC board, etc.)

VC investorsElectric companies

3D Printing Technology(functional)Supporting

Investment By Multimedia,Manufacturing Industry

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(4) Merger as last resort

Consider merging with other companies

If no turnaround within 18 months after acquistions

List of targeted companies:

1. Dell

2. IBM

3. Accenture

Benefits of Merger:

Grow value chain

Reduce stagnation

New large customer pool

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Accenture as Merger Target

Currently, Accenture best fit

Leveraging HP systems as Accenture consulting solution

Synergies

Complimentary expertise/skills set and core competencies

Accenture customer base: large market for HP

Could be turnaround pivot – bundling consulting and server/printer solutions

(from just consulting to consulting and implementation for Accenture)

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Thank you