Suddenly, Meg Whitman stands alone at HP.
With the departure of chairman Ray Lane and two other board members from Hewlett-Packard , Whitman finally finds herself with the freedom to complete the turnaround of the embattled company. But will the vision Whitman brings to the table work in this new computing era?
Lane was an enterprise computing specialist. His time at Oracle showed a deep understanding of the needs of large corporate clients. Unfortunately, that experience – and his championing of the disastrous acquisition of Autonomy – didn't seem to have any effect on HP's fortunes.
The overall plan Lane started is a good one: Switch from making cheap stand-alone PCs to selling large integrated packages of hardware and software for the largest clients. In addition, bring the company's skills with PCs to the tablet market. On the face of it, that direction should pay off. It simply hasn't with Lane at the helm.
Catching Up on Tablets
There are a lot of players in the tablet computing market. It won't be easy for HP to compete with monsters like Amazon and Apple . Between the two, they controlled over 55% of the tablet market in Q4, and both will be difficult to dislodge. Still, HP is doing the right thing by using Google's Android operating system in its new tablet. Pricing that offering at $169 is an even better move to grab market share fast.
Holding the Business Market
Whitman's selection of Android also follows through on her decision that HP would walk away from partner Microsoft . HP products have used Microsoft operating systems for quite a while, and the move could indicate that the company is distancing itself from Microsoft as it prepares to go after the big corporate clients that Microsoft also tries to lock up long-term.
By going after the enterprise-level business account, Whitman is making the statement that she knows where the future of computing is heading. Businesses will want efficient, affordable and effective systems that cover their needs while integrating with tablet computers that executives can carry around and work on. That's the same space that Microsoft has identified with its Surface tablet. If HP can successfully maintain and grow market share in that space, it can afford to let Samsung and Apple run wild in the consumer space.
No one can say Whitman's strategy hasn't been working. Even with the distractions of Autonomy and Lane, the firm's shares have regained most of the loss it saw through 2012. Since November, shares have grown 90.4%. The company's 2012 operating margin was -9.19% but its Q1 margin this year was 6.18%. Those signs all look good for HP.
With Lane out of the way, media distractions should decrease, too. It allows shareholders to focus on Whitman as the hero and dismiss Lane as the villain. That storyline is too simplistic, but people like simple tales, and this gives them a reason to believe in HP again. That's the important thing going forward. The company has a CEO that people believe in, it's beginning to make money again, and the shares are headed upward. Those are all good signs for Hewlett-Packard.
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