Hewlett-Packard Company - SWOT Analysis

Page 1

© 2011 Factiva, Inc. All rights reserved.

. Strong market position in various market segments provides economies of scale for the company. * HP also has leading market position in the global printers market. In FY2010. HP managed to take market leadership from Dell in the global PC market in 2006 and sustain the position through 2010. All rights reserved Hewlett-Packard (HP or "the company") provides technology products. However. software. besides increasing its chance of winning customers. small and medium size businesses (SMBs) and large enterprises. It ships more than one million printers per week. solutions and services to a broad range of customers including individuals. the company had about 18% market share of the global PC market followed by Dell (13%).SWOT Analysis 3. personal computing and other access devices. The company also has a leadership position in server blades.Hewlett-Packard Company . In 2010. retaining its leadership position in this segment for over 59 straight quarters.165 words 29 June 2011 Datamonitor Company Profiles DATMON English © 2011 Datamonitor Ltd. The company's revenue from the x86 servers grew 34. * Strong market position in various market segments provides economies of scale for the company. Also. The company was the second largest player in the storage market behind EMC in 2010.0% in the current year compared to 2009. It also became one of the major IT services companies in the world with the acquisition of EDS in 2008. Strengths * Strong market position * Successful inorganic growth * Significant brand recognition Detailed * Strong market position * Hewlett-Packard (HP) has a robust market position in most of the product segments it serves. besides increasing its chance of winning customers. HP shipped approximately 64 million PCs in 2010. Its portfolio includes multi-vendor customer services. the company serves more than one billion customers in more than 170 countries across six continents. enterprise information technology infrastructure. and Lenovo (10%). The company leads the global PC market in terms of shipments. * Successful inorganic growth Page 2 of 8 © 2011 Factiva. Acer (12%). HP's industry standard server business continued to lead the industry in terms of units shipped and revenue. and imaging and printing-related products and services. Inc. intense competition will adversely affect the revenues and profitability of the company in long term. HP retained its leadership position in x86 server segment by accounting for nearly 39% of the total global revenue for 2010 in the x86 server segment. All rights reserved. the fastest growing segment of the market.

7 billion. a privately held software security assurance company and 3PAR. Moreover. a leading security and compliance management company. in the Fortune 500 ranking. Weaknesses * Lack of significant presence in various market segments Detailed * Lack of significant presence in various market segments Page 3 of 8 © 2011 Factiva. a privately held. in July 2010. The HP brand is recognized by various rating and ranking agencies. HP brand was valued at $26. by value. a provider of smartphones powered by the Palm webOS mobile operating system. The acquisition. following HP's acquisition of Compaq in 2002. in April 2010. This creates value for both investors and customers of the company in long term. an increase of 12% over 2009. the company signed a definitive agreement to acquire Vertica. The acquisition of 3Com will expand the company's Ethernet switching offerings. * In addition. * The company's successful inorganic growth allows it to increase its competitiveness both through scale and expanded portfolio of offerings. . the company's acquisition of Mercury Interactive at a value of approximately $4. * Significant brand recognition * The company has significant brand recognition. Inc. adding real-time business analytics for large and complex sets of data in physical. The company's major mergers and acquisitions in recent past include Compaq Computer in 2002.2 billion. Further.5 billion strengthened its portfolio of IT management software and services. real-time analytics platform company. at a value of approximately $2. Further. for approximately $1. The company acquired Palm. a leading global provider of utility storage. an international brand consultancy. HP acquired 3Com.9 billion made HP a leading player in IT services market. The acquisition of Vertica will enhance HP capabilities for information optimization. the company acquired ArcSight. a leading provider of networking switching. Mercury Interactive in 2006 and Electronic Data Systems (EDS) in 2008. The acquisition of 3PAR expands HP's storage portfolio into enterprise-class public and private cloud computing environments. for approximately $1. * Significant brand recognition provides a competitive advantage to the company and allows it to penetrate markets for new offerings with ease. HP was ranked 10 in the list of top 100 Best Global Brands 2010 ranking by Interbrand. These large acquisitions have allowed the company to gain scale and expand its capabilities in related areas. * In September 2010. virtual and cloud environments.5 billion. was the largest in the IT services sector and the second largest in the technology industry. The acquisition will enable HP to tap the growing smartphone and connected mobile device markets.35 billion. routing and security solutions. All rights reserved. HP has been successful in growing through large deals. In the following month. HP acquired Fortify Software. Further.8 billion to over $87 billion. For instance. adds routing solutions and also strengthens its position in China. in February 2011. the company's acquisition of EDS in a transaction valued at $13.* Over the years. HP was ranked in the tenth position during 2010. and made it one of the leading players in the IT market. for approximately $2.867 million in 2010. * The merger with Compaq allowed HP's revenue to scale up from $48.

