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Strong Market Position – Recently (April 2010), Hewlett-Packard’s shares closed at $53.15. According to NASDAQ, the stock is up 62% in the past year, better than the market at large. This continues a trend that saw the company ease pass the previous global pc leader Dell in 2006. In 2008 Hewlett Packard led Dell with over 17% of the PC Market while Dell settled for second at 14%.
Expanding presence in cloud computing market – Cloud computing describes a new delivery model for IT services. In July 2008, HP along with Intel Corporation and Yahoo! created a global, multi-data center, open source test bed for cloud computing research and education. The goal of the project was to promote collaboration among industry, academy and governments by removing the financial and logistical barriers. In 2009, HP announced HP Cloud Assure, a new SaaS offering designed to assist businesses to safely and effectively adopt cloud-based services. HP Cloud Assure consists of HP services and software, including HP Application Security Center, HP Performance Center and HP Business Availability Center. These solutions are delivered to customers though HP SaaS platform. The increasing demand for cloud computing is likely to create demand for HP’s solutions in coming years. The global spending on cloud computing is forecast to cross a value of over $40 billion by 2012
Projected decreases in the IT markets – Forecasters predict a decrease in the worldwide demand for various IT products offered by HP. The economic slowdown has negatively affected many market segments, including information technology. Hewlett Packard has experienced this decline not only in the U.S. but also in its global markets. Worldwide spending on IT was predicted to decline by 4% in 2009.
Hyper-competitive environment – Although Hewlett Packard recently overtook Dell in sales, the latter remains a formidable competitor, as are other companies such as Toshiba, Lenova Group and Aver. It competes in terms of price, quality, brand, technology, reputation, distribution and range of products, among other factors. In some regions, the company faces competition from local companies and from generically-branded or white box manufacturers.
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This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only.
In addition Hewlett Packard can boast of a 30% of the global server market. Its domination of the global printer market is evidenced by its 40% market share. In 2008 Hewlett Packard took a major step in strengthening its position in the IT services market by acquiring EDS.
Prominent Brand Name Recognition – Hewlett Packard is keenly aware of the importance of branding. It has long sought to adjust its brand image as required by changing market forces. In the late nineties it began to shift its image to encompass more than just the business to business segment making adjustments to increase its presence in the consumer market as well. Although business to business sales continue to prevail, the company seeks to exploit its good relationship with retailers. As a result of this strategy many current consumer products are business models stripped of costly features in order to appeal to the needs and pocketbook of the consumer market.
Hewlett Packard has launched a branding initiative called, “One Voice,” in order to better integrate its line of consumer electronics and computer hardware products. With a fresh design to the packaging, they are striving to on brand across thousands of product lines and dozens of packaging types. The project has resulted in hundreds of thousands of dollars in cost savings by automating package design creation. In addition, the company gained greater consistency in its packaging by providing a system that keeps the company on brand. In 2009 the company moved up from the 12th to the 11th most recognizable brand according to Interbrand.com.
Successful Strategic Acquisitions – Hewlett Packard continues its trend of recognizing and capitalizing on strategic acquisitions. The company’s major mergers and acquisitions in recent past include Compaq Computer Corporation in 2002, Mercury Interactive in 2006 and Electronic Data Systems Corporation (EDS) in 2008. In November of 2009, Hewlett Packard announced that it had reached an agreement to acquire 3Com, a provider of computer network equipment, for $2.7 billion in a deal that H.P. plans as a the beginning of an assault on the market leader in networking, Cisco Systems. Computer networking is a $40 billion-a-year market with high profit margins that is growing briskly and dominated by Cisco, which has so far had little head-to-head competition. The company’s successful inorganic growth allows it to increase its competitiveness as well as create value for both investors and customers of the company.
Weak Market Segment Integration – Although Hewlett Packard is currently addressing its lack of presence in some seemingly obvious segments, there remains room for improvement. The company’s portfolio of offerings lack significant software product or manage consulting services when compared to major competitors including, Accenture, EMC and IBM. For example, both IBM and Accenture are establishing management consulting divisions so as to provide more comprehensive and integrated range of services. Recently, Hewlett Packard has partnered with Thomson eXimius to provide front office processes for private client wealth management firms to support the increasingly sophisticated needs of their customers.
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