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Is No News Good News For HP And Customers?

Whether a strategy of bringing better efficiencies and bottom-line performance to the status quo proves ultimately to be a success, however, remains unclear. And although Hurd did made it clear Tuesday that he intends to focus on improving HP as it is structured today, don't be surprised if more significant changes emerge over the next six to 12 months. An example could be within its mission-critical server effort, where HP's efforts are centered on systems based on Intel's Itanium processor, but in the future a broader line of high-end systems based on Intel's Xeon and Advanced Micro Devices' Opteron processors could be more attractive to customers.

The initial reaction of Wall Street on Tuesday appeared to be unenthusiastic, as HP's stock price in the first few hours remained stable, dropping less than a third of a percent. Had HP revealed dramatic changes, such as dividing the computer and printing businesses into separate companies or selling off its PC business like IBM did earlier this year, it's likely that Wall Street would have had an initially favorable reaction. In the long term, however, making such major changes to its product portfolio may not be wise.

Generating nearly $2 billion annually in operational efficiencies, if executed successfully, can go a long way in providing a strong foundation for HP in the years ahead, but the company now needs to concentrate on creating a readily identifiable and credibly differentiated position in the marketplace. To some observers, HP since the 2002 merger with Compaq had become a little like IBM, and a little like Dell, but overall, lacking in a clear direction, strategy, and identity.

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