SWOT Analysis Hewlett Packard

Ron Thomas, Thomas Enterprises, Indianapolis

Strengths
• Strong Market Position - Recently (April 2010), Hewlett-Packard’s shares
closed at $53.15. According to NASDAQ, the stock is up 62% in the past year,
better than the market at large. This continues a trend that saw the company ease
pass the previous global pc leader Dell in 2006. In 2008 Hewlett Packard led Dell
with over 17% of the PC Market while Dell settled for second at 14%. In addition
Hewlett Packard can boast of a 30% of the global server market. Its domination of
the global printer market is evidenced by its 40% market share. In 2008 Hewlett
Packard took a major step in strengthening its position in the IT services market
by acquiring EDS.

• Prominent Brand Name Recognition - Hewlett Packard is keenly

aware of the importance of branding. It has long sought to adjust its brand image
as required by changing market forces. In the late nineties it began to shift its
image to encompass more than just the business to business segment making
adjustments to increase its presence in the consumer market as well. Although
business to business sales continue to prevail, the company seeks to exploit its
good relationship with retailers. As a result of this strategy many current
consumer products are business models stripped of costly features in order to
appeal to the needs and pocketbook of the consumer market.

Outsourcing:

• Hewlett Packard has launched a branding initiative called, “One Voice,” in order
to better integrate its line of consumer electronics and computer hardware
products. With a fresh design to the packaging, they are striving to on brand
across thousands of product lines and dozens of packaging types. The project has
resulted in hundreds of thousands of dollars in cost savings by automating
package design creation. In addition, the company gained greater consistency in
its packaging by providing a system that keeps the company on brand. In 2009 the
company moved up from the 12th to the 11th most recognizable brand according
to Interbrand.com.
• Successful Strategic Acquisitions - Hewlett Packard continues its trend of
recognizing and capitalizing on strategic acquisitions. The company’s major
mergers and acquisitions in recent past include Compaq Computer Corporation in
2002, Mercury Interactive in 2006 and Electronic Data Systems Corporation
(EDS) in 2008. In November of 2009, Hewlett Packard announced that it had
 reached an agreement to acquire 3Com, a provider of computer network
equipment, for $2.7 billion in a deal that H.P. plans as a the beginning of an
assault on the market leader in networking, Cisco Systems. Computer networking
is a $40 billion-a-year market with high profit margins that is growing briskly and
dominated by Cisco, which has so far had little head-to-head competition. The
company’s successful inorganic growth allows it to increase its competitiveness
as well as create value for both investors and customers of the company.

Weaknesses
• Weak Market Segment Integration - Although Hewlett Packard is currently
addressing its lack of presence in some seemingly obvious segments, there
remains room for improvement. The company’s portfolio of offerings lack
significant software product or manage consulting services when compared to
major competitors including, Accenture, EMC and IBM. For example, both IBM
and Accenture are establishing management consulting divisions so as to provide
more comprehensive and integrated range of services. Recently, Hewlett Packard
has partnered with Thomson eXimius to provide front office processes for private
client wealth management firms to support the increasingly sophisticated needs of
their customers.

Opportunities
• Expanding presence in cloud computing market - Cloud computing describes a
new delivery model for IT services. In July 2008, HP along with Intel Corporation
and Yahoo! created a global, multi-data center, open source test bed for cloud
computing research and education. The goal of the project was to promote
collaboration among industry, academy and governments by removing the
financial and logistical barriers. In 2009, HP announced HP Cloud Assure, a new
SaaS offering designed to assist businesses to safely and effectively adopt cloud-
based services. HP Cloud Assure consists of HP services and software, including
HP Application Security Center, HP Performance Center and HP Business
Availability Center. These solutions are delivered to customers though HP SaaS
platform. The increasing demand for cloud computing is likely to create demand
for HP’s solutions in coming years. The global spending on cloud computing is
forecast to cross a value of over $40 billion by 2012
• Expanding portfolio of imaging and printing solutions - Hewlett Packard has
made several strategic acquisitions and introduced new products in the imaging
solutions segment in recent times. Its imaging solutions strategy entails the
commercial markets, from print services solutions to new growth opportunities in
commercial printing and capturing high-value pages in areas such as industrial
applications, outdoor signage, and graphic arts. Among those key acquisitions are
Tabblo, Logoworks, MacDermid and ColorSpan.
HP has launched several retail photo printing solutions and services that provide
consumers the tools to personalize their photos and publish customized creative
 output. In addition, it has introduced new digital printing technologies, HP Inkjet
Web Press, HP Latex Inks and three HP Indigo presses, as part of its graphic arts
offerings. In October 2008, it also announced a plan to launch full wireless HP
Photosmart printer lineup by 2010.

Threats
• Projected decreases in the IT markets - Forecasters predict a decrease in the
worldwide demand for various IT products offered by HP. The economic
slowdown has negatively affected many market segments, including information
technology. Hewlett Packard has experienced this decline not only in the U.S. but
also in its global markets. Worldwide spending on IT was predicted to decline by
4% in 2009.
• Hyper-competitive environment - Although Hewlett Packard recently overtook
Dell in sales, the latter remains a formidable competitor, as are other companies
such as Toshiba, Lenova Group and Aver. It competes in terms of price, quality,
brand, technology, reputation, distribution and range of products, among other
factors. In some regions, the company faces competition from local companies
and from generically-branded or white box manufacturers.

Specifically, the company’s competitors in enterprise servers and storage include

IBM an in storage there is the EMC Corporation, Dell in industry standard servers
and Sun Microsystems in UNIX-based servers. The imaging and printing group’s
key competitors include Canon USA, Lexmark International, Xerox Corporation,
Seiko Epson Corporation, Samsung Electronics and Dell. HP even faces
competition from re-manufacturers including private label brand stores, supply
stores such, internet vendors and original equipment manufacturers (OEMs) such
as Lexmark. The re-manufacturers buy the original cartridges from customers,
refill them with their own ink and resell them at a discount to the branded OEMS.
These entities provide a continuous source of competition which could impact the
profitability of HP.

HP is a technology company that operates in more than 170 countries around the world.
We explore how technology and services can help people and companies address their
problems and challenges, and realize their possibilities, aspirations and dreams. We apply
new thinking and ideas to create more simple, valuable and trusted experiences with
technology, continuously improving the way our customers live and work