HP to merge IPG and PSG units
by Stuart Wilson, Wednesday 21 March 2012
Hardware giant HP is merging its PC and printer groups into one combined unit. HP’s imaging and printing group (IPG) and personal systems group (PSG) will join forces to become the HP printing and personal systems group (PSPG). The new super-unit will be headed up by PSG boss Todd Bradley. Vyomesh Joshi, boss of the IPG unit, is retiring after a 31-year career at HP.
Under Joshi’s leadership, IPG has grown revenue from US$19 billion to US$26 billion, and doubled its operating profit to approximately US$4 billion. “VJ embodies the spirit of HP and his impact on the company has been tremendous,” said Meg Whitman, president and chief executive officer, HP. “Under his leadership, IPG accelerated innovation and pioneered solutions that transformed the printing market. We wish him the very best as he embarks on a new chapter in his life.”
HP reckons that combining IPG and PSG will help rationalise its go-to-market strategy, branding, supply chain and customer support worldwide. The vendor claims that this will lead to a better customer experience and drive innovation across PCs and printing. The realignment is expected to provide opportunities for cost savings and accelerate HP’s ability to pursue profitable growth and reinvest in the business.
“This combination will bring together two businesses where HP has established global leadership,” said Whitman. “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders.”
HP also announced that it will unify its Marketing functions across business units under Marty Homlish, executive VP and chief marketing officer, HP. This will allow for even more effective brand-building and marketing activities, and will create efficiencies across the business units.
“Ensuring we have the right organisational structure in place is a critical first step in driving improved execution, and increasing effectiveness and efficiency,” added Whitman. “The result will be a faster, more streamlined, performance-driven HP that is customer focused and poised to capitalize on rapidly shifting industry trends.”
CE ANALYSIS: HP wants to combine a low margin PSG unit with a higher margin IPG unit to create a medium margin PSPG business. Is that a recipe for success? Difficult to say, but let’s not forget it was the low margins of PSG that prompted last year’s decision (ultimately abandoned) to look at options for offloading PSG. Will shareholders approve of this new proposal or will they just see it as a way of getting PSG’s low margin issues out of the investor spotlight? This decision also has the potential for creating some internal issues at HP. It is never an easy task to combine two separate business units into one harmonious entity.