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HP’s new strategy insights

October 8, 2019

The incoming CEO Enrique Lores and HP Executive Tuan Tran explained the key elements of the company’s plan to shake up its printer business model.

Just a month ahead of taking the reins at HP the incoming CEO Enrique Lores announced that the dominant OEM in the office printer and computer sector will slash the 55,000 global workforce by up to 9,000 people in a major restructuring starting in Q4 of 2019.

HP estimates total costs in connection with the layoffs and restructuring plan of $1.0 billion (€0.91 billion) and estimates that by the end of 2022 they will save about $1.0 billion (€0.91 billion).

A wake-up call for the office printing aftermarket as their “Advance, Transform, Disrupt” strategy HP is taking on the third party suppliers of consumables. Talking to Bloomberg, HP plans include changing “how the company prices its printers. HP will start raising prices for printers that are compatible with third-party ink cartridges but keep them lower for printers that work only with HP’s own ink products.”

Further details given by incoming CEO Enrique Lores and HP Executive Tuan Tran, who explained to the publication that the OEM was challenging the traditional model and move away from a transactional model to a service provider model.

Incoming CEO Enrique Lores said: “We are challenging the status quo and making bold moves to pivot our transactional business to provide greater choice. This is not something that’s going to happen in one week, it’s not happening in one year. It’s a multiple-year programme.”

HP Executive Tuan Tran explained the model as: “Customers can pay for the full value of the HP printer up front, gaining the flexibility for supplies. This is like buying an unlocked cell phone and then choosing your own wireless carrier. In these cases, customers can enjoy HP’s superior printing hardware, but obviously take risk if they choose alternative supplies.” He added: “We’ll begin to systematically increase hardware prices that move towards this model. As a result, supplies—while still very, very, very important to us—will no longer be the singular metric to determine our progress.”

“We are taking bold and decisive actions as we embark on our next chapter,” said Lores after the announcement of the restructuring plan. “We see significant opportunities to create shareholder value and we will accomplish this by advancing our leadership, disrupting industries and aggressively transforming the way we work. We will become an even more customer-focused and digitally enabled company, that will lead with innovation and execute with purpose.”

Categories : World Focus

Tags : Business HP Inc Restructuring

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