RealTime IT News

Analysts Urge HP to Work Fast

HP's post-Fiorina priority must be to act quickly to replace its CEO and communicate more to its customers in order to compete against both Dell and IBM, analysts said.

No strategic changes are anticipated in the short-term but analysts with IT research firms IDC and Forrester Research issued reports Thursday suggesting customers stay the course in the face of broader changes after a permanent CEO is found.

"HP competitors will probably use this period at HP to their advantage by suggesting uncertainty about the future," IDC analysts said in their note to customers. "It is critical that HP find a new CEO as quickly as possible and that it quickly and aggressively communicate stability and a plan for customers, and the channel."

During its conference call with analysts and press Wednesday, Palo Alto, Calif.-based HP said it has many potential areas to focus on including a geographic expansion for PCs, and instituting processes to prevent its storage business from falling behind in its product roadmap.

HP's board also said it is sticking to the strategy of pursuing consumers and enterprise customers with a difficult mix of commodity and premium products.

"If a focus on execution is not producing results within 18 months of the new CEO's arrival, we expect the board will again entertain more aggressive organizational moves, including possibly breaking up the company, to achieve higher levels of profitable growth for the company's large institutional investors," IDC said in its briefing.

Until that time, Forrester analysts said HP will need to work fast. HP's printer customers are clearly happy, but HP's board members -- and the new leader they seek to hire -- will have to answer difficult questions from its other three core customer categories: enterprise data center, enterprise PCs, and consumer business partners.

"Letting users choose whether to buy direct or from distributors doesn't help HP win against Dell's brutally effective direct sales model," Forrester said in an advisory report today. "It's not that Dell is unbeatable. For example, in just a year, Sun has become a big seller of AMD Opteron-based servers.

Forrester said HP can also differentiate itself against Dell with features that appeal to enterprise buyers like reliability and platform stability. Still, analysts said Dell shines in account management - and ultimately, relationships, which are the key to customer retention.

"An integrated HP can offer the market's broadest portfolio of desktops, laptops, and handhelds and can heavily discount client hardware when users buy higher-margin servers and services," Forrester said in its report. "IBM won't be able to claim this once it completes the sale of its PC division to Lenovo, and Dell can't really claim it at all."

As for consumer business partners, Forrester and IDC suggest HP needs to solidify its "radically simple, better together" consumer strategy with its consumer business partners and customers like Apple, Best Buy, Comcast, Disney, DreamWorks, Intel, Microsoft, Starbucks, and Verizon.

"They need to hear that HP is still committed to the digital home and will continue its leadership on standards and technologies for copy protection, device interoperability, and content distribution," Forrester said.