Hewlett Packard

A 3 Dimensional Venture

Megan Olsen

BA 301 Final Term Paper

Section 004

2 June 2016

1

Table of Contents

Executive Summary……………………………………………………………….. 3

Situation Analysis…………………………………………………………………. 4

Problem Analysis & Description…………………………………………………... 7

Solutions, Evaluation & Recommendation…………………………………………13

Implementation Plan……………………………………………………………….. 21

Success Metrics……………………………………………………………………. 24

Bibliography…………...……………………………………………………………27

Appendix….……………………………………………………………………….. 29

2

Executive Summary

The growth in the mobile industry has proven to be a tough time for Hewlett Packard.

Once a technology driven company; HP now suffers due to a lack of advancement in the mobile

industry. The company’s revenue began decreasing in 2011 which showed the underlying

problem with HP’s extremely low market share in the mobile industry (“Hewlett Packard:

Statistics” 1). With companies such as Apple and Samsung taking over the growing industry, HP

had a difficult time competing and in 2014 the company split in order to become independent

and to better focus on individual markets (Whitman 4). Even with the split, HP could not gain

market share in the mobile industry. The solutions to the issue of low market share involved

pairing with a different company, allocating resources to HP’s mobile devices and completely

changing markets into the 3D printing industry. It was concluded that pairing with a different

company would still not raise market share high enough to be profitable, and allocating resources

to HP’s devices would not be enough to compete with Apple and Samsung. Completely

switching markets and moving into the 3D printing industry would give HP a new start to be able

to lead in an up and coming industry. The 3D printing industry is projected to grow by 13.9% in

2016 and will continue to grow over the next 5 years as development continues (“3D Printing”

1). Due to growth, HP’s immersive computer (Sprout), and the company’s vision to invent and

reinvent new technologies, this move to 3D printing is the best solution for HP (“HP History” 1).

Though the move would be large and affect most, if not all departments in the newly split HP

Inc., the solution would be successful in regards to profit and a benefit to the medical and

aerospace fields (Sedgwick 1). The solution would take 5 years to penetrate into the 3D market

then continue with research and development of 3D printing/scanning technologies. 3D printing

would allow for HP to establish itself as once again a technology driven company.

3

Situation Analysis

Hewlett Packard was started by Stanford graduates Bill Hewlett and Dave Packard in a small

garage in Silicon Valley. The start-up began in 1939 and eventually grew to be one of the largest

printing and computer companies in the world. The company quickly became known for its

innovation and became incorporated on August 18, 1947 (“HP History” 1). As the company

continued to grow it became public, and on November 6th, 1957 it started selling shares for $16

US. Over the years the stock has fluctuated from $10 to over $100 but is now worth $12.12 (“HP

Inc.” HPQ 1). After going public the company moved into global markets and in 1961 entered

the medical industry. HP holds a large patent portfolio including many medical instruments as

well as computer parts and mechanisms. HP continued to go global as it entered China in 1981

and began to outsource. In 2002 HP introduced Indigo N.V which allowed for a new type of

printing. The company also acquired a new electronic data system in 2008, pushing it further into

electronics. Even with great innovations the company was not without legal issues. These issues

included the 2012 Autonomy Corp. accounting misrepresentation, worth $8.8 billion, and the

Mark Hurd sexual harassment case the previous year (De La Merced, Hardy 1). The company

recovered and continued to create new products for the technological era. The rise in electronic

markets created a gap between segments of the company, so in 2014 HP decided to split into

Hewlett Packard Enterprise and HP Inc. (“HP History” 1). Hewlett Packard has always held

strength with innovation and technological growth. The company’s vision statement reflects

those strengths while showing its drive to create imaginative products for everyone.

“Our vision is to create technology that makes life better for everyone… every community around the globe. This motivates us… To make what we make. To invent, and to reinvent. To engineer experiences that amaze. We won’t stop pushing ahead, because you won’t stop pushing ahead. You’re reinventing how you work. How you play. How you live. With our technology, you’ll reinvent your world” (“HP History” 1).

4

The company shows promise to innovate and help its customers while changing technology for

the better. HP fully includes all stakeholders in its vision. Though there are many stakeholders,

the primary stakeholders include customers, partners, stockholders and employees. Secondary

stakeholders however, though they still have stake, are less affected by company decisions, these

stakeholders are the community and the environment.

The business strategy for HP relies heavily on splitting the company into two working parts. This

allows for greater speed and agility in the fast growing technological market. According to the

2014 annual report, the company’s strategy for its core business of laptops and printers is to

“deliver superior products, high-value technology support services and differentiated integrated

solutions that combine our infrastructure, software and services capabilities” (Whitman 13).

Even though HPs strategy reflects its business goals it does not exclude its values. The new HP

Inc. and Hewlett Packard Enterprises are all about sustainability. The companies’ website

included a sustainability strategy that the company lives by. The company created solutions that

allow it to “strengthen our communities; minimize the environmental footprint of our customers,

operations, and supply chain; and act with integrity and respect for human rights around the

world” showing the companies values its customers, employees and the environment

(“Sustainability Strategy” 1). Though HP was once a growing company, the increasing

technology in the market creates vast amounts of competition. The company’s sales per year

continue to be in the high but are slowly decreasing each year (“HP Inc.” HPQ 1).

