Saturday, May 26th, 2012
OVUM COMMENT John Madden, Ovum Principal Analyst

"HP’s restructuring is painful but necessary in order to restore market and customer confidence after two years of turmoil. We’ve been down this road before, of course, and the market remains skeptical about how these operational changes will enable HP’s stability, especially for its enterprise business. What’s somewhat encouraging is HP’s indication that most restructuring savings will be directed toward R&D – a part of HP’s legacy and history which the company has sorely undervalued in the past few years, but which will be a critical component of HP’s recovery in new product and service development. However, the ability to reinvest will be dependent on the stability of the revenue stream, if sales soften then Whitman will be under pressure from Wall Street to not invest, but cut more. So as of now we’ve seen the major pieces of Meg Whitman’s restructuring and operations plan – the key missing piece is her long-term company vision and strategy, which hopefully will be revealed to an anxious customer base soon. Even with this restructuring, the question still remains: Just what kind of company does HP want to be next year, three years, five years from now?

"We at Ovum recommend that enterprise and public sector IT managers carefully assess the risks associated with committing to HP for strategic IT projects. Buying commodity grade products, e.g., x86 servers running Windows, will have low risk. On the other hand, any projects that rely on innovation, sustained R&D, integration of acquisitions, and participation of key HP staff over time will have a much higher risk profile. IT executives should carefully future proof their IT strategies and procurement plans to incorporate the uncertainty that has settled over HP. Unfortunately, there are reasonable scenarios where HP does not survive as a strategic supplier of enterprise-grade technology and services."


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Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Our research draws upon over 400,000 interviews a year with business and technology, telecoms and sourcing decision-makers, giving Ovum and our clients unparalleled insight not only into business requirements but also the technology that organisations must support. Ovum is an Informa business.
Jennifer Duraisingam
P: +61 3 9601 6723


HP’s restructuring is painful but necessary in order to restore market and customer confidence after two years of turmoil.



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