What happens when a company straddles two industries, profiting in one arena and struggling in the other? That was Hewlett-Packard’s story a couple years back — its printing business paid the bills while Dell took the lead in PC sales. Then-CEO Carly Fiorina (responsible for the ill-fated Compaq purchase) responded by combining the divisions to coordinate management and marketing effortsin an attempt to bolster PC sales. Fiorina’s replacement, Mark Hurd, reversed that strategy — managing the Personal Systems Group and Imaging and Printing Group separately to improve cost structures. And that shift has made all the difference.
After separating the two units, Hurd tapped Todd Bradley to head up the PC division. Bradley decided to fight Dell by going where its rival lacked a presence — retail stores — instead of competing for direct sales over the phone and Internet. HP then enhanced their channel partners rewards program, offering greater incentives for retailers to push HP’s products. With those relationships strengthened, the next move was to bring customers to the stores. Bradley started a separate marketing group for the PC division and used the tagline “The Computer is Personal Again” to encourage actually seeing a computer in person before purchasing it.
As a result of Bradley’s leadership and focus, sales increased. This year, HP’s PC profits rose 29 percent, exceeding analyst’s estimates for the tenth straight quarter.
Although Dell’s now fighting on Hewlett-Packard’s retailer turf, HP appears to be the industry leader at the moment.
(Mark Hurd Image by Eddie Awad, CC 2.0)