HP has been one of the top

companies in its field for many

years, but with a rise in technological companies their sales are slowly decreasing. According to

database IBIS world, HPs large increase in competition, in this and other industries, contributed

5

to the fall in revenue for all segments of the firm ("Computer Manufacturing." 1-3). The figures

below represent the revenue for HP and its competitors Dell, International Business Machines

Corp. (IBM) and Apple from 2010 to present day. The decrease in revenue for HP, Dell and IBM

compared to Apple provides insight into industry problems. The following table shows revenue

for each firm stated in millions of dollars US. ("Online." 2).

Year 2010-11 2011-12 2012-13. 2013-14 2014-15 2015-16HP Revenue 2579.4 2889.9 2581.1 2577.1 2353.3 2287.2Dell Rev 2025.5 1855.7 2220.7 2164.1 2092.8 2048.2IBM Corp. 1529.5 1701.1 1587.6 1503.2 1152.5 1143.6Apple Rev 995.7 1652.4 2400.0 2940.5 3261.7 3889.5

According to the company profile for HP Inc., HP is the largest operator in its market however,

the personal printing market is decreasing (“HP Inc.” 4). One of the largest industries HP is

involved with is computer manufacturing. The pie chart reveals

market share for each company in the market (“Computer

Manufacturing” 1). Though the market is fairly large it continues to

decrease. This decrease is due to the rise in superior technologies

such as tablet computers. Apple currently rules the tablet computer market with its product

“IPad” holding a majority of market share. HP not only competes in the computer manufacturing

industry but must also compete for share in these new markets. The decrease in the market is a

large threat to HP, without competing in other markets, the company’s revenue could continue to

fall. The company’s strengths in research and development show promise for the opportunities

HP Inc. holds. New developments in 3D printing allow for HP to grow into an undeveloped

market. The threat of losing its market with changes in technology is a large challenge the

company will face. A SWOT analysis was created to show possible opportunities to grow and

threats to consider for HP Inc. as shown on page 7 (“HP Inc.” 4).

Environmental Factors

6

The computer

manufacturing industry is in

a highly changing market

and requires new

innovations to compete. The

decrease in the current market for personal and printing systems show technological change for

the future. A report on computer manufacturing in the US, stated that “Revenue is projected to

continue declining at an average annual rate of 1.9% to total $7.8 billion in the five years to

2021” concluding a decrease in the market as a whole (“Computer Manufacturing” 1). Without

good research and development HP could fall behind in the technological era. The new markets

HP Inc. must inhabit involve the millennial generation. This social group is the main market for

technology.

Creating new innovative products for a different type of market will be a challenge for HP as it

goes into its first official year as a split company. With the market for PC’s and printing

diminishing, HPs future relies in a new market. According to IBIS World, computer

manufacturers continue to go out of business as technology increases ("Computer

Manufacturing." 1).With no grasp on the mobile or tablet industry HP has to adjust its

production. Tablet computers and new technology are trending, leaving the company behind.

With the growth of tablet computers there is a looming uncertainty of how much longer before

PC’s and printers are out of date. The push further into the electronic market will be a challenge

for HP as they grow to develop market share in new markets.

7

Problem Analysis and Description

Hewlett Packard was once a strong thriving company that led technological development.

Though it is still considered a strong company, HP has been losing revenue and market share for

several years. In 1998 revenues for HP continued to rise until around 2011 when revenue began

to decrease ("Hewlett-Packard: Statistics" 1). The chart below depicts this dip in revenue,

showing each year of HP’s revenue

from 1998 to 2015 ("Hewlett-Packard:

Statistics" 1). HP grew with the

increase in technology but was stunted

with the rise of mobile phones and

devices like tablets. This revenue

decrease is a large symptom of the

overwhelming problem for which HP struggles. According to the HP 2015 fiscal report, the

company’s net revenue is down 7% from the previous year and the fourth quarter is down 9%

from the previous fourth quarter ("HP Inc. Reports” 1). With the constant decrease in net revenue

this gap effects the company and its ability to grow. The change in revenue is not the only

symptom that shows a larger problem for the company. HP also showed signs of a larger

problem with the company split.

Hewlett Packard Enterprise and HP Inc. were made official in 2015. The split was decided in

order to increase efficiency in development and push HP further into the technological era. Meg

Whitman describes the split of the companies, in the 2015 annual report, as splitting into

companies that each have “the independence, focus, financial resources and flexibility to respond

to a constantly evolving market while generating long-term value for stockholders” (Whitman 2).

8

This split is a symptom of the trouble HP is having in today’s market. With splitting the

company, each segment can focus on generating new ideas to compete with technological

advances, where HP has a whole previously had struggled. Before the split, the company was

large and handled many different segments of the market at once. Branching into two companies

allows for a more focused approach. The need for a split shows a gap in the company’s focus

with each individual market, however, the company’s largest gap would have to be its low

market share in the growing technological industry.

