Unlocking the value of the portfolio

Transcription

1 Unlocking the value of the portfolio Ann Livermore Executive Vice President 2004 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice

2 HP & Critical Product category leadership #1 or #2 Improved gross margin Leverage the portfolio to deliver the Adaptive Enterprise High-tech, low-cost, best Total Experience

3 In millions $8,000 $7,500 $7,000 $6,500 $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 Revenue $7,312 $6,902 $6,707 $6,803 $7,693 $7,078 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 In millions $ Operating profit $500 $400 $366 $291 $265 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 1H04 revenue by segment 45% ESS S/W HPS 2Q revenue grew 12% Y/Y: ESS up 8% Y/Y, HPS up 15% Y/Y, software up 23% Y/Y 1H revenue up 9% Y/Y 1H operating profit up 39% Y/Y 52% 3%

4 Total Experience satisfaction awards ComputerWorld/InterUnity (May 2004) customer satisfaction index HP earned the highest overall ranking Technology Research (May 2004) HP ranked #1 in customer satisfaction among vendors of Intel-based servers Respect Group (April 2004) HP ranked #1 for online customer experience CIO Insight research study (January 2004) HP outscored its outsourcing rivals in all categories Association of Professionals (June 2004) HP IT Resource Center and sites among Ten Best Web Sites

5 & Critical Market dynamics: $19B market, growing 14% Y/Y (unit growth 24% Y/Y) 1 Fastest growth in Blades and 1P/2P Increasing use in mission-critical applications review: Record second quarter, 2Q FY04 revenue up 15% Y/Y, unit growth of 32% 2 #1 WW position in x86, Windows and Linux servers 3 #1 position in customer satisfaction 4 Price leadership with Dell at entry level 5 Complete portfolio including x86 extensions (Intel, AMD) Focused innovation in management & Blades (up 150% Y/Y) 3 Focus areas: Continue leadership in 1P/2P and Blades Drive growth in both SMB and enterprise segments Drive gross margin through aggressive attach programs Ongoing investments in direct distribution 1 Market in CY2003, growth over CY2002. Source: IDC s Worldwide Quarterly Server Tracker, May HP Earnings report, fiscal 2nd quarter 3 IDC s Worldwide Quarterly Server Tracker, May Market position refers to units. 4 Technology Research, Inc., Corporate IT Buying Behavior & Satisfaction Study: Intel-based First Quarter 2004, May 4, ": Who's Cheap" by Illuminata, 25 May 2004

6 Critical & Critical Market dynamics: $22B market, declining 3% Y/Y 1 Movement to industry standard technologies Becoming a two-horse race review: Returned to growth 2Q FY04 revenue up 6% q/q and up 3% Y/Y 2 2Q FY04 Superdome shipments up 15% Y/Y 2 #1 position in Unix (31% revenue share) 3 Integrity adoption: doubled revenue q/q; doubled ISV applications to 2,000; customers include Airbus, Pepsi, Volvo, Wells Fargo Momentum in Real-time solutions (ZLE) in finance and supply chain Focused innovation: management, virtualization, availability, multi-os Successful installed base retention and significant competitive wins Focus areas: Take advantage of industry upturns in telecom and manufacturing Pursue new growth opportunities in healthcare/wellness and security Accelerate mainframe and Sun attack, plus U.S. growth 1 FY03 BCS addressable market. Y/Y is 1QCY04 vs. 1QCY03. Source: HP internal data. 2 HP Earnings report, fiscal 2nd quarter 3 IDC Q1 2004

7 Network Solutions & Critical Market dynamics: $20B market, growing 3.5% Y/Y 1 Intensely competitive market Regulations (SOX, HIPAA) and digitization driving growth review: 2Q FY04 revenue up 7% Q/Q, down 1% Y/Y 2 #1 in total disk storage systems with 23% factory revenue share; #2 in external disk storage systems factory revenue 2 Strength in high-end XP arrays, EVA, NAS and storage software Strong cash generation from nearline (tape/media) business Focused innovation: storage grid and ILM, archival and retrieval based on Persist acquisition Focus areas: Drive revenue and margin through aggressive attach, increased sales specialists, value added selling motion Aggressive focus on SMB with entry-level SANs and Microsoft partnership Leverage TSG portfolio to differentiate against point competitors 1 Total disk storage system market in CY2003. Growth is CQ Y/Y. Source: IDC Worldwide Quarterly Disk Systems Tracker 2004Q1. 2 IDC Worldwide Quarterly Disk Systems Tracker 2004Q1

