HP confirms Printing and Personal Systems Group

Zac Butcher
Mar 21, 2012

Updated — March 21st

HP has today confirmed the reports in the Wall Street Journal and Reuters. The Imaging and Printing Group (IPG) and the Personal Systems Group (PSG) will be combined into a new business unit, namely the Printing and Personal Systems Group, to be led by Todd Bradley.  Vyomesh Joshi (VJ), the current executive vice president of IPG, is to retire from HP after a 31-year career with the company. This is an interesting, if not entirely unexpected development. Both areas of the business are under pressure; PSG from the rise of mobile computing, IPG from the rise of mobile computing. But that is where the similarity ends.

The threats to PSG and IPG stem from the same source but the implications are different. PC sales are being eroded by mobile computing devices. There is nothing stopping PSG from making and selling these alternative computing devices. The biggest challenge to date appears to have been themselves but PSG can still respond to the changing hardware trends. It tried with the TouchPad running WebOS, it could try again, perhaps with Windows 8 tablets or even Android. It is too early to tell if HP’s plan to make WebOS an open source operating system will gain any traction. HP is already in the Ultrabook category. It is clear that there are ways to respond to the mobility of computing trend. Whether HP can be do so profitably is another issue but PSG’s hands are not tied and the market is still young.

IPG is facing something more disruptive in terms of the core consumer and office printing business. The benefit that a printer delivers, namely display of content on a page, is being replaced by mobile display technology. Also, the incremental improvements for consumer and office printers are minor with little reason for people to upgrade.  IPG saw this trend coming and has been repositioning upstream into the more lucrative production and professional print space for some time. VJ has often spoken about the opportunity for selling gallons of ink rather than millilitres. The longer term concern for IPG, of course, is that tablets and other mobile devices will reduce the demand for print in the publishing, transaction and promotional markets.

Meg Whitman paid tribute to VJ’s enormous contribution to HP stating that “VJ embodies the spirit of HP and his impact on the company has been tremendous”. Having risen through the ranks, VJ has led IPG from $19 billion to $26 billion in revenue, doubling operating profit to approx. $4 billion. Whilst this latest development may see HP benefit from some cost reductions, a rationalized go-to-market approach, consolidated supply chains and synergies in customer support, HP is also losing significant leadership talent. VJ had the vision to lead HP into the production print market through strategic acquisitions (Indigo, Scitex Vision, etc.) and internal development. VJ, who was one of the early engineers on HP’s thermal inkjet technology for office and personal printing, has seen the technology scale all the way up to the HP Inkjet Web Press for books, statements and direct mail. Anyone who has had the pleasure of meeting VJ, or listening to him speak, will attest to the charisma, energy and vision that he brought not only to HP but to the industry as a whole.

The motivation for the changes are a combination of efficiency gains and a drive for more synergistic future innovation and development.  These synergies certainly existed in the old world. PCs and printers have been synonymous since day one but in the new world these levels of synergy appear to be in decline. Whilst some of the sales channels remain the same the products are no longer so closely linked. If you’re in any doubt, how many of the three million people that unboxed a new iPad last weekend have decided that what they really need next is a new printer? This iteration of the iPad is mostly about the Retina display. Competitors will follow suit. Display is only going to get better (thinner, lighter, less glare, less power). In this context it strikes me that a new printer is going be pretty far down the list of peripheral items people will be considering.

From a consumer and office perspective it is too early to tell how effectively a combined group can address the differing implications mobility presents for HP’s PC business and the printer and supplies business. From a professional print perspective it is not immediately obvious what the advantages for an HP Indigo B2 format press might be within the Printing and Personal Systems Group. What is clear is that HP faces challenges and Meg Whitman is certainly moving swiftly to address them.  As analysts we always reserve judgment until the full explanation of changes and how things will work in practice are available.  We will do so in this case.  Stay tuned.

 

More blogs from

2016 InfoTrends, Inc.

WordPress Appliance - Powered by TurnKey Linux