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Meg Whitman Combines HP Printer and PC Groups
Meg Whitman Combines HP Printer and PC Groups

By Jennifer LeClaire
March 21, 2012 12:05PM

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"The decision to unite PSG and IPG isn't particularly original -- veteran HP watchers will remember Carly Fiorina proposing the same move shortly before her ouster in 2005," said analyst Charles King of Meg Whitman's move at HP. "Plus, natural synergies between the two groups' efforts...should help HP to capture improved efficiencies."

Hewlett-Packard's newly minted president and CEO, Meg Whitman, is moving to put her stamp on the tech behemoth. One way she's doing it is through reorganization. Among other shakeups, HP on Wednesday announced plans to combine the Imaging and Printing Group with the Personal Systems Group.

Led by Todd Bradley, who served as the executive vice president of PSG since 2005, the new division is dubbed the Printing and Personal Systems Group. Vyomesh Joshi, executive vice president of IPG, is retiring after 31 years at HP. He grew IPG from $19 billion to $26 billion, and doubled its operating profit.

Whitman is betting blending the two divisions will rationalize HP's go-to-market strategy, branding, supply chain and customer support and lead to a stronger customer experience and drive innovation. HP is also counting on cost savings and stronger profits.

"We believe we will create a winning scenario for customers, partners and shareholders," Whitman said.

A Common PC Industry Problem

"The decision to integrate PSG and IPG is the obvious headline news here but that's likely because the last attempt to deal with third-rail issues around PSG led to former CEO Leo Apotheker's ouster," said Charles King, principal analyst at Pund-IT.

King points to issues like how to better manage the disparities between PSG's huge revenue base and its minuscule operating profits. The problem is not just with HP, he said. Most every other PC maker faces the same situation.

"The decision to unite PSG and IPG isn't particularly original -- veteran HP watchers will remember Carly Fiorina proposing the same move shortly before her ouster in 2005," King said. "Plus, natural synergies between the two groups' efforts, both in consumer and corporate markets, should help HP to capture improved efficiencies and also allow it to use IPG's healthy profits to bolster PC and laptop margins."

A First Critical Step?

Whitman didn't stop with combining PSG and IPG. HP is also taking steps to streamline other business functions. For example, the Global Accounts Sales organization will join the newly named HP Enterprise Group. Led by David Donatelli, this group includes Enterprise Servers, Storage, Networking and Technology Services.

HP's motive is to speed decision making, increase productivity, improve efficiency and simplify customer experience. A new role for Jan Zadak, executive vice president for Global Sales, will be announced at a later date. Zadak will work with Donatelli to ensure an orderly transition.

HP also announced that it will unify its marketing functions across business units under Marty Homlish, its executive vice president and chief marketing officer. HP's communications employees will be unified under Henry Gomez, the company's executive vice president and chief communications officer.

Finally, HP is moving the Global Real Estate function from Finance into Global Technology and Business Processes to address real estate consolidation and improve the workplace experience for HP employees.

"Ensuring we have the right organizational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency," Whitman said. "The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends."

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