HP
Reorganizes; Competitors React
HP
has been offering its critics lots of ammunition. Its 3rd quarter earnings failed to meet
expectations, causing a major reorganization in HP management.
Peter
Blackmore has left HP as EVP of the Customer Solutions Group,
replaced by Mike Winkler. He
will have responsibilities for
all direct sales to the company's enterprise, small and
medium-size business and public sector customers worldwide, while
also retaining his current responsibilities.
Other management changes included the replacement of Jim
Milton as CSG senior vice president and managing director for the
Americas region. Jack Novia and Bernard Meric will replace Kasper
Rorsted as CSG senior vice president and managing director for the
Europe, Middle East and Africa (EMEA) region.
All
of this apparently is over chaos in HP’s order system during
August, as HP merged multiple SAP systems together.
This systems integration problem interrupted management
information and caused difficulties in supplying customers with
orders on a timely basis, leading to significant revenue
shortfalls. Of
course, it’s embarrassing for HP, considered an expert in
implementing and managing large SAP systems, to have a highly
visible problem of its own.
HP
has assured customers that the problems have been identified and
appropriate measures to fix them are already well under way.
The
revenue loss triggered a substantial fall in HP’s share price
and a number of customer concerns about HP’s future service
capabilities. HP will
need to do some customer and channel hand-holding to get past
this.
In
the meantime (perhaps one should say predictably?), HP’s
competitors lost no time in offering to help out.
In his August 16th weblog, Sun COO Jonathan
Schwartz took pot shots at HP’s decision to base their future on
Itanium, Windows, and Linux.
He offered customers Sun’s HP Away program, a special
discount designed to help HP-UX customers migrate to Sun Solaris,
as well as incentives for Alpha Server and Tru64 Server customers.
This program has been running since late 2003 and Sun
claims to have moved more than 150 customers to Solaris.
Sun has now expanded the program to include its Solaris x86
operating system, with discounted hardware pricing and special
financing. There is
more information on Sun’s HP Away migration program at www.sun.com/datacenter/migration/hp_offer.html.
IBM
had also anticipated HP’s inventory woes and was offering extra
inventory and incentives to business partners to provide IBM
systems to HP customers who might be willing to consider an
alternative. IBM has
recruited over 200 HP and Sun business partners in the past 18
months and notes that their business with IBM has more than
doubled.
The
hardware business is competitive and aggressive and missteps are
sure to be costly, especially with competitors eager to offer
suitable alternatives and vendor changes, once made, hard to undo.
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