With the rise of new technology of mobile tablet computers, HP is left in the dust. This new

technology is changing the market and creating new market segments, which creates new

competition. HP began to lose its market share to companies such as Amazon and Samsung, but

the largest market threat, is Apple. Over the last five years the growth of Apple has been

exponential, hurting HPs share in the market and pushing the company out. The market for the

mobile industry was booming, as shown in a table of total sales/revenue for Apple from 2011-

2015 (“Apple Inc.” 1).

Year 2011 2012 2013 2014 2015Sales/Rev (Billions)

108.6 155.97 170.87 183.24 231.28

Apple and other mobile industry leaders were developing and producing products at mass

amounts as the market became more accustom to the functionality and ease of tablet devices.

Although HP tried to develop with the HP slate tablet and HP Pre and Veer mobile devices, the

amount of competition from Apple, Samsung and Amazon gave HP very little market share.

According to IBIS world, HP is not a

major competitor in online computer

and tablet sales, which contributes to a large amount of sales for computers and tablets, HP is

placed in the “other” category among many other companies (“Online” 1).

9

Having a low market share effects HP the most due to the growing technological industry and

decrease of the PC industry. The previous symptoms and gaps refer to a larger problem that HP

has been facing for years. There are many symptoms that revolve around this problem, but the

main symptoms include the revenue gap, the split of companies to enhance focus and

independence, and HP’s low market share in the mobile industry. The lack of market share is a

large underlying problem for HP and will continue to become worse as the industry grows. The

fish bone diagram listed in the appendix under diagram A, illustrates why HP has such a low

market share in the mobile industry. HP was a leading contributor to the technological industry

for many years, until the tablet became the norm. With little effort made to establish the brand

with tablets and mobile devices, HP retained low market share in the industry. Though HP has

some mobile and tablet devices, the market share is so small that many of the brands have been

discontinued. The company is more focused on the old industry of products rather than the new.

This lack of focus leads to poor products with very little research and development. The HP

tablet selection, the Pro, Elite, and Slate, are all fairly similar to other tablets on the market, with

a high price tag of $500-$1500 (“HP Tablets” 1). With very little innovation and development

put into these products, the products are almost unseen by a majority of the market. Increasing

the company’s product development to create new and different products would help to lessen

the overall problem of the companies low market share. HP however, does not focus on these

tablet products because most of its sales revolve around laptops and desktops. The pie chart

shows the division of sales for HP for Quarter ending July 31, 2015 and percentage of sales to

each category, based off of the HP Company and Subsidiaries Segment/Business Unit

Information Statement (“HP Inc.” 1). Tablets and mobile device sales reside in the “other”

category at 3.8%, showing HP’s low market share for tablet and mobile products (“HP Inc.” 1).

10

Subsidiaries Segment/Business Unit Information Statement (“HP Inc.” 1). Tablets and mobile

device sales reside in the “other” category at 3.8%, showing

HP’s low market share for tablet and mobile products (“HP

Inc.” 1). Having market share in the mobile industry is

important due to its growth in the last decade. In order to

understand why there is such a steep increase in the mobile

industry HP must understand the change in value for the

consumer and the market as a whole.

When looking at the problem of why PC demand is decreasing, one journal took a scientific

approach. Bringing Non-adopters Along: The challenge facing the PC industry, written by Susan

A. Brown and Viswanath Venkatesh, describes the categories of adopters, innovators, early

adopters, early majority, late majority and laggards (Brown, Viswanath 77). Innovators are the

first to discovery new products available to the market, where as early adopters are the second to

adopt these products and make them more recognizable. Early and late majority involve

households and the majority of the US. Having the early and late majority means the product has

grown large enough to reach most of the public. The last group is the laggards, which represent

people who choose to stay with their current product and refuse to change. The authors describe

the adoption in the PC industry in 2008, which can be related to the growing industry of mobile

devices today. Early adopters and innovators have had tablet products for a long time, allowing

early and late majority to begin to enter the market. Tablets and mobile phones are household

products than some consumers carry with them on a daily basis. The authors refer to the early

and late majority as people who wait on others decisions, but not wanting to be behind with

technology (Brown, Viswanath 78). Early and late majority adopted PC’s in the mid 2000’s and

11

now that tablets and mobile devices have become the norm, these adopters are moving in that

direction. This change in market share for HP directly relates to the change in adoption among

consumers. As more people move from their PC to a tablet, more will adopt this new technology,

until HP is left with the laggard category. This leaves HP’s lack of market share to be a large

problem now and in the upcoming years.

Another reason for HP’s low market share involves the amount of competition for the

mobile industry. The company was a leader in the PC industry, until the release of the IPhone in

2007, which started a surge in the mobile and tablet segment. According to IBIS world, the main

competitors in the tablet industry are Apple, Amazon and Dell Inc. (“Online” 1). HP is behind

with only a few, fairly unpopular, tablets on the market, for the growing industry. The database

IBIS world concluded the state of the mobile market as growing, and “As the economy continues

to pick up, higher projected disposable incomes and an improved sense of financial stability will

support demand for industry products” leading to an even greater growth in the tablet industry

and a greater hit to the PC industry ("Online." 1).Without market share, HP’s revenue will

continue to decline at an even faster rate, showing the overall problem facing HP. These large

competitors, due to early adoption into the market, are difficult to beat. Apple’s strong sense of

innovation and development allow the company to create new products that take over the

industry, making it more difficult for HP to gain market share. As the industry grows, more

companies are switching over to the mobile industry and creating their own tablets and mobile

devices, making even more competition in the market. The increased amount of competition

makes it difficult for HP to gain share in the industry.

