Hewlett-Packard: Counting On Managed Services - InformationWeek

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11/26/2003
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Hewlett-Packard: Counting On Managed Services

In the two-horse race for PC market dominance, it's Dell and Hewlett-Packard running neck-and-neck. But moving beyond raw sales figures to customer perception, HP's position is harder to gauge.

InformationWeek Research's Analyzing The PC Vendors study shows HP placing third in overall customer satisfaction for both desktops and notebooks, tying for third place with white-box vendors in the important desktop criteria of reliability and quality, and tying for fourth with Gateway in desktop customer service. In addition, while top competitors IBM and Dell earned scores of 8 or higher on a scale of 1 to 10 in a few instances, HP never scored above a 7.7 in any criterion for notebooks or desktops. Nevertheless, HP is second to Dell only in PC sales, and just barely so: In the third quarter, its worldwide market share was 17.1%, compared with Dell's 17.4%, according to research firm IDC.

With the acquisition of Compaq, CEO Carly Fiorina created a company to compete beyond the box. The name of the game today is managed services, and that's what's giving HP such a strong customer base. HP's managed-services include any number of IT-management tasks associated with PCs, such as application management and help-desk support.


Ann Livermore -- Photo by Bloomberg News

Companies want a positive, consistent PC experience, not just a low-cost box, Livermore says.

Photo of Ann Livermore by Bloomberg News
"Customers want more than a low-cost box today; they want a positive and consistent experience for their employees' desktop environment," said Ann Livermore, executive VP of HP services, in an E-mail to InformationWeek. "That's why many of our customers are turning to a managed-services solution, because it addresses more than just the PC and related help-desk support.

"Managed services allows our customers to focus on their business, where they're the experts, while it enables HP to focus on what it knows best: making the larger IT infrastructure more adaptive," she added. "The adaptive enterprise ensures a closer linkage between business and IT, which leads to a very positive total customer experience."

Such differentiations are important in the world of enterprise computing, notes Forrester Research analyst Richard Fichera. "PCs are poorly differentiated commodities right now, despite the vendors' attempts to make them appear otherwise," he says. "There's virtually no lag between vendors getting the next 'best' technology. Users are becoming increasingly sophisticated in evaluating total cost of ownership over the life of the offering. They're increasingly turning to outsourcers and managed-services deals for these things. IBM and HP are both strong in that arena."

Greg Martin, VP of information solutions at Des Moines Area Community College, says that's why he went with HP. "We were looking for a total solution, not just a desktop," he says. "HP brought that total solution where some of the other vendors didn't. Price is always important. But at least as important, if not more, is the support. They were going to be there for us. They had everything from recovery to backups, the whole works."

chartWhile many of the components that PC makers use are similar, some distinctions remain. "HP takes a fair amount of pride in the fact that they design their own motherboards, for example," says Roger Kay, IDC's VP of client computing. "They think that this design work matters and can affect the total system."

Jim McDonnell, HP's VP of marketing and sales for the personal product group, contends that HP's PC hardware is anything but interchangeable. "The value proposition that we're trying to present to our customers is one about innovation," he says. "What we're not doing is just trying to compete on price. We're trying to have a much broader impact with our customers." He cites security, manageability, form factors, and ergonomics as areas in which HP excels. Indeed, HP ranked second only to Dell in the InformationWeek survey in the areas of innovation and ergonomics.

Like Pandora's box, the PC has opened up. What has emerged are concerns about making the whole IT infrastructure greater than the sum of its desktops and notebooks. That's a race HP appears well prepared to run.

Illustration by Scott Laumann

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