EXCLUSIVE: HP - The good, the bad and the spin

EXCLUSIVE: HP - The good, the bad and the spin

HP's Dion Weisler and Robert Mesaros, tackle the big topics such as jobs, executive shuffles, financial losses, the channel, and its upcoming tablet

HP's Robert Mesaros and Dion Weisler (inset)

HP's Robert Mesaros and Dion Weisler (inset)

Although HP has been largely reluctant to speak with media over the past few months in the local market, HP PPS Asia-Pacific and Japan senior vice-president, Dion Weisler, and HP PPS Australia and New Zealand vice-president and general manager, Robert Mesaros, sat down with ARN"S NERMIN BAJRIC for an exclusive interview that tackled topics such as jobs, executive shuffles, financial losses, the channel, and its upcoming tablet.

Nermin Bajric (NB): Can you explain why the recent enormous job cuts occurred, and exactly how many employees were affected?

Dion Weisler (DW): Globally, Meg Whitman (HP president and CEO) announced (the job cuts). I cannot remember the exact numbers, it affected close to 10 per cent of the workforce. Principally, it’s more about what we are doing and the essence behind it. What Meg is doing is creating a capacity to reinvest back in the business.

It is not designed to take cost out of the business and throw it to the bottom line. It’s designed to take those dollars and reinject them back into research and development, marketing, channel programs; to put those dollars

to work in the traditional things that made HP strong in the past. It’s important for us to ensure we have the capacity to invest in products and innovation, like we displayed in Shanghai earlier this year (Global Influencer Summit 2012). There is a lot more of that to come. We have got a very healthy roadmap ahead of us and that is really the core of what we are doing and why we are doing it.

NB: What is the official number of job cuts for Asia-Pacific, and furthermore, Australia and New Zealand?

DW: We do not talk about the number in context of region to region. It’s not necessarily an even split. We’re part of a region that is rapidly growing. We have got many emerging markets, and two of the three largest in the world: China, which is now officially the largest PC market in the world and Japan, which is the third largest. We have also got markets like India and Indonesia; they are very eclectic. We have got some highly emerging countries, and some very mature ones, like A/NZ. To just apply a ‘peanut butter spread’ approach is not investing where the growth is in the market.

In many countries I am increasing head count. I am looking to invest more heavily and grow at a much faster pace than the market. So in markets like A/NZ, where we are doing extremely well, we want to continue the efforts we have built our business on.

NB: In which departments will this head count increasetake place?

DW: When we brought the PC and printing businesses together, we did a number of things. We streamlined operations. We made it easier for us to do business with our partners, and made it easier for our partners to do business with us. We wanted it to be easier for our end customers to do business with HP. We have created additional capacity in our go-to-market model by coming together with PC and print, and that’s an area we actually want to develop.

With the portfolio we have, there is a lot of scope for improving the ability for our partners to make money. So we are investing in those parts. Things like administrative overlay roles, where perhaps you have two finance sections, does not make sense. What we do is look at how we can redeploy resources in areas that will enable us to grow. That’s really what our focus has been in countries like Australia; the redeployment of our key talent to go-to-market, to category, and to marketing.

Robert Mesaros (RM): For A/NZ, our overall objective is to extend our leadership. We are in a great position at the moment. Recent IDC results have reaffirmed our number one share in PCs and print. The organisation we are taking forward is stronger than the one we are leaving behind. We are strengthening our position and coverage in this market to enable further growth. Our clear objective is to do that.

NB: When will all job cuts be complete?

DW: It is complete. My objective to the team was very clear and they have delivered on it. We walked into August 1 having fully deployed our organisation from management, all the way the down through to every level of the company. We are now externally focused. We are working with our partners, which is why I am currently in Australia. I have got meetings all day with our partner community, and we have got a dinner tonight with major resellers in Australia. Now it’s about how we and our partners can work together to win in the market, and how we help them make money, and how we service our end customers best.

NB: A couple of months ago, there was what people would call ‘instability’ on the executive level at HP, with senior people leaving the company, Janice Cox being one of those. Why did those departures occur?

DW: Whenever you bring two world-leading franchises together, you go through a period of change, and change is never easy. What we needed to do was to figure out what is right for HP, customers, and partners. How can we assemble the best talent we can in a single team and go to market? We have a very high-class executive team in Asia-Pacific and Japan. Now we are all focused on the market. But whenever you bring two organisations together, there is a period of instability.

NB: Relatively recently, HP’s $8.9 million 3rd quarter loss became public. Why did the loss occur?