Though there are many reasons why HP does not have market share in the mobile industry, the

largest consist of its poor products and lack of innovation and development, as well as its mass

12

amounts of increased competition and having unfocused goals. As shown in the fish bone

diagram, all of these issues are attributed to the main problem for the company, its low market

share in the growing mobile industry. Without market share, revenue will continue to fall for the

company and it will slip into laggard territory, making its products obsolete. Knowing the issues

for why the company has low market share will allow the company to improve and develop, in

order to compete in the industry and gain market share for the future.

Solution and Evaluation

When dealing with HP’s low market share in the mobile industry there are many solution options

to fix the issue, however only some are ethical and feasible. One of the tracks HP could take is

to partner with a more successful mobile device company, such as the windows phone and

tablets from Microsoft. Although Microsoft is not a leader in the mobile device and tablet

industry, it has a larger following for its products such as the Surface Tablet. Microsoft holds a

3.8% share in tablet manufacturing in China (“Computer Tablet” 1). Due to its lower market

share, pairing with HP to create better more innovative tablets could boost market share for both

companies. The two companies could create new tablets and mobile devices that have a higher

market acceptance. This solution is valid because Microsoft, due to its lower market share would

be more willing to partner with HP to increase share, whereas other more successful companies

in the mobile industry have no need to partner.

The issue of having low market share in the mobile market shows the struggle HP has with the

industry. One solution to the problem is to leave the mobile industry altogether and focus on

laptop PC’s and new markets, such as 3D printing, 3D scanning and immersive computing

products. According to IBIS world, the market for PC’s is declining, but the market for laptop

PC’s is growing by an annual rate of 2.5% (“Retail” 1). This rate is slower due to the increased

13

popularity of tablets, but the laptop industry is still in the growth phase because of the demand

for personal computers in US households (“Retail” 1). The 3D printing market is also on the rise

with a GDP annual growth rate of 2.3% and an IVA annual growth rate of 16.7%, showing an

increase in value in the market (“3D Printer Manufacturing” 1). The laptop and 3D printing

markets are growing and HP already has a grasp on the computer manufacturing industry,

holding a 26.8% market share, as well as beginning development into 3D printing (“Computer

Manufacturing” 1). Having growth in the unsaturated markets of 3D printing and 3D scanning

allows HP to penetrate the market and become a leader. The mobile industry is dominated by

Apple and Samsung, regardless of innovation, HP may be too far behind to compete with the

leader companies. It is possible that leaving the mobile industry altogether and better allocating

resources to more profitable markets could be a solution for HP’s issue.

Another viable option for HP’s problem would be to allocate money and resources into its

mobile product development to increase sales of HP mobile products. With the world shifting

over to mobile devices and tablets, having a share in the market could increase sales for HP and

allow the company to move forward in the mobile industry. As stated in the 2014 annual report

for HP, “we have been negatively impacted by the market shift towards tablet products within

mobility products, which has reduced the demand for PC’s”, without adapting HP will continue

to be negatively impacted by this issue (Whitman 53). Allocating money and resources into

products such as the OLED screen, a flexible, thinner and lighter mobile device screen would

help HP to gain some market share in the mobile industry (Honig 1). These new developments

could help to put HP back on the map in terms of the mobile market.

Decision Matrix

14

To conclude the best solution to HP’s low market share in the mobile industry it is important to

look at the saturation of the mobile market and the technological market as a whole. Criteria used

in making a solution decision includes profitability of solution, ability to increase company share

in the tech and mobile industry, ability to increase product development and innovation and

ability to improve the company image. These criteria were used to evaluate each solution in a

decision matrix as shown in the appendix under diagram B.

Profitability has the most weight in this decision matrix because HP wants to change its market

share to gain profit. The solution to HP’s problem must be profitable in order for the project to

even be considered. Increase in mobile market share holds the second highest weight due to its

relation to the problem. HP’s low market share is the overall reason a solution is being sought

after for the company. Product development holds the third highest weight due to the changes in

the technological industry, product development is the only way to get ahead in the tech industry,

but if the solution is not profitable development will not matter, so development is weighted

at .2. Company image has the least amount of weight with .1. Although HP’s image is important

in decision making, profitability, market share and product development are more important than

establishing a better company image.

When looking at the partnership project option it is clear that this option is not a good solution

for HP. Although Microsoft’s tablet has done fairly well profit wise, the market share for the

company is still low. The Surface, Microsoft’s first tablet, launched in 2012 but did not become

popular until the Surface 3 was released in 2014 (“Computer Tablet” 1). In 2014 Microsoft

brought in $1.1 billion revenue from tablets alone, showing that a merger with HP would be

somewhat profitable (“Computer Tablet” 1). However, due to the already saturated mobile

15

market there is a low chance that a partnership will increase Microsoft’s 3.8% market share to a

high enough level in order to compete with Apple and Samsung (“Computer Tablet” 1).

As shown in the pie graph, Apple and Samsung rule more than 38% of the entire market for

tablet manufacturing in China (“Computer Tablet” 1).