the company depends upon other vendors to complement its offerings. In 2010.0. By 2014. both IBM and Accenture have strong management consulting practices. a 9. * Further. HP has been continuing to enhance its portfolio to overcome this weakness. the global tablet shipments reached about 14 million in 2010 and are forecast to register a compounded annual growth rate (CAGR) of above 51% during the period 2010-14. Inc. For instance. including Apple. Although. Moreover. among others. Samsung Electronics. in February 2011 Nokia partnered with Microsoft to make Microsoft Windows Phone 7 its high end smartphone operating system. The company's increased focus on the tablet PC segment will enable it to benefit from the growing market. All rights reserved. While. * In February 2011. Asia Pacific region including China is expected to lead the tablet PC market. For example. Page 4 of 8 © 2011 Factiva. the company's portfolio of offerings lack significant software product or management consulting services when compared to its major competitors including IBM. The company plans to make available this product in the coming months. among others. HP launched the HP TouchPad. in the tablet PC market. Further. increasing number of IT companies are establishing management consulting divisions in order to provide a more comprehensive and integrated range of services. In the smart phone market. the acquisition of EDS was an effort to strengthen its IT services offering. * The company is also way behind some of its competitors. However.7-inch tablet PC that runs on webOS 3. The growth is expected to be driven by the demand from the US and Asia Pacific regions. According to the industry sources. Apple's iOS. its operating system faces stiff competition from Google's Android platform. Accenture and EMC. and Acer. the company's acquisition of Palm in July 2010 enabled its entry into high growing smartphone market. . it still has a long way to go to make its impact in the market. * The company's lack of significant presence in various areas may affect its competitiveness and makes it dependent on others for providing complementary offerings. Opportunities * Growth of tablet PC market * Entry into smartphones market * Increasing demand for cloud computing services * Focus on healthcare sector Detailed * Growth of tablet PC market * The global tablet PC market is expected to grow strongly in the coming years.* HP lacks significant presence in various segments of the IT market when compared to its major competitors. followed by Apple's iOS with 35%. Indian IT companies such as Infosys Technologies have also added management consulting practice to their technology services in order provide better breadth and depth of services. the market was led by the North American region with approximately 35% market share. and RIM's BlackBerry platform. It is also forecast that Google's Android and Chrome OS will capture 36% of the smartphones and tablet-style devices by 2015.

