HP Ireland seeks to hold pole position

26 Sep 2002

When your worst nightmare happens and the pilot of the airbus announces he’s going to have to make an emergency landing, Martin Murphy is the kind of person you want sitting next to you. Relaxed, unexcitable yet unerringly upbeat, he’s also the man that the hierarchy in Hewlett-Packard chose to be Ireland’s country manager as it absorbed Compaq into its business and set a course through the sticky waters of an ongoing recession.

When he first heard about the HP/Compaq merger just over 12 months ago, his reaction was equally enthusiastic. “I welcomed it. We had been looking at a number of acquisitions before that and my reaction was positive,” Murphy admits. “There was a lot of commonality with complementary products, services and capabilities. An obvious strength was the Compaq global services business that was very well established. HP had identified that the industry was going to be services led and it was an area it was going to get further into. So clearly here was opportunity to get into a leadership position.”

The coming together of two monolithic IT empires might have started with secret meetings between HP’s Carly Fiorina and Compaq’s Michael Capellas, but the consequences have rippled around the world.
Globally the new entity automatically assumed No 1 position in two of the four sectors in which it operates. Closer to home it’s even more impressive, according to Murphy. “We are now No 1 in every sector and our vision is to remain No 1 in every single sector and segment we compete in,” he says.

Of the four areas that HP operate across — imaging, devices, enterprise and services — Murphy puts an onus on a strong action plan to be executed around the device market and the company’s retail presence.

In the US leading computer chain Best Buy had signalled its concerns about HP demanding too much shelf space because of its decision to continue to sell Compaq and Hewlett-Packard product in tandem. This was not an issue in Ireland, according to Murphy. “The strategy about maintaining two brands was to make sure we could maintain the shelf space in stores and that’s a strategy that has worked well for us here. Coming into the peak retail season, the run up to Christmas, early indications are that the Irish market is starting to pick up and pick up well.

“In some regions the dual strategy will stand up better than in others. In the Irish market it’s holding. Retail is something that we have specifically focused on and you will see some things happening in the next month or two that will strengthen HP’s retail presence here,” he continues.

One thing he is alluding to is the launch next month of tablet PCs, already signposted by Bill Gates as the Next Big Thing in computing. Part of this may be wish fulfilment, talking up new product lines at a difficult time for the industry, but there is no doubt that Microsoft and partners such as HP believe tablet PCs will fill a gap in the workplace for busy, on-the-move executives.

“Without doubt tablets are the next biggest development and we’re working very much in conjunction with Microsoft. You haven’t lived until you’ve seen one,” says Murphy with enthusiasm that is just about detectable in his cool and controlled delivery.

There is an argument that the launch of tablets into what may seem to be a narrow gap between personal digital assistants (PDAs) and laptops runs the risk of overcrowding the market and confusing customers, but Murphy will have none of it.

“The strongest segment of growth in access devices over the past 12 months has been the laptop but the tablet PC is not a laptop replacement. It’s a totally different market sector. We can see a very specific market and are working with Microsoft to identify it. The last thing we want to do is eat away at successful laptop sales. When you see the HP tablet, there is a huge wow factor,” he tells me, rubbing salt in a wound because his accompanying public relations person won’t let me see one until next month. “You’re looking at a product [or not, in my case] that will leave the competition in the shade. It will blow everyone away.”

The crown jewels in HP’s computer brand is, however, its print and imaging division, which he describes as having a “staggering 60pc plus market share across all product lines”.

Ireland has also thrown up some more idiosyncratic success stories as Murphy elaborates: “We’re bucking trends here. We bucked the trends on the Unix server market where we’ve grown significant market share. To keep on bucking the trend you have to focus your business away from products and on to sectors.”

The merger officially took place in May but work was well under way behind the scenes. “I knew about eight weeks before that I was to be country manager. One of the advantages of the gap between the announcement and the actual merger was to give both organisations a huge amount of time to plan for the new company,” Murphy explains. “In that context I had advance warning and time to work with Compaq’s general manager to look at it from a sales and marketing perspective. We spent a lot of time in the intervening weeks working out the plans.”

The logistics of bringing together the two Irish divisions has more than doubled Murphy’s staff, from 2,000 to over 4,000. He has had to acquaint himself with different divisions including Compaq’s Dublin-based sales and marketing operation, which was substantially bigger than HP’s own department. In other areas, such as financial services, there was greater synergy and their assimilation was “pretty quick and pretty smooth”.

Now Murphy presides over an operation that includes HP’s inkjet manufacturing plant in Leixlip, its call centre in Clonskeagh as well as a Compaq software development base in Galway.

A key driver for the merger has been cost savings for the new conglomerate that has necessitated a programme of cutting back staff globally by 15,000. In Ireland, Murphy has continually played down any prospect of job losses locally.

So much for behind the scenes upheaval, what about front of house? Presumably the process created problems with customers?

“One of the technology strengths of the merger is that many of the product lines complemented each other,” Murphy explains. “So from a customer’s perspective it was very clear where Compaq had a strong product line and where HP had a strong product line, so to a large extent customers were able to work it out for themselves what were going to be the focal points in the new business. They didn’t have issues about buying something and wondering if it was going to be around in three months’ time. We didn’t notice a huge limbo though our competitors do try to make mileage out of it. On day one of the merger we were able to publish a roadmap that effectively reflected what people had worked out.”

Less tangible than products and buildings is corporate culture. “Both companies have had very strong culture,” acknowledges Murphy, “and we’re taking the best of both. There is a huge focus on this, which to some extent is driven from corporate level but it also depends on leadership executed locally. It is a priority. We now have one culture effectively and the senior management team has got to lead the delivery of that. There is a good balance between the two cultures at senior management and as you go down through the organisation you’ll see it reflected.”

To a point Murphy agrees that the hard fact of life is that old company cultures are losing their relevance because of the current market downturn. “Cultures have to change,” he advises. “The company is constantly reinventing itself. We’ve always been recognised as a company with a very different culture that has differentiated us in the market and it’s one of the reasons why people want to come and work with us.”

Like many companies, the latest shift in culture is based around a hard-nosed attitude to the bottom line. “What’s changing, and we’ve seen this coming down from corporate level, is that the number one priority for the new HP is to deliver exceptional results and be focused on doing things that will deliver exceptional results,” he says.
In an increasingly aggressive business landscape, Martin Murphy, with a background in sales, is better positioned than most to knuckle down in a fight for survival.

He makes no bones about there being winners and losers over the next few years. “I can see it happening in the Irish market that there will be two major players in the IT services and technology space, HP and IBM and that’s it,” he predicts. “From an R&D perspective, it’s companies like HP and IBM that have the capability to develop the types of technology that will lead the market and differentiate us more and more from other product and niche product providers such as Sun, EMC and Dell.”

He is, however, careful to qualify his prediction: “But this market is very volatile and it’s impossible to predict what will happen in three years’ time.”