What’s Behind HP’s Printer Reorg?

Reorganizations are usually done when a division, unit or company is performing poorly or not executing properly. They tend to be quite disruptive, complete with layoffs. So why in the world would a company reorganize one of its most successful divisions?

In the case of HP, it has begun a restructuring of its Imaging and Printing Group (IPG) to offer some efficiencies, but it won’t be anywhere near as big a change as is normally associated with a reorg. No one, for example, is going to lose their job.

“There’s no big change or anything to signal,” Alyson Griffin, a spokesperson for HP, told InternetNews.com. “It’s literally just a follow on from our Print 2.0 transformation last year and a continuing effort to streamline the organization.”

HP’s Print 2.0 initiative is designed to connect better with the digital age with support for new devices and means of capturing, sharing and displaying images.

The five previous divisions, run by Vyomesh “VJ” Joshi, who has led the group since 2000 and will remain its head, were LaserJet, InkJet, Graphics, supplies, and Enterprise. Graphics remains unchanged. It will continue to support everything from billboards to packing slips with their printing supplies.

Connecting products with their parts

One of the shortcomings of the old structure was that parts were separate from the devices, so things like ink and paper were separate from InkJet and LaserJet. Now all of the InkJet parts will be in the InkJet unit and LaserJet supplies like toner will under the same roof as the printer.

InkJet and its supplies, as well as Web solutions, will be streamlined into one group while LaserJet and enterprise, due to their natural pairing, will become the third group. “We basically said ‘hey, let’s make this tighter’, so we can be more agile, reduce cost structure, enable growth and enhance the customer experience,” said Griffin.

Analyst Shaw Wu of American Technology Research figured it wouldn’t be a huge change. “I think it’s just adapting the business to cope with the realities of the market, and what’s likely to emerge as the newer reality,” he said. “It’s already a pretty decent business as it is. I think it’s just a feeling that the new culture with [CEO Mark] Hurd is they don’t want to rest on their laurels.”

Indeed, the IPG group is one that should be treated with the old maxim “If it ain’t broke, don’t fix it.” IPG revenue grew 6 percent year over year in the first quarter to $7.6 billion. Operating profit was $1.2 billion, or 16.2 percent of revenue.

Peter Grant, a research vice president with Gartner, said this looked like the work of Mark Hurd. “Hurd is good at trying to squeeze out redundancy,” he said.

“I think he’s just looking for synergy and he has aligned LaserJet with the commercial business, which makes sense, and InkJet with retail, which is where they sell. They have the same customers and the same channels.”

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