Without a large increase in market share, a partnership

may not be beneficial enough for HP. Product

development received a lower ranking in the decision

matrix due to a lack of innovation in tablets and mobile

devices. According to an article from Gadgets.com, the

IPhone and Microsoft Lumia are fairly similar, showing little innovation on Microsoft’s end

(“Lumia” 1). Microsoft is more focused on its software development work, due to its 17.1%

share in the software developing industry, rather than tablet and mobile phone products

(“Software Publishing” 1). As far as company image is concerned, HP pairs with Microsoft with

most of its PC products, so the partnership would have little to no effect on the company image.

Allocation of resources was ranked the second choice in the decision matrix with a high ranking

in product development. Using resources to further development for current products, such as the

Pro, Elite and Slate tablets, could enhance the products, making them more desirable to the

consumer. One form of development HP would look into would be OLED screens, a thin,

unbreakable screen that is flexible and able to bend into a curve (“LG” 1). However LG, a

Korean electronics’ company, holds the market for flexible phones with its product the LG Flex

(“LG” 1). In 2015 LG shipped 59.7 million smartphones and incurred sales of $3.26 billion for

its mobile communications division, showing that HP is already behind in the OLED industry

(“LG” 1). If HP were to work on developing the OLED technology into its own products,

16

development could be high. This would not be the first time that HP tried to develop products to

gain a greater market share in the mobile industry.

In 2010 HP acquired smartphone leader Palm for $1.2 billion, along with the WebOS operating

system, in order to get into the tablet business (“HP uploads WebOS” 1). However, HP

considered the product to be unsuccessful due to lack of traction in the mobile market compared

to the Apple IPhone (“HP uploads WebOS” 1). Palm and WebOS were sold to LG in 2013 and

HP has lacked innovation in the mobile industry ever since (“HP uploads WebOS” 1). Due to the

company split in 2014, major projects such as mobile development were put on hold. Though

product development is important for the company’s growth, the split makes it difficult to

allocate funds to larger development projects (Whitman 12). As shown in the graph from HP’s

annual report, the split reduces revenue amounts for both segments of the company due to

services staying with

Hewlett Packard

Enterprise and products

moving to HP Inc.

(Whitman 12). With each company having a segment of the overall revenue, allocating resources

and funds to new projects is more difficult. With a lower amount of cash, a large developmental

move may not be a profitable project for HP (Whitman 12). Even with product development, HP

is far behind in the tablet and mobile industry compared to leaders Apple and Samsung. With

such a saturated market of competition and companies coming out with new innovative products,

HP will continue to struggle for market share. When looking at allocating funds for development

it is clear that this solution would be a waste of money for HP due to lack of profitability and no

increase in market share, even if product development would be relatively high.

17

Cost Benefit Analysis for Solution

According to the decision matrix, the best solution for HP’s problem with low market share in

the mobile industry is to get out altogether. Although this solution is a bit unconventional, seeing

as the mobile technology market is growing, the resources being used to create products that hold

such a small amount of market share is a waste of time for HP (“Online” 1). Staying in an

industry that HP holds no market share and little innovation does not stay true to the vision of the

company (“HP History” 1). HP’s vision states “to create technology that makes life better for

everyone… To invent, and to reinvent. To engineer experiences that amaze”, and using its

resources to make phones and tablets similar to other companies does not stay true to the

company’s vision for inventing, reinventing and creating a better life for people (“HP History”

1). According to IBIS database, HP holds such a low market share in the tablet industry that the

company is featured in the “other” category with other small tablet manufacturers, showing the

company holds no share in the industry (“Online” 1). Instead of staying in this industry with no

market share, HP can thrive in new undeveloped markets and do what the company was

envisioned to do (“Online” 1). These new markets include 3D printing, 3D scanning and

immersive computing technologies, but may also include new product innovation in these

categories.

In 2014 HP launched its new product Sprout, the world’s first immersive computer with the

ability to scan 2D and 3D items, capture them into a program where the items can be “mashed”,

and then printed on a 3D printer (“Sprout” 1). This new type of innovation will lead HP into a

new era of technology. Since this product is fairly new it is centered on commercial use, rather

than consumer use at this point, however with more development this new type of computer

could be the new PC (Westover 1). The product is used in design, engineering, medical and

18

aerospace fields to create parts and designs easier and faster with the scanner and 3D printer

(Sedgwick 1).

HP’s new development in these markets shows more promise than the mobile market due to the

growth in 3D printing and the ability for HP to penetrate the market early to gain acceptance.

The 3D printing industry is set to grow within the next 5 years with an industry GDP growth of

6.5% per year (“3D Printing” 1). With progress for 3D printing for medical and aerospace use,

3D printing will become an easier way to create medical and aerospace tools to help cut down

costs and time (“3D Printing” 1). In an article from Automotive News, 3D printing is becoming

the way of the future with automobiles as well (Sedgwick 1). The author D.Sedgwick quotes

Delphis Manager of Manufacturing in saying ““You can make it smaller, lighter and simpler,”

Rhinehart says. “Now you have complete design freedom”” showing the future for 3D printing

technology (Sedgwick 1). 3D printing is a growing industry where HP can lead the way if the

company focuses on these new markets. The table

shows the growth and revenue for the 3D printing

industry in its beginning years (“3D Printing” 1).

