Hewlett-Packard tops MBT 2007 ranking of IT vendors

This year's Manufacturing Business Technology Global 100 has a new No. 1: Palo Alto, Calif.-based Hewlett-Packard. HP is the world's largest IT company, reporting 2006 fiscal year revenue of $91.7 billion, thus surpassing IBM by a narrow margin. Suffice to say, HP is firing on all cylinders. In the past, printers and ink cartridges comprised most of the profits, but today other units make big ...

07/01/2007


This year's Manufacturing Business Technology Global 100 has a new No. 1: Palo Alto, Calif.-based Hewlett-Packard. HP is the world's largest IT company, reporting 2006 fiscal year revenue of $91.7 billion, thus surpassing IBM by a narrow margin.

Suffice to say, HP is firing on all cylinders. In the past, printers and ink cartridges comprised most of the profits, but today other units make big contributions as well. Software, blade servers, and PCs all performed well in 2006; laptop sales alone were up 24 percent, and operating margins in the PC division jumped by a third.

In fact, HP now leads Dell in market share in PCs: 17.6 percent to 13.9 percent, according to a recent story in The Wall Street Journal .

The software business looks to deliver significant growth, with the $4.5-billion acquisition of Mercury Interactive in 2006 adding strength in IT management. And with the boardroom scandals now in the rearview mirror, HP expects 2007 revenues to reach $97 billion—a 5.7-percent gain.

No wonder the stock price has doubled in just two years.

HP's numbers are impressive, but skeptics could point to IBM's divestiture of various businesses (notably PCs and printers), which hit its top line. HP, on the other hand, has resolutely maintained a broad product line. CEO Mark Hurd's mantra is, “Sell what you have.”

Manufacturing is a big part of this success story. HP is the biggest IT company in manufacturing: $18.5 billion to IBM's $18.2 billion, according to data from Manufacturing Insights , an IDC company based in Framingham, Mass. Revenue grew 12 percent-plus in HP's manufacturing services business unit.

“HP has done a good job of rationalizing its product set against specific industry needs,” says Bob Parker, VP, Manufacturing Insights. “They are very savvy in tailoring solutions to the diverse needs of different subsectors like CPG and automotive, which essentially function like different industries.”

A look at HP's client list, which includes General Motors , Airbus UK , and many other marquee manufacturers, illustrates the breadth of its solution set:

  • HP manages global SAP operations for Procter & Gamble (P&G). Its services were vital to enabling the integration of P&G and Gillette's infrastructure, according to IDC's Parker. The P&G outsourcing deal is worth $3 billion to HP.

  • For chip maker Advanced Micro Devices , HP designed and deployed a knowledge-management portal that links servers and storage to support content-management tools, instant messaging, and basic workflow capabilities.

  • For oil services leader Schlumberger, HP provides supercomputing platforms to perform complex and sophisticated reservoir simulations.

A 2006 report from Boston-based AMR Research sums up HP's strength in manufacturing: “What HP has today is an impressive list of services success that capitalizes first on its technology expertise, second on internal process excellence, and third on current account relationships with manufacturing CIOs.”

It used to be that HP touted its own manufacturing operations as its main qualification. In many ways, it's still a compelling story line. The PC division, for instance, streamlined logistics and closed seven of 30 factories to improve on-time delivery by 30 percent in 2006—a critical metric, given HP's retail-centric strategy.





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