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10/18/2005
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HP's Hurd Pledges Tens Of Billions For New Technology Initiatives

HP is one of the few companies that will invest heavily on the research side of R&D, which will lead to new technologies in the years ahead, the CEO said.

Hewlett-Packard needs to do a better job of getting its technology into the hands of users in a way that makes it easier to use, which will allow the company to succeed in its three strategic markets of servers, storage, and management in the coming years, according to chief executive and president Mark Hurd.

In some of his first public comments since taking the helm of HP in March, Hurd participated in separate question and answer sessions Tuesday at the company's inaugural Technology Forum and the Gartner Symposium ITXPO, both being held in Orlando, Fla., this week.

"We need to create solutions, create demand, and service those solutions," Hurd said. "The framework is right. The raw technology is right. But we need to be more transparent in bringing it to market. The magic is in applying technology to business problems. When the two are connected, something great happens."

HP has to be able to perform that magic in a way that is easy for enterprises to adopt and allows them to save money, he said.

"There is no CIO on planet Earth that likes the amount of money they spend on IT," he said. "And no matter how low you get it, they want it lower. And if it breaks, they're going to be very mad. So at the end of the day, you can't satisfy the CIO until the budget is zero, and IT performs admirably with every piece of data they'd ever want, and it never goes down."

In July, Hurd made his first significant moves to "optimize" HP when he cut the workforce by about 14,500 employees, dissolved the sales organization, the standalone Customer Solutions Group, and placed the sales force back within the company's three main business units.

The change in the sales organization is intended to help the company more easily communicate its capabilities to customers, and get its products implemented within businesses quicker and more simply.

When he first arrived at HP, Hurd said he frequently heard from customers that they liked HP's technology, and its people, but doing business with the company was too difficult. The reorganization of the sales staff is an effort to "push accountability and responsibility down closer to the customer," he said. "We need people at the point of interaction that can get things done. We needed to get rid of the checking of checkers, and allow people to do their jobs."

Hurd reiterated that he isn't going to spin-off HP's printer business or close its PC business, "or any of those big theoretical things." But neither of those businesses was mentioned when Hurd repeatedly said the ongoing focus of HP will be on servers, storage, and management.

He acknowledged that HP had "lost its way," in the storage business over the past few years, but said he company has renewed focus on the business that will be critical to future growth. "There will be more data created in the next five years than previously in the history of world," he said. "It's a market that HP should participate in."

HP's commitment to investment will also enable it to be a technology leader in the years ahead, he said. Hurd estimates the company could invest as much as $30 billion to $40 billion in new technology initiatives over the next four to five years. HP is also one of the few companies that will invest heavily on the research side of R&D, he said, an investment that will lead to new technologies in the years ahead.

Hurd also spoke to a couple of areas that have drawn public scrutiny over the past seven months, such as his decision to discontinue the HP iPOD product line and the company's continued commitment to servers based on Intel's Itanium processor. He decided to exit the iPOD business because HP was unable to differentiate itself as a provider, and "in some cases we were Scotch-taping $10 bills to them as they went out the door."

He noted that "we are kind of out on a peninsula with Intel" as the only supporter of Itanium-based servers among the top four server providers, "but if you look at our financial position and Intel's financial position, I feel good about our shot" at making those systems successful in the market.

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