With HP’s lead in the immersive computer industry,

the company holds a strong spot with 3D printing and scanning, which will continue to grow as

3D printing becomes more available. Due to the extreme competition in the mobile market, it is

in HP’s best interest to leave the market all together and allocate its resources into more

worthwhile projects for the company. Within the next few years, referring again to the revenue

outlook table, 3D printing will become a profitable industry for HP to lead (“3D Printing” 1).

Though there will no mobile market share for the company, its development and company image

will thrive in a completely new market that has not fully been invaded, making focusing on new

19

markets the best solution for the company. The solution is the most ethical in regards to HP’s

current situation in the mobile market and the company’s future goals. Focusing on the 3D

printing industry will help medical and aerospace fields as well as designers and engineers by

providing easier more efficient ways for employees to do their jobs. 3D printing allows for

creativity and efficiency in the work place and possibly for consumers use in the future.

The following is a cost/benefit analysis showing the tangible and intangible costs and benefits of

HP’s solution, listed in the Appendix under diagram C. The cost benefit analysis was based off a

of five year time frame with HP having 287,000 employees, 35,000 of which worked in 3D

printing in the solution (“Hewlett-Packard” 1). The average salary for an HP employee is

$60,000 per year (“Average Salary” 1). The property plant and equipment information was

pulled from the HP Annual cash flow statement (“Cash Flow” 1). Marketing costs were

calculated using figures from statista.com (“Hewlett-Packard: Statistic” 1). The tangible benefits

of Immersive computing, revenue from 3D printing and 3D scanning were calculating using the

revenue outlook table above (“3D Printing” 1). The information is a rough estimate and not exact

figures. The cost benefit analysis clearly shows the gain in choosing the new markets solution.

Although the development costs such as employees and equipment are high, the tangible benefits

of revenue from the new markets outweigh those costs due to the growth in the industry in the

next five years (“3D Printing” 1). Overall the net tangibles for the solution are a positive two

billion.

The intangibles for the solution involve a large amount of time, but the company no longer deals

with the mobile industry so that time and effort is put into 3D development. The solution

category does not have employees losing jobs. Focusing on a new market actually holds the

20

potential for new jobs. The benefits include helping the medical and aerospace fields while

creating goodwill and an enhanced image for the company.

The growth in the 3D printing, scanning and immersive computer market will continue within

the next five years, showing promise for HP to become a leader in those markets (“3D Printing”

1). With the solution to leave the mobile industry altogether, HP will save money while staying

true to its vision of innovation and helping people (“ HP History” 1). As shown in the decision

matrix and cost/benefit analysis, changing markets will be a powerful and profitable move for

HP that will lead to a large market share in the 3D computing industry as a whole, as well as

improve product development and innovation, while enhancing the image of the company. To

solve the problem of HP’s low market share in the mobile industry HP must take a complete turn

and move away from the crowded industry in order to gain more profits and develop in a new

industry. HP cannot compete with Apple and Samsung, so money wasted on trying to compete

with those brands is better used in developing new products for the 3D printing and computing

industry.

Implementation

The recommended solution would bring a great deal of change to HP. Most departments would

be effected by this change due to the complete switch in market. The most effected departments

would be the Business planning department, to analyze a new strategy’s to approach the industry

and grow in the future, and the Finance department that would strategize a new financial plan

(“HP Careers” 1). As well as the Engineering and Engineering services department that would

design and create the new products to allow for good market growth (“HP Careers” 1). This large

change would affect all aspects of HP, however, departments from HP Inc. will be more effected

than Hewlett Packard Enterprise. According to an article from HP about the split in 2014, HP

21

Enterprise deals with current projects such as networking, storage and the cloud, whereas HP

Inc. deals with personal systems, printing projects and new “innovations that will empower

people to create, interact and inspire like never before” making HP Inc. the affected party in the

recommended solution (“HP to Separate” 1). HP Inc. holds a leading position for printing and

the personal systems market, putting the company in a good spot financially in the coming years

(Whitman 12). HP Inc. has the finances and drive possible to implement this solution.

In order to fully implement the solution of moving into the market of 3D printing, scanning and

immersive technology, there are steps that need to be followed in a certain order. The Gantt chart

and table is outlined in the Appendix under diagrams D1 and D2, showing the process and steps

for this solution. Though the penetration into the 3D industry will go on for many years with new

developments and innovation, the Gantt chart is based off of a 5 year time scale.

The first year revolves around strategy, research and leaving the mobile industry. The most

important beginning steps involve creating a new strategy and financial plan in order to deal with

allocation of funds and resources. The company will also need to negotiate new plans with the

manufacturer, these steps will take around 2-3 months. The next steps involve moving funds,

employees, and equipment around to better fit the new venture into the 3D industry. These steps

will take 4 months but acquiring new equipment could take around 6 months, due to the

complexity of the equipment. Following the move out of the mobile industry in year two, there

would be intense research done around the market and development of the new products

(“Market Penetration” 1). The company will also conduct a feasibility study and cost analysis of

the future projects in the 3D printing industry to have an overall plan to move forward (Martin

1). This research will take around 3-4 months.

