United we stand

Partners and market watchers give their verdict on HP's decision to merge its IPG and PSG units. Sam Trendall reports

Analysts and HP resellers have given the vendor’s decision to bring together its print and systems businesses a cautious welcome.

The hardware giant is uniting its Imaging and Printing Group (IPG) and Personal Systems Group (PSG) into the imaginatively named Printing and Personal Systems Group. The new-look division will generate more than half of HP’s annual revenue.

The announcement appears to mark the end of a tumultuous period for the vendor’s systems unit, after former chief executive Léo Apotheker announced in August that HP was considering selling or spinning off PSG. The news went down badly with shareholders, caused unease among partners and customers and, was surely the final nail in the coffin of the former SAP chief’s brief reign. In October incoming chief executive Meg Whitman announced that the vendor would hold on to its PC business.

Martin Hellawell, managing director of Gold partner Softcat, gave the IPG-PSG unification a cautious thumbs-up, but questioned the timing of the news, in light of the distress caused to the channel by last year’s saga.

“At the moment, I have to have conversations with PSG and IPG, ESSN and HP Software,” he added. “There are lots of different people to deal with and customers feel that as well. There may be a period of adjustment but over time I feel this is good news for us and our customers.”

Alex Tatham, commercial director of distributor Westcoast, also harboured some concerns about ensuring the integration process was wrapped up as quickly as possible.

“I totally understand the reasons behind it but I am a little concerned that HP will be inward looking for another six months,” he said.

“It does not put them on the front foot so the sooner they get on with it, the better.”

Meanwhile, Stuart Fenton, EMEA managing director of Gold partner Insight, claimed the move is good news for the channel.

“This will make HP easier to deal with from a chan-nel perspective, because currently we have to deal with the silos that sit in their organisation,” he said.

Terry Betts, managing director of HP Gold partner CCS Media, also saw the sense in the decision.

“Overall, it is a good thing,” he said. “It will make HP more efficient and therefore more competitive, which can only be good for partners.”

In a statement announcing the move last month, HP claimed that bringing the two units together will enable greater harmonisation of go-to-market strategies, branding, supply chains and customer support. The rejig will allow the firm to make cost savings while driving growth opportunities and reinvesting in the business, said HP.

Whitman said: “This combination will bring together two businesses where HP has established global leadership. By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”

Cost saving

The new unit will be led by incumbent PSG boss Todd Bradley, who has helmed the division since 2005. IPG leader Vyomesh “VJ” Joshi is retiring after serving HP for 31 years. The vendor claims that under his leadership, IPG’s annual sales grew from $19bn (£12bn) to $26bn.

“VJ embodies the spirit of HP and his impact on the company has been tremendous,” said Whitman. “Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market. We wish him the very best as he embarks on a new chapter in his life.”

Insight’s Fenton paid tribute to the boss of the newly expanded division.

“It is very clear that Todd Bradley is an incredibly strong, gifted leader,” he said.

Analysts have also given the move a degree of approval. Steve Brazier, chief executive of Canalys, claimed the idea of bringing together the two divisions is not a new one.

“This is a big move for HP. [Former chief executive Carly] Fiorina tried to implement this, but it was all changed when Mark Hurd moved in,” he said.

“It is an obvious cost-saving move, but it could be a good move for the channel. By bringing PCs and printers together under one sales force, some of the power comes back in again. What HP lacked was a coherent and dynamic consumer strategy and as a result of this move, one will start to emerge.”

Jeremy Davies, founder of analyst Context, said: “As a cost-cutting measure, I can see the logic in combining two hardware businesses into one to save overhead costs.” But the market watcher expressed concern about the differences between the increasingly services-led print space and the more volume commodity-based PC arena.

“From a channel perspective, you are dealing with businesses that - leaving aside the obvious fact that the products are different - have diverging dynamics and to an extent, different markets,” he said. “The imaging business is moving towards the MPS model, and PCs are a hardware commodity play. This is bound to confuse not only the messaging from HP, but also the relationships with its channel partners.”

An enterprising move

But Softcat boss Hellawell claimed the two propositions could be parlayed into a singular managed service play.

“People have been talking about managed print for 25 years and it is still a very small part of the market,” he said. “I do not see PSG being any less of a managed services play so I think they fit together quite nicely. If you could put the two together into one managed solution, that would be quite attractive to customers.”

Announced alongside the IPG-PSG tie-up was a move to bring HP’s Global Accounts Sales unit, its Enterprise Servers, Storage and Networking (ESSN) division and its Technology Services arm under one roof, in an organisation dubbed the HP Enterprise Group. Leading the group will be current ESSN boss David Donatelli.

The vendor claims this unification will allow it to be more productive and efficient, and to make speedier decisions. The firm also indicated it is working to identify a new role for existing Global Sales head Jan Zadak.

HP is also bringing siloed marketing and communications operations into two operating units to serve across all its technology brands. Chief marketing officer Marty Homlish and chief communications officer Henry Gomez will lead the respective divisions.

Finally, HP is to house its Global Real Estate operations in its Global Technology and Business Processes unit, moving them from their current home in the Finance division. This will ameliorate the staff experience in the workplace, claimed the vendor.

“Ensuring that we have the right organisational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” concluded Whitman.

“The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalise on rapidly shifting industry trends.”