Recently HP announced that it is hiring a new chief information officer to run an IT department that will now operate independently from the company’s supply chain group. In June, Hurd separated the PC and printer groups that were combined by his predecessor, Carly Fiorina, in January. He likewise separated a global sales role and a chief marketing role in organisational moves this quarter.
But all indications are that further changes are coming. Financial and industry analysts, according to Germany’s largest-selling computer magazine and IT website PC-Welt, expect HP to search for the right structure and operational model while still digesting the 2002 acquisition of Compaq Computer Corp.
Charles King, principal analyst at Pund-IT Research in Hayward, California says HP is at a crossroads in its history.
“The company’s size is right in between its major rivals, IBM Corp. and Dell Inc. HP has 150,000 employees worldwide, compared to 57,600 at Dell and almost 320,000 at IBM,” he says.
Many of those workers are finding their roles changing as HP moves from a company driven by extensive research and development to a company more reliant on low-margin businesses like PCs and low-end servers.
“For example, HP used to design its own server processors, but now relies on chips from Intel Corp. and Advanced Micro Devices Inc. for those markets.
“The company is evolving into something that [co-founders William] Hewlett and [David] Packard wouldn’t have considered or even recognised,” King said.
“The profit margins are notoriously slim in those markets. If that’s the strategy they want to pursue, they’ve got to get every bit of fat out of their workforce.”
Certain HP employees were offered a severance plan earlier this year and about 2,000 people accepted, mostly in the printing and imaging group, the company said.
In an interview, printer chief Vyomesh Joshi said that the layoffs reflect a changing HP printer business as the company goes after more lucrative markets such as colour laser printing and de-emphasises older products.
Hurd has a history of cost-cutting at his former employer, NCR Corp, which many analysts believe was an important factor in the decision of HP’s board to bring in Hurd, Welt says.
Some customers and employees are worried that a leaner HP would be unable to invest in new product research that would set the company apart from Dell and IBM. However, companies that are struggling have to sometimes cut costs to get back on their feet, said Gordon Haff, senior analyst with Illuminata Inc. in Nashua, New Hampshire.
“There are very good signs that [Hurd is] fairly happy with the team he’s got,” Doherty said, noting that Hurd recently hired two tech industry veterans in new PC boss Todd Bradley and new Chief Information Officer Randy Mott, instead of bringing people over from NCR, his former company.