22

Years three, four and five revolve around the product lines and development of new products. 3D

printing and scanning development will begin after the company confirms strategy and has

sufficient research. The 3D development process will take around 5 years including the

manufacturing and testing phases of the 3D printer. However, the research being done on 3D

printing projects will continue after that 5 years ensuring that new products are innovative and up

to date with current technological advances. During this research and development stage of 3D

printing HP will focus most of the company’s efforts on Sprout, the 3D printing and scanning

immersive computer, because Sprout has already penetrated the immersive computer market

(“Sprout” 1). The next step will be for HP to begin development on Sprout 2, which could take

roughly three years including testing and manufacturing, according to past project history (“HP

History” 1). Though HP Inc. is a larger technology company, the split makes it more difficult to

work on more than one money intensive project at a time. In 2015 HP Inc. brought in revenue of

103.4 billion dollars (“HP Inc. Reports” 1). One money intensive project will leave room for

time adjustments. Working on Sprout will create market share for the company as well as bring

in revenue for new projects such as 3D printing. While Sprout 2 is in the testing stage, engineers

and designers will be freed up to work on the new 3D printer. After Sprout 2s release the

company will run an intensive marketing campaign for the product for 3 months to gain market

acceptance. After this step, HP will reevaluate its pricing strategy and adjust its marketing

strategy depending on sales. The last step for this solution to be implemented is to continue

innovation and development for the products, the Sprout and 3D printer.

The project as a whole will take a number of years and then continue on into the future. If the

solution is implemented correctly, HP should be a successful leader in the 3D printing and

scanning industry and hold that spot for many years. With the recommended solution, HP Inc.

23

will work heavily on penetrating the market for the next 5-7 years, and continue research and

development in future years.

In order for the solution to work well for the company, HP Inc. must follow steps to implement

to solution. Though all of these steps are important, there are critical steps to take in order to

make everything else run smoothly. The marketing and financial strategies are the most

important items when looking at penetrating a new market. The financial strategy will be a factor

in almost every decision the company faces. Market research and a feasibility study are also

critical because knowing how to reach the market and knowing what is feasible for the company

will allow HP to make long term decisions. Analyzing and adjusting the market strategy is also

critical to allow for changes in the market and economy.

Some task time frames are less important that the strategy driven tasks such as selling inventory

and machines. HP Inc. revenues were $103.4 billion in 2015 so selling old mobile inventory and

machines is not as important as focusing on the strategy of the company (“HP Inc. Reports” 1).

The development process in the later years of this solution require large amounts of time in order

to collect information and innovate new products. Although they are important, these tasks,

unlike the strategy tasks, have more freedom to adjust. Though there are financial reasons for

ending tasks on time, without proper research and development, there is no product. The release

dates and development deadlines for these tasks are adjustable in order for the tasks to be able to

be implemented properly.

Success Metrics

When looking at the success of the solution for HP, it is important to look back at the original

criteria for the chosen solution. In 2015 HP Inc. had $103.4 billion dollars in net revenue, which

was down 7% from 2014 (“HP Inc. Reports” 1). The personal systems segment, which includes

24

HP’s mobile segment was down 14% year over year (“HP Inc. Reports” 1). The revenue in the

mobile industry is shrinking for HP, however, the recommended solution allows for growth in a

new market so the company can recover lost revenue. If the solution is implemented correctly,

HP will be a leader in the 3D printing and scanning industry. According to an article from CIO,

revenue from 3D printing products is set to triple within the next four years starting in 2016, to

$21 billion dollars (Mearian 1). The recommended solution would have HP successfully in the

3D printing market within those 4 years, showing the profitability of this solution for the

company. With HP having a lead in printing and personal computers, the company will have a

successful arrangement of products and services if 3D printing is included (“HP to Separate” 1).

Although the company will no longer have a market share in the mobile industry, HP will have a

leading market share in the growing industry of 3D printing, giving the company a better chance

at leading market share. 3D printing is being used by more companies as it becomes more

popular. The method is being used by Ford to create car parts, showing more availability in the

market for sales to industry and businesses for HP (Sedgwick 1). Being a part of a new

technological journey is what HP’s vision is all about. With entrance to the industry, HP would

be able to help the medical and aerospace field achieve new feats that would not be possible

without 3D printing. HP has room to innovate and develop new products in this industry leading

to a high amount of product development. An article from Design News states that the medical

industry is beginning to create custom patient prints for their exact needs (Murray 1). With HP’s

engineering talent there will be more improvements such as this that will make the lives of

patients easier. This intangible benefit shows the true success of the solution. HP’s vision is

about helping people and improving life and this solution allows for that (“HP History” 1).

Helping people to live better lives through the ability of technology will turn HP’s image from

25

just a technology company, to a company that helps better people and the community. With 3D

printing being a new industry with room for growth HP would be successful after implementing

the recommended solution of leaving the mobile industry and would continue to evaluate its

success each year as the 3D market grows.

Conclusion

The low market share that HP holds in the mobile market will continue to become lower as

companies like Apple and Samsung continue to innovate. In order to become a leader in a

growing market, it would be in HPs best interest to move out of the mobile device industry and

into the 3D printing industry. With a growth of 13.9% projected for 2016, the 3D printing

industry holds large promise for the company to be able to grow and develop (“3D Printing” 1).

