HP Revvs Up

Barron’s writes on HP’s progress two years after it merged with Compaq:

CEO Carly Fiorina was only warming up. She went on to deliver a whopping $3.5 billion in promised cost-savings — and a year ahead of schedule. Lately she has started to boost the performance of two key units that have been holding back the technology giant: personal computers and corporate computing systems. Along the way, H-P has amassed a surprisingly large, $6.5 billion cash horde.

Fiorina is making two major pushes. She is trying to take advantage of H-P’s revered brand and potent retail channels in anticipation of the digital home — where the flat-panel TV in the family room, for instance, will routinely be linked to the PC in the den. In efforts aptly named Big Bang I and II, H-P launched more than 150 consumer products over the past two years, ranging from digital cameras to sleek personal digital assistants.

In addition, Fiorina hopes to use H-P’s newfound scale to sell innovative, customized products and services to big corporations. A new partnership with Starbucks, for example, allows customers to burn compact discs in their stores using H-P devices for a fee. H-P consultants worked with Starbucks to create this setup, using H-P servers, storage gear and more.

“The history of every industry, including technology, demonstrates that companies that can make markets and lead markets are the most successful,” Fiorina says. It has yet to be seen whether H-P has what it takes to truly lead all of its markets.

I was among those who was skeptical about HP’s future after the merger. Nice to be proved wrong!

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Rajesh Jain

An Entrepreneur based in Mumbai, India.