DW: Meg has gone into a lot of detail and I won’t rehash what she has talked about. She is very focused on setting HP up for success in the future. We know we have to realign the organisation to do that. We have got fewer people to say ‘no’ to now. We have effectively got two decision makers around the world: Todd Bradley, who takes care of PPS and is my boss, and David Donatelli who runs the enterprise group side of the business and global accounts. We have organised ourselves that way across each of our three sub-regions.

There’s a lot of work to do in enterprise services, and there’s a lot of work to do against some very turbulent macro-economic uncertainties. We are setting ourselves up for success in the long term. Meg is creating a capacity, as I said, to reinvest back in the business, and we are executing to that plan.

NB: What are you doing to reverse this sales loss, especially to keep up with your main competitors?

DW: We are the world’s number one provider of PCs and print in every single category in which we operate. In Asia-Pacific and Japan, we are not number one, so we are after some fairly significant growth for this part of the world. In mature markets, markets are generally slowing down, and emerging markets are still showing a lot of growth across the world. We are focused on that. We are also focused on building out a very large portfolio in every single sector of the market, from consumer to SMB to enterprise. It’s a marathon, not a sprint.

NB: Asia-Pacific is a very diverse market. China aside, which other markets seem to be going really well for HP?

DW: India is a very interesting market indeed, just by sheer population, but PC penetration is still pretty low. Treating India as a single country is a challenging concept; it’s like treating China as a single country; Beijing and Shanghai are different to the tier three cities, which are then different to the tier five cities. Having channel programs and channel partners that can go on the journey with us in the various market segments in which we operate is key.

Indonesia is also interesting, but again has low PC penetration. So I would say China, India, and Indonesia are very important growth countries. Our important mature countries are Australia, New Zealand, Japan, and Singapore. We have got different approaches for the different markets, and different products which we bring to each country or city. The day we try to put everybody into one basket and expect that a partner in Australia is going to make the same money as a partner in a tier five city in China is the day that we’ll mis-step.

NB: Robert, when we spoke in Shanghai in May, you told me the A/NZ channel will have to wait a while until PPS settles in. Where is HP at now on the partner front?

RM: Channel partners, our people and innovation is what underpins our success. Our channel partners will continue to be central to that. What we are looking at is being better for them. As Dion mentioned, we are here to talk to them about any ideas they have about what we can do to serve them better.

A lot of it is about simplification. In the past, we became too complicated in the way we took messages to the market, in the way we put out marketing programs, channel programs, and the way we covered the market. The short term focus is how we do that better. If you are looking for what we are changing, there’s nothing in concrete as yet. We are looking at how best to serve partners. Over the next two years, everyone will have their opinions on what we need to do to simplify ourselves. We are walking into these next couple of years with our minds open and with intent to drive the right change. That’s why Dion is here, as well as other executives: to listen to our customers and make sure that the changes we make hit the mark.

NB: Jumping onto products – are you happy with how your new product set is being received?

DW: I’m really happy with our consumer line-up. I think we have taken leadership in Ultrabooks and everything that’s thin and light. It has been received very well across the region. Again, I think a lot of that is predicated on the fact that we did not try to just have a single set of products to fit in every single market in the region. We have probably got more platforms than any other vendor. Some would say that’s complex, but we put each product in the market in which I think they will do well.

In our commercial line-up, we have got a tremendous product set. It is tried and tested, and trusted by our partners, and there’s a lot more innovation coming down the pipeline. Are there gaps here and there? There always will be, and we know where they are. I don’t think there are major gaps in our mature products, but there are in our emerging market line-up, particularly the low end segment of consumer. We are focused on plugging those gaps. For example, I think our opening price points in the commercial markets, for markets such as tier four to seven cities in China and regional cities in India, is where we have gaps.

NB: What products can the market expect HP to unveil?

DW: The whole area of mobility is an interesting space. Will tablets overtake PCs? You heard my opinion in Shanghai and it has not changed. I think you have got to have devices that spread across the axis according to the seriousness of the task and I think we will have products that fall across that axis.

We will do a commercial slate based on Windows 8 that will come out towards the end of this year or beginning of next. I think that’s going to lend itself sort of mid-range on that axis. That slate will be a traditional tablet-type form factor. Let’s not go too much into details, but I think it’s fair to say that we will be playing in the mainstream.

I think you will see hybrids come out into the market through the advent of Windows supporting both ARM-based and traditional Intel-based processes. You are going to see some innovation in form factors come to market. You are going to see us expanding our portfolios for commercial and consumer. So, you know, watch this space.

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