Though the company split in 2014 makes the transition of markets more difficult, due to a

smaller amount of revenue, HP has enough funds to back individual projects that lead the

company to a large market share (“HP Inc. Reports” 1). The implementation process will take 5

years to complete entrance into the market and continue after that 5 years with new innovation

and development. The solution will be a successful venture for HP with a large impact on the

company’s image, showing the true care HP has for the community (“HP History” 1). HP will be

involved in medical and aerospace 3D printing development to further medical and space

research and growth (Sedgwick 1). With the growth in the 3D printing industry and growth in

revenue over the next 4 years, HP would hold a leadership position in the market and be able to

profit from the venture eventually, due to the current growth (Mearian 1). HP would benefit from

the recommended solution, allowing the company to grow into an undeveloped market and

create innovative new products the company had always envisioned.

26

Bibliography

"Apple Inc." AAPL Annual Income Statement. Market Watch Inc., 25 Apr. 2016. Web. 25 Apr.

2016.

Brown, Susan A., and Viswanath Venkatesh. "Bringing Non-Adopters Along: THE

CHALLENGE FACING THE PC INDUSTRY." Communications Of The ACM 46.4

(2003): 77-80. Business Source Premier. Web. 27 Apr. 2016.

"Cash Flow." HP. HP, 2015. Web. 19 May 2016.

"Computer Manufacturing in the US." IBISWorld. IBIS World, 2016. Web. 09 Apr. 2016.

"Computer Tablet Manufacturing in China." IBIS World. IBIS World, 2016. Web. 17 May 2016.

De La Merced, Michael J., and Quentin Hardy. "Hewlett-Packard Finds Accounting Problems,

Takes $8.8b Charge, after Acquiring Autonomy - The Boston Globe." BostonGlobe.com.

New York Times, 21 Nov. 2012. Web. 11 Apr. 2016.

"Hewlett-Packard: Statistics | Statistic." Statista. Statista, 2014. Web. 18 May

2016.

Honig, Zach. "LG to Demo 5-inch Unbreakable and Flexible Plastic OLED Panel at SID."

Engadget. Engadget, 19 May 2013. Web. 17 May 2016.

"HP Careers." HP Careers. HP, 2016. Web. 24 May 2016.

"HP History." History. HP, 2016. Web. 11 Apr. 2016.

"HP Inc." HP Inc. SWOT Analysis (2015): 1-9. Business Source Premier. Web. 11 Apr. 2016.

"HP Inc." HPQ Annual Income Statement. Market Watch Inc., 10 Apr. 2016. Web. 10 Apr.

2016.

"HP Inc. Reports." HP Investor Relations. HP, 2015. Web. 24 May 2016.

"HP Tablets." HP Store. HP, 2016. Web. 27 Apr. 2016.

"HP uploads WebOS to LG." Investors Business Daily 26 Feb. 2013: A02. Business Source

Premier. Web. 18 May 2016.

"LG ANNOUNCES FINANCIAL RESULTS." LG Newsroom. LG, 26 Jan. 2016. Web. 19 May

2016.

"Lumia v. Apple Comparison." Gagets360. NOTV, 2014. Web. 17 May 2016.

27

"Market Penetration." Smartling. Smartling, 2016. Web. 26 May 2016.

Martin. "How to Enter a New Market." Cleverism. Cleverism, 28 May 2014. Web. 24 May

2016.

Mearian, Lucas. "3D Printing Industry to Triple In Four Years To $21B." Cio (13284045)

(2016): 1. Business Source Premier. Web. 26 May 2016.

Murray, Charles J. "3D Systems Going Mainstream In Healthcare." Design News 70.7 (2015):

27-28. Business Source Premier. Web. 26 May 2016.

"Online Computer and Tablet Sales in the US." IBISWorld. IBIS World, 2016. Web. 26 Apr.

2016.

"Retail Market for Laptop Computers in the US." IBIS World. IBIS World, 2016. Web. 18 May

2016.

Sedgwick, David. "3-D Is For Real." Automotive News 90.6724 (2016): 0004. Business Source

Premier. Web. 26 May 2016.

"Software Publishing in the US." IBIS World. IBIS World, 2016. Web. 18 May 2016.

"Sprout 3D Scanning Technology, Software and Turntable | HP® Official Site." HP.com. HP,

2016. Web. 18 May 2016.

"Sustainability Strategy." Sustainability Strategy. HP, 2016. Web. 10 Apr. 2016.

Westover, Brian. "Hands On With the Weird But Intriguing HP Sprout." PCMAG. PCMAG, 29

Oct. 2014. Web. 18 May 2016.

Whitman, Meg. 2014. Berlin: Walter De Gruyter, 2014. Www3.hp.com. HP, 31 Oct. 2014. Web.

09 Apr. 2016.

"3D Printing and Rapid Prototyping Services in the US." IBIS World. IBIS World, 2016. Web.

18 May 2016.

"3D Printer Manufacturing in the US." IBIS World. IBIS World, 2016. Web. 17 May 2016.

28