Thursday, April 30, 2009

Is Hurd funding IPG's Demise with IPG's Revenue?

In a very interesting article by Ned Randolph at NewsFactor, he discusses HP's move into other, non-traditional printing areas like Photo Kiosks and on-demand, uniquely individualized newspapers.

Buried toward the end of the article is a quote from Gary Peterson, a principal analyst with Gap Intelligence in San Diego.

"... the printing industry is a mature one, and there is a movement within HP to use IPG's 18.5 percent profit margin not to grow the printing segment, but move it into IT services, where IBM Relevant Products/Services dominates..."


Peterson goes on, "What we've seen from (CEO) Mark Hurd is that he's very interested in infrastructure Relevant Products/Services services. He wants to slowly evolve HP into IBM."

And they're using IPG profits to power Relevant Products/Services that transition, he said.

"It's really a matter of IPG funding the transitional costs of acquiring EDS and funding how that division of HP grows and succeeds," he said. "They purchased EDS to get a better foothold in the enterprise Relevant Products/Services market."

For example, when IBM approaches a huge company like General Motors, it can give them high-level customized server Relevant Products/Services, software, hardware and support..."

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Over the past few months, HP has overtaken Dell in laptops, purchased EDS and is actively working with Intel and the G6 - CISCO is getting into servers now as well.

It isn't like HP is going to leave the printer and output space completely, just come at it from a different direction.

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1 comment:

  1. Thanks for the info.

    My take is the HP has it exactly wrong. The margins on laptops are tiny. Meanwhile they have a business with an 18.5% margin in this economy, and that's the part they want starve to feed EDS to service "General Motors"...

    All the problems for the next couple of years is going to be with globals at the top of the pyramid. Ferocious competition in competition with Google, Amazon, IBM and the internet and that's the market they want to be a "computer" company.

    From where I sit it's the print piece that is set for explosive growth and computers that are the mature market.

    But hey, I'm just a blogger. What do I know?

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