8 & Critical Market dynamics: $88B market, growing 2% Y/Y 1 Industry under pressure from overcapacity Increased competition and price pressure from offshore firms review: 2Q FY04 revenue up 8% Y/Y 2 Focused player with collaborative partnerships Core strength in open infrastructure services and enabling Adaptive Enterprise Focus areas: Disciplined business management Focus on 700 accounts & 12 solution areas Improve front-end consultative selling capabilities Extend ITSM market leadership along with HP OpenView Continue global delivery program addressable market. Source: HP analysis based upom IDC s Worldwide Forecast and Analysis: A Market in Transistion 2 HP Earnings report, fiscal 2nd quarter

9 & Critical Market dynamics: $67B market, growing 1.6% Y/Y 1 Product mix putting pressure on traditional support model review: 2Q FY04 revenue up 9% Y/Y 2 Strong, profitable annuity #1 market share position in product support based on revenue in Listed in leaders quadrant, high-availability services (Gartner Magic Quadrant) 4 Broad multi-technology environment capabilities Core strengths: mission critical, storage services, global reach, technology leadership and enablement, PCs, imaging & printing Focus areas: Aggressive service attachment in both SMB and enterprise Increase renewals and up-selling to installed base Grow value services Continue global delivery program addressable market. Source: HP analysis based upom IDC s Worldwide Forecast and Analysis: A Market in Transistion 2 HP Earnings report, fiscal 2nd quarter 3 Gartner Infrastructure Service: 2003 Trends and Opportunities, Jan Gartner Research Note, October 29, 2003, Magic Quadrant: Server Vendor s High-Availability, 2003

10 & Critical Market dynamics: $188B market, growing 8.5% Y/Y 1 IBM strong; EDS challenged Process Outsourcing (BPO) is promising emerging category review: 2Q FY04 revenue up 50% Y/Y 2 Double-digit growth every quarter since 4Q FY02 2 Tier One status with outsourcing advisors Balanced portfolio across geographies, industries, deal size Focus areas: Continue delivery excellence against current contracts Balance between aggressive growth and profit improvement Expand client management and transformation skills Grow F&A BPO business Continue global delivery program addressable market. Sources: HP analysis based upom IDC s Worldwide Forecast and Analysis: A Market in Transistion IDC, Worldwide final data spreadsheet; IDC, Worldwide IT Security and Continuity Forecast, (Sept. 2003, IDC #30136) 2 HP Earnings reports, fiscal 2nd quarter and historical

11 & Critical Market dynamics: $6.5B HP OpenView addressable market, growing 10% Y/Y 1 $1.5B HP OpenCall addressable market, growing 9% Y/Y 1 Management is the new control point for CIOs Significant consolidation in the management software market review: HP OpenView 2Q FY04 revenue up 15% Y/Y (1.5x market) 2 HP OpenView 2Q FY04 deal size up 20% Y/Y; deals >$500K up 27% Y/Y 2 HP OpenCall 2Q FY04 revenue up 43% Y/Y (5x market) 2 HP OpenCall powers 35 telecom carriers on 5 continents Successful integration of six software acquisitions since July 2003 Existing portfolio will be near breakeven by end of 2005 Focus areas: Focus on management, not middleware Continue category leadership and aggressive growth plan Management software and services as foundation for the Adaptive Enterprise 1 Addressable market. Source: HP internal data 2 HP Earnings report, fiscal 2nd quarter

12 Management software functionality Elements Monitor, meter & control services Knowledge process integration Create and manage SLAs Deliver service views Discover, monitor & control storage, systems, networks, and applications Provision users, elements & applications priorities drive IT response IT workforce management Provision services Task and system level Application automation optimization Discrete element level automation Response Act Advise Assess

13 Leveraging the portfolio to deliver Adaptive Enterprise Apply key design principles consistently across business, application, infrastructure Simplification Standardization Modularity Considerations include: People Process Technology IT business management objectives and strategy Service delivery management services Application services Infrastructure services Service delivery

14 Unlocking the value of the portfolio Maintain or drive to #1-2 position in every product category Leverage category leadership to pull through the entire portfolio Drive new business growth in areas such as Blades, outsourcing, software, ILM, total print management, and Linux Improve gross margin with higher value sales, global delivery, and stronger attach rates Use software and services to create new strategic customer relationships

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