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

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.

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