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HEWLETT-PACKARD: High Growth, Elusive E

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DQI Bureau
New Update

At

Taipei’s World IT Congress in June, Bill Gates and Taiwan’s President Chen

probably got less applause than Carly Fiorina. This charismatic chief of

Hewlett-Packard (HP), who has pushed hard to turn the IT giant’s image from

staid to a net-savvy innovator, went on to say, "We aren’t the boring old

HP."

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An HP-Swatch ebiz wrist-watch? A Swiss tester walks through a

train-station turnstile, and the watch debits her bank account. E-services for

mobile users? HP will open 20 e-bazaars for services such as banking or stock

trading–one of them in India.

HP went through much change in 1999, including a new CEO.

Fiorina took over in July last year, and drove the new HP Invent global

campaign. At last, HP tried to convince the world that it was a Net-age

innovator. It also struggled for presence in a Net-dominated server market that

bought Unix servers mostly from Sun.

HP India’s new chief, Ganesh Ayyar, too had an eventful

first year. ‘Printer king’ HP went for the PC market. Ayyar took charge of

the key enterprise systems business. The test and measurement division first

became Agilent, and finally separated completely from HP India in October 1999.

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The Rs 1,356 crore group in India includes Delhi-based HP

India (computers, peripherals, services) and Bangalore-based Indian Software

Operation (ISO). Agilent was part of the group for seven months, till October

1999. Subsidiaries VeriFone and Apollo do not add to HP group revenues in India.

(Apollo sells low-end inkjets via Wipro in India, sans the HP name to avoid

conflict with deskjets.)

Corporate desktops were hot–with low pricing, and a strong

channel and support program–as HP downplayed its ‘printer company’ image.

Local assembly in Bangalore helped. While Pavilions didn’t sell and the Vectra

did modestly, the Brio corporate desktops really moved. Based on standard,

outsourced designs and components, the Brio helped push PC sales to over 60,000,

making HP the top MNC PC brand in India in 2000’s first quarter. Sales were up

in most of Asia, but slumped 33% in China, keeping HP’s PC numbers to 227,300

in the quarter (HP is among the top three PC vendors in the US and in the

world).

But HP gave up on portables. Barring the few palmtops its

distributor HOPE sells and a few Omnibooks, HP pushes out to corporates, it just

isn’t there.

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HP’s new internet strategy centered on its e-speak

technology, with a media event in 1999 and a developer conference in Bangalore

in March 2000. Net impact so far: zero.

HP’s weakness has been the internet. E-speak, HP’s glue

to bring together transactions in ‘Chapter II’ of the internet, is a

compelling technology let down by weak marketing and fuzziness about what it

really is and does. A year down the line, there are no users in India.

(Microsoft’s new.Net technology, with similar aspirations, has made an early

splash).

From the enterprise, HP India got numbers for low-priced

Intel servers, especially the locally-made NetServer E200. It got revenues from

higher-end servers and storage systems. HP 9000 Unix server revenues were good,

but numbers were behind an aggressive Sun’s, which sells only Unix servers.

The fast-growing Rs 600 crore Unix server market in India is crucial, and HP

will focus on ISP/ASP users, helped by its new HP-UX 11i upgrade.

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The Bangalore-based Indian Software Operation (ISO) has been

a success story for HP, with key development work for HP worldwide and its

partners and customers such as Amazon.com done there. The ISO develops

applications, system software, embedded code and firmware. It’s an e-speak

test center, and is also working on Linux applications support for the new HP-UX

11i OS.

Software is becoming crucial for this hardware giant, in its

move towards ‘internet infrastructure provider’ status. For instance, with

its VantagePoint software, HP is trying to take its OpenView family of products

in the same direction that CA took Unicenter–from network tool to enterprise

management to ecommerce infrastructure.

Peripherals continue to add a big chunk to HP India’s top

line, but margins there are tight, barring network lasers–and consumables.

Another success area last year, corporate desktops, has even thinner margins.

Given this fact, its services and enterprise systems business, including storage

solutions, is going to be of strategic importance for HP India’s bottom line.

Fiorina spoke of 20 HP e-services bazaars that would host

wireless e-services for personal banking, et al, for mobile users. Bangalore’s

HP ISO



will be one venue. Globally, if e is


the letter HP is trying to prefix, ‘services’ is the word driving its
strategy–"any asset that can be turned into a service on the web, will

be," as she put it.

Selling hardware, technical and marketing expertise, and even financing, HP–like

Cisco, Intel, CA and others–wants to be an e-infrastructure provider. It’s a

tough climb and a late start, but HP has the technology, products, expertise and

cash to do it. Meanwhile, in India, its challenge will be to keep up last year’s

growth, especially in PC numbers and enterprise systems revenues. DQ

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