3. 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
Developers
e.g. Microsoft
Chipset
manufacturers
e.g. Intel
3
4. 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 Page
Manufacturers
Distributors/
Retailers customers
upstream
Value to
Downstream
customers
Value added by agents within the value chain
Supply chain
logistic
Continue improving
Along this path
Leads to stagnation
Printer Parts
Manufacturers
4
5. Core Competencies - VRIN
HP’s Core
Competenci
es
Valuable Rare In-imitable
Non-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.
5
6. 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”
6
7. 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
7
8. SWOT Analysis
Strengths Weaknesses
ThreatsOpportunities
InternalExternal
• 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
8
10. 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
10
11. 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
11
12. (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
12
13. (2) HP Personal Computing:
New Vision, New Platform
HP PC
Microsoft
Windows,
Intel
(Old Platform)
US
Consumers
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
+
13
14. HP PC : Dynamic Support and Push Cycle
Chip producer
(performance)Pivot
(Assets in
PC, 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 systems
For smart, personalized devices
HP Smart
Devices
Supporting
HP Investment in R&D for
Incremental innovation in
Personalized tablets / smart devices
Wearable Devices
(performance and
coverage)
Repeat cycle
Supporting
HP Investment in R&D for
Human Computer Interaction
To design gesture oriented /
Wearable devices
Disruptive Innovation
14
15. (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
15
17. 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
infrastructure
to keep price
relatively low
Decreasing price will
encourage investors
to enter certain
segments of industry
Strong Grabber
Holder structure
17
18. 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
Supporting
Invested by IBM
Software vendor
(applications)
Supporting
Microsoft and
VC investors
PC peripherals
PC board, etc.)
VC investors
Electric companies
18
3D Printing
Technology
(functional)Supporting
Investment By Multimedia,
Manufacturing Industry
19. (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
19
20. 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)
20
