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Our biggest business is services, says HP chief
Services now account for 38% of Hewlett-Packard's total operating profit, more than any other segment of the firm's business. The news from one of the world's biggest PC manufacturers reflects a transition seen across the industry as computing firms away from their traditional business models. CEO Mark Hurd says the firm's acquisition of major business outsourcing firm EDS and developments in other parts of its operation have wrought significant changes.
"It's very different from how it was four or five years ago where imaging and printing group was over 80% of HP's profits," Hurd told HP's annual general meeting. "So it's a big change in the company's position and segments."
HP is the latest in a series of established computing firms to embrace services. IBM long ago turned its focus away from hardware to business services, and Microsoft recently affirmed its commitment to the cloud, a shift in strategy which will involve providing its software products on a service basis. This shift is partly the result of firms increasingly relying on outsourcing their hardware requirements. This would previously have required significant capital outlays.
Despite the growing importance of services to HP's revenues, Hurd claims HP's broad range of products is its strength. "It's a big deal to us to be able to cover the entire IT market-it's about a USD1.7 trillion market. HP's portfolio can now address USD1.4 trillion of it," he told the meeting.