in July 2010. running HP WebOS in February 2011. HP plans to project the Pre 3 as a business oriented smartphone and the Veer will have a 2. according to the industry sources. are forecast to account for over 35% of shipments in 2012. In December 2010. compared to $58. As result of its benefits. * In January 2011. the company launched HP CloudStart. a provider of smartphones powered by the Palm WebOS mobile operating system. In September 2010. it is also forecast that the smartphone shipments will increase by about 25% in 2011. which accounted for about 15% of worldwide mobile phones shipments in 2009.6 billion in 2009. * Growth of smart phone market presents an opportunity to the company to enhance its revenues in the coming years. Further. The worldwide smartphones shipments. which enables delivery of software as a service (SaaS).6inch screen and an 800MHz Snapdragon chip with 8GB of storage. Veer and Pre3. * Increasing demand for cloud computing services * The worldwide demand for cloud computing services is forecast to record strong growth in coming years. Cloud computing is a computing infrastructure model. In July 2010. The launch of new smartphones with an updated version of webOS will enable the company to effectively compete with other players in the market. HP and Microsoft partnered to work together on a Microsoft Windows Azure platform appliance that will enable large enterprise customers to adopt cloud-based applications. The smart phone shipments reached approximately 275 million in 2010.* Entry into smartphones market * HP launched two smartphones. an increase of above 50% compared to 2009. HP launched a suite of new products and services that enable businesses and governments to leverage the power of the cloud while ensuring they meet required levels of security. Inc. investment in hardware and other operating expenses. performance and availability. reaching $68 billion in 2010. This reduces the upfront royalty or licensing payments. * The company's increasing presence in the expanding cloud computing domain will provide it with the steady revenues and increasing customer base. Also. including Apple and Google. SHI International selected HP Networking solutions as the network infrastructure for its new IaaS cloud center. a solution for deploying an open and flexible private cloud environment within 30 days.5 billion in 2014. The company and VMware collaborated to develop and market next-generation intrusion prevention system (IPS) solutions designed and optimized for VMware vSpherebased virtual and cloud environments. . the market is expected to reach $148. platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) during the next five years. HP introduced integrated private cloud solutions customized for Oracle applications that significantly shorten and simplify the deployment process. Further. the enterprises are expected to gain about $110 billion from SaaS. The company entered the smartphone market with the acquisition of Palm. In August 2010. the worldwide smartphones market is forecast to record strong growth in coming years. the global cloud computing services market is forecast to record a growth of about 16% in 2010. the smartphones are expected to account for more than half of total mobile phones shipments in the US by 2012. * The company has been focusing on the cloud computing area in recent times. All rights reserved. growing at a CAGR of 20%. With the growth of cloud computing services. * Further. It plans to make available these products in the coming months. * Focus on healthcare sector Page 5 of 8 © 2011 Factiva.

including Wipro. among other factors. Its competitors include IBM Global Services. * The company and African social enterprise mPedigree Network introduced a service that targets counterfeit pharmaceuticals by enabling people in Nigeria and Ghana to check the authenticity of their malaria medication in December 2010. and Tata Consultancy Services. patients taking a range of medication manufactured by May & Baker Nigeria and the KAMA Group of Ghana can send a free text message to get an instant response as to whether the tablets or syrup bottles they received are genuine. business process outsourcing and application services. quality. CSC. Infosys Technologies. EMC. the company formed an alliance with the Clinton Health Access Initiative (CHAI) to speed up early infant diagnosis of HIV in Kenya. the company and McKesson collaborated to work on electronic health record (EHR) adoption at independent physician practices. All rights reserved. and Teradata. Approximately one third of US physicians and many of the country's leading hospitals. * The company's enterprise IT management software faces competition from IBM. systems integration firms such as Accenture. With the new service. In October 2010. * The company's solutions targeting healthcare sector will enable it to increase its revenues in the coming years. Its communications and media solutions compete Page 6 of 8 © 2011 Factiva. In January 2010. analyze and monitor diagnostic. infrastructure technology outsourcing. CA. and offshore companies such as Fujitsu and India-based companies. including Symantec. reputation. consulting and integration. HP's service businesses including HP Enterprise Services and Technology Services compete in IT support services. Threats * Intense competition * Legal proceedings * Dependence on third-party suppliers Detailed * Intense competition * HP faces intense competition in all its business segments. Quest Diagnostics' health information technology subsidiary MedPlus and HP partnered to facilitate and simplify EHR adoption for physician practices across the US. Inc. It competes in terms of price. BMC Software. technology. brand. and regional health exchanges rely on health care information solutions developed by Quest Diagnostics to document. In November 2010. . The combination of Quest's EHR solution with HP's hardware and services will create a platform for SMB physician practices to transition to an EHR system. which was recently endorsed by the West African Health Organization.* HP has been focusing on providing healthcare solutions in recent times. prescription and clinical data to provide better patient care. HP's information management and business intelligence solutions compete with products from companies. The company faces stiff competition in the ESS segment and its competitors range from broad solution providers such as IBM to more focused competitors such as EMC and NetApp in storage and Dell in industry standard servers. The service. CA. This code can be text messaged by the consumer or medical professional to a free SMS number to verify the authenticity of the drug. The system from HP and mPedigree assigns a code that is revealed by scratching off a coating on the drugs' packaging. IBM. and others. is expected to be available for other medications and in more countries in the near future. distribution and range of products. health plans.

