HP Recasts Itself for Internet Commerce

IBM Corp. has been hyping e-business for the past two years. Sun Microsystems Inc. is now putting the "dot" in ".com." And Microsoft Corp. has taken to publicly strategizing about its Internet commerce-related plans. So what about enterprise mainstay Hewlett-Packard Co.? In early March, HP joined the crowd by announcing the formation of a new Internet business unit (IBU), which the company says will create software, appliances and services geared toward the Internet business space.

HP’s IBU is one of the latest organizational shifts unveiled this year by the Palo Alto, Calif.-based computing giant. In early March, HP also announced plans to spin off its noncomputer-related measurements division, a move the company indicated would allow it to better focus on growing its IT-related products and services. The new IBU will consist of five divisions: e-services, e-commerce, e-business solutions, Internet security and VeriFone Inc. (www.verifone.com), a maker of credit-card transaction solutions acquired by HP in 1997.

The consolidation of previously disparate Internet-related divisions will allow HP to more sharply focus on growing its overall Internet-related business, says Joe Beyers, general manager of HP’s IBU. "The pulling together of HP's previously dispersed Internet efforts into an integrated Internet business unit, coupled with the launch of the new e-services strategy, will significantly enhance HP's Internet position," Beyers explains. "Our charter is to establish HP as a leading innovator in the new e-services world while immediately enhancing our current capabilities in e-business/e-commerce."

In creating the IBU, HP hopes to create a semi-autonomous unit that can react quickly to changing business trends in the e-commerce space. According to Scott Smith, director of Internet business strategies at Current Analysis (www.currentanalysis.com), this move by HP signifies a growing trend among large organizations that are attempting to recast themselves as nimble competitors in view of the more dynamic and reactive requirements of the Internet age.

"It’s a trend that’s happened across a lot of the major hardware and software providers, and that is they’re arranging their product delivery around the shifting needs of business, to a more holistic electronic-business orientation rather than shooting in with products from different divisions," Smith observes.

According to HP, each subdivision of the IBU will work to develop solutions in conjunction with each of the other subdivisions. HP hasn’t formally announced any IBU-related software products or software release schedules, but sources indicate the enterprise computing giant may shift to a software distribution paradigm in which it gives more of its products away for free, generating revenue by charging a fee every time its software is used to complete an Internet transaction.

HP is also expected to unveil a new marketing campaign similar in nature to efforts from competitors such as IBM and Sun.

With all of the reorganization commotion at HP in early 1999, Current Analysis’ Smith says he doesn’t know quite what to make of HP’s IBU move -- yet. "Is HP capable of completely rethinking their organization and their product orientations in the way that IBM has done? Do they have the leadership in place to execute on this?" Smith wonders. "These are all open questions. I don’t have positive or negative answers to them because I don’t think that the picture has been fully painted yet."