Hewlett-Packard Takes Some Lessons From Apple

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Iconic PC maker Hewlett-Packard (NYSE: HPQ  ) reported first-quarter earnings a few days ago, and investors weren't too pleased with the figures, as shares promptly shed nearly 7% of their value the following day.

Fellow Fool Anders Bylund will brief you in full on the results and the reasons its business model just won't work. I'm here to touch on an interesting tidbit in CEO Meg Whitman's remarks during the customary conference call and on a follow-up interview with CNBC. She categorized HP's issues into three broad buckets, and I'm just going to discuss the first one she mentioned: execution.

Whitman conceded that the company needs to fix its execution, which has a number of aspects, several of which relate back to lessons from Apple (Nasdaq: AAPL  ) -- one of which is "SKU reduction," meaning HP needs to slim down the number of models that it offers so as to achieve improved efficiencies and cost savings, not to mention a simpler customer experience. In other words, HP needs to focus on product depth instead of breadth.

This follows as mobile rival Motorola Mobility (NYSE: MMI  ) similarly voiced intentions to shift gears this year and focus on deeper development on fewer models, also emphasizing quality over quantity. Taiwanese gadget maker HTC also said it intends on rolling out fewer models this year, too.

Regarding HP's supply chain, Whitman told CNBC, "We don't think about our supply chain holistically, from designing in a way to limit the cost," reiterating her comments on the conference call that HP needs to "remove unnecessary complexity from the way we design, manufacture, and deliver products."

In other words, HP needs to focus on simpler and better industrial design, as well as working on incorporating that approach into honing its supply chain -- both of which are skills that Apple has down pat.

It's about time some of Apple's rivals started to take notes. Better late than never.

HP has some challenges to overcome, which is one reason it's not The Motley Fool's Top Stock of 2012. That title goes to an exciting company that's tapping into retail growth in emerging markets, whose business model resembles two retail household names that you probably shop at each week. Get access to the free report now.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On February 26, 2012, at 12:08 AM, RipRagge wrote:

    I have a few HPQ shares and a few AAPL shares. Hewleltt Packard is the only company who has all the pieces and parts to compete with Apple.

    A real Apple competitor must take control of software, hardware and OS – the whole user experience – in order to begin. HP has all three in house. Hewlett-Packard can do it by improving what they have. Everyone else must buy or build one of the three.

    No one can be a true Apple competitor until they can claim to do all three. Steve Jobs knew that controlling the whole user experience was essential. It is way past time for someone to do it.

    I bought HPQ after they announced they would incorporate WebOS into all their products. That is the path to success and the only way to compete effectively with AAPL.

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