Hewlett-Packard India Sales (HPI). * Intense competition will adversely affect the revenues and profitability of the company in long term. embezzlement and tax evasion relating to a transaction between Hewlett-Packard ISE in Germany. * Further. In addition. ASUSTeK Computer. and the Chief Public Prosecutor's Office of the Russian Federation.with products from IBM and various other competitors. The Russian GPO deal spanned the years 2001 to 2006 and was for the delivery and installation of an IT network. In the company's financing business. Xerox. There could be other supplier problems Page 7 of 8 © 2011 Factiva. * Any unfavorable resolution of above litigations will affect the company's image and affects its investors' confidence. The company's wide variety of systems. In addition. products and services at reasonable prices in time to meet schedules. particularly in jurisdictions outside of the US where adequate intellectual property protection may not exist. * Legal proceedings * The company has been involved in various legal disputes for the past few years. independent suppliers offer refill and remanufactured alternatives for the company's supplies which. during 2010. Under the FCPA. All rights reserved. and the long lead times that are required to manufacture. In branded personal computers market. The US Department of Justice and the SEC have also been conducting an investigation into the Russia GPO deal and potential violations of the Foreign Corrupt Practices Act (FCPA). and certain current and former HP employees have received show cause notices from the India Directorate of Revenue Intelligence (DRI) alleging underpayment of certain customs duties. * Dependence on third-party suppliers * HP depends on third-party suppliers for components. the company's competitors include Dell. The company's ability to serve its customer at a competitive price depends on its suppliers' ability to deliver sufficient quantities of quality components. Apple. as well as banks and financial institutions. . Lenovo Group and Toshiba. Acer. Inc. Seiko Epson. other companies also have developed and marketed new compatible cartridges for HP's laser and inkjet products. the company's imaging and printing group's key competitors include Canon. HP is involved in several lawsuits in which the plaintiffs are seeking unpaid overtime compensation and other damages based on allegations that various employees of EDS or HP have been misclassified as exempt employees under the Fair Labor Standards Act and/or in violation of the California Labor Code or other state laws. and Brother Industries. its competitors are captive financing companies. Further. products and services require it to source from the large number of suppliers and contract manufacturers that are dispersed across the globe. Lexmark International. for its smartphones. a former subsidiary of HP. Samsung Electronics. The company intends to contest each of the show cause notices through the judicial process. In addition. a subsidiary of HP. HP faces intense competition from Apple. * Further. may be offered at lower prices and put pressure on HP's supplies sales and margins. HP also experiences competition from local companies and from generically-branded or "white box" manufacturers. mainly IBM Global Financing.000 per violation and equitable remedies. a person or an entity may be subject to fines. the German Public Prosecutor's Office (German PPO) has been conducting an investigation into allegations that current and former employees of HP engaged in bribery. civil penalties of up to $500. RIM. products and services. In particular regions. assemble and deliver certain components and products. and Nokia.

For some components. replacing a single source supplier may delay production of some products as replacement suppliers initially may be subject to capacity constraints or other output limitations. excess supply. * Dependence on third-party suppliers exposes the company to risk associated with its ability to manage suppliers properly. Document DATMON0020110706e76t001th Page 8 of 8 © 2011 Factiva. In addition. but that may be unilaterally modified or terminated by the supplier with limited notice and with little or no penalty. All rights reserved. Inc. such as customized components and some of the processors that HP obtains from Intel. .that the company may face including component shortages. risks related to the terms of contracts with suppliers. risks associated with contingent workers. The company's inability to manage suppliers properly may affect its operating performance and brand value. the company sometimes purchases components from single source suppliers under short-term agreements that contain favorable pricing and other terms. alternative sources may not exist or those alternative sources may be unable to produce the quantities of those components necessary to satisfy the company's production requirements. * For instance. and risks related to its relationships with single source suppliers.