HP’s Whitman: R&D will overcome infrastructure commoditization

HP CEO Meg Whitman

HP CEO Meg Whitman

LAS VEGAS – HP’s business is built on a foundation of infrastructure – laptops and mobile PCs, servers, storage, networking and printers – that accounts for 75 per cent of the vendor’s overall revenue, CEO Meg Whitman said Tuesday morning as the keynote speaker at the company’s HP Discover event.

The company, she said, is proud of that foundation, and it’s “a differentiating strength” for the company. But, she said, she’s frequently asked if the company is worried about that business commoditizing.

“My answer is ‘Not if we can help it,’” Whitman told attendees, before detailing the company’s belief that through increasing its investment in research development, it can deliver the kind of product innovation that will help stave off the forces of commoditization.

Two weeks ago, HP announced a massive round of layoffs, which will reach 27,000 people worldwide. The cost savings, the company said, will go to a number of things, including boosting earnings. But the majority of those funds saved via job cuts will be put back into product development, the company said.

It’s a little bit of a return to the customer’s roots, returning the focus on engineering and innovation that was HP’s calling card until the massive R&D cuts ushered in during the Mark Hurd era. The company’s not quite to the point of bringing the famous “invent” tagline back to its logo, but it’s clear that one of Whitman’s major goal is to re-establish HP as an R&D, engineering and innovation powerhouse.

Whitman detailed for attendees the company’s overall strategy, including revitalizing and innovation in the core infrastructure business, as well as growing the importance of software and services on top of that, and perhaps its most important new focus, into a groups of “solutions” that cut across hardware, software and services, with the most important plays being cloud, Big Data and analytics, and security. They are, as Whitman put it, “three solutions to capture the future.”

At the same time, she said she’s leading the company to be more customer-focused – a familiar role for Whitman from her days as CEO of eBay, where – as she puts, “We bought a lot of HP infrastructure.”

“Everything we do no starts with the customer and helping the customer reach their objectives,” Whitman told attendees.

And when pushed, she said – by challenging market changes, a recent past full of missteps, or by natural disasters, as was the case in Japan, Thailand and New Zealand last year – the company’s people will “darken the skies with the magnitude of our response.”

Whitman was followed on stage by Jeffrey Katzenberg, CEO of longtime headline HP customer Dreamworks and frequent HP keynoter, who offered his vote of confidence for HP in general and for Whitman (whom he has known since the late 1980s when both worked at Disney) in particular.

“Throughout our 12-year relationship with them, whether it’s been smooth sailing or they’ve been hitting some speed bumps, we could not ask for a better, smarter partner,” Katzenberg told attendees. “I couldn’t be more confident about the company’s future.”