Back in 2008, while I was still a senior corporate IT executive in Chicago, I attended a lunch hosted by the CEO of CDW (the big Chicago area based value-added reseller and at the time one of my suppliers) where the guest speaker was Mark Hurd, at the time the chief executive of Hewlett-Packard. Over lunch, Hurd laid out the rationale for his strategy for #HP ’s future, more or less as follows (this is from a combination of memory and my notes from the lunch):
Be in both the consumer and corporate PC and printer business for volume at admittedly low margins (3%-5% overall as I recall, although printer supplies and accessories had much higher margins). However, use the volume leverage to get significant procurement and supply chain efficiencies for everything from components to original design manufacturer manufacturing capacity and shipping costs. At the time, IBM was out of the PC business and Dell was struggling. Lenovo was certainly going to be a threat, but not yet the force it would become. No other PC vendor was a significant marketplace presence in HP’s key markets. HP could be number one by a wide margin.Use these procurement and supply chain efficiencies to dominate the small business and enterprise server, networking, and storage market segments through aggressive pricing in all channels. Use component pricing power to aim for 14% to 20% margins, but build a strong VAR ecosystem through attractive volume discounts. Restrict the direct channel to a limited number of very large enterprise accounts to encourage VARs to build market share.Use this significant presence in the server and related technology segments to build a focused data center software business at better margins (40% to 60%), filling in portfolio gaps with acquisitions as needed and when “good deals” were available.Use the resulting data center “operational platforms” to build a managed services and systems integration business, also at decent margins, covering everything from facility design to equipment installation services to information technology outsourcing and business process outsourcing.
http://ww2.cfo.com/the-cloud/2016/06/hps-strategy-fell-apart/
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