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ORLANDO, Fla.—In the face of Michael Dells recent announcement that he plans to delve into Hewlett-Packard Co.s highest growth business—the printer business—HP Chairman and CEO Carly Fiorina is expressing no fear.
“People have been coming after [HPs printer business] for the 20 years weve been in it,” Fiorina said today. “I understand why Dell wants to be part of this market. My answer is, Michael Dell, come on in, the waters fine.”
The printer business is a highly capital-intensive industry, and HPs low-end printers have 100 patents associated with them, Fiorina told an audience of industry professionals at the Gartner Groups ITXpo in Orlando this morning. Dell can be a distribution channel of low-end printers, but it wont be a major threat because HP is the low-cost producer, she said.
“HP has consistently demonstrated the ability to meet every competitive threat to our imaging and printing business over multiple years,” she said. “The fact that Dell makes an announcement doesnt send us shaking in our boots.”
One area of HPs business that Fiorina recognized does need improvement is the enterprise systems group, which has recently lost market share. Noting that the bulk of workforce reductions through combining with Compaq are taking place in enterprise systems, Fiorina was optimistic about the impact of the merger.
Theres no question that the Enterprise Systems Group is the place that we get the biggest benefit from merger,” she said. Fiorina did not respond directly to analyst concerns about how HP will get back lost enterprise systems market share, but she said that the new company has been able to strengthen its product line and cut costs where there is duplication.
Replying to concerns about growth in the services businesses, Fiorina said that the decline in consulting is an industry-wide phenomenon but that HPs services business continues to make money. Consulting is a low growth, low profitability area, and one in which HP plans to accomplish more through partnering, she said.
Gartner analysts also noted the slow market acceptance of the Itanium processor that HP developed with Intel and suggested that Microsoft Corp. has not shown enough enthusiasm to inspire ISVs to improve their acceptance level.
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Fiornia defended the Itanium strategy and, more generally, HPs commitment to heterogeneous computing environments. She noted that Microsoft and HP are aligned not only around Itanium but also around Microsofts .Net initiative.
Fiorina said that her company is the only systems and platform provider that is supporting Linux/Unix and .Net/Windows and the interoperability between them. She differentiated her strategy from competitors—particularly IBMs. “IBMs approach to this is have it IBMs way,” she said. “We think customers would rather do it their way.”
Another benefit of the merger is that the company can sustain a high level of research and development despite the difficult economy, Fiorina said, adding that HP will focus its R&D where it can make a unique contribution, particularly in imaging.
As for the merger process in general, Fiorina said she is pleased that she has proven naysayers wrong. The process remains on track and the company is meeting or surpassing its integration milestones, including cost cutting, she said. The combined company has been able to identify billions of dollars of synergies through workforce reductions, real estate and procurement, among other things. “We are receiving from our suppliers a cost benefit that is not common across the entire industry,” she said.
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