After Fiorina, More Of The Same

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Hewlett-Packard 's board of directors says that while Chief Executive Carly Fiorina Carly Fiorina is out, it's not going to significantly change the strategies put in place on her watch. That's good news for the companies that struck alliances under Fiorina's tenure. But it's probably also good news for the companies that are HP's rivals.

The dispute between HP's board and its former CEO, analysts say, had more to do with operational details than with overarching strategy. But during her time heading one of Silicon Valley's most storied companies, HP went off in many new directions.

In the last two years it has attacked the consumer electronics space, striking up an alliance with Apple Computer to sell a rebranded version of the popular iPod music player. In an alliance with Microsoft , HP was the first to try selling a new, consumer-oriented personal computer called the Media Center PC.

But HP also remained under steady attack in the PC business from traditional rivals like Dell , which last year commanded more than 16.4% of the global PC market, compared with HP's 14.5%, according to the latest market survey from iSuppli. While the overall PC market grew by more than 13.4% last year, HP saw its shipment volume grow by less than 11%. Another competitive headache for HP is Acer, which saw its PC market share grow by 44%, and over the last year has been particularly dogging HP in the European market for notebook PCs.

IDC analyst Roger Kay says he's been struck by recent organizational changes in HP's PC unit. It was recently combined with the printing and imaging business unit under Vyomesh Joshi Vyomesh Joshi following the retirement of Duane Zitzner Duane Zitzner .

"I asked them in a conference call about this, if they were going to appoint someone to run the PC business," says Kay, "but I couldn't understand what they were saying. Essentially, the answer from Joshi was no and 'Give me a few months to figure that out.' "

Wall Street analysts have been calling for HP to spin off its PC business, particularly in the wake of IBM 's decision to sell off its own PC business to China's Lenovo. But Kay doesn't think that's much of an answer to HP's troubles.

"They have to make printers and PCs do something sensible together," he says. "The PC business needs to sustain its market share, but it also needs to become more profitable."

One of HP's stars--and one that's been visible in its advertising campaigns of late--has been its digital camera business, says iSuppli analyst Shyam Nagrani. But a resurgent Eastman Kodak will harass HP's efforts on that front, he says. "Kodak did very well in the last half of last year," he says.

Aside from digital cameras, Nagrani doesn't see much traction in HP's consumer efforts. "They've been pouring money into selling PDAs under the iPaq brand, but no one wants to buy PDAs anymore. They're getting smartphones. Why carry two devices when you can carry one?"

On the enterprise computing front, IBM has been HP's No. 1 nemesis and will continue to be so, says Kencko Burney of Instat.

"The computing requirements of their customers are declining. They don't need as many high-end computing systems as they used to, and IBM really owns that business," Burney says.

HP has always played a dual role in enterprise computing, selling standardized commodity systems and competing with Dell on one hand, and selling more specialized systems, such as systems based on Intel 's Itanium chip--which HP helped design--on the other.

"The question for HP is, What direction does it take next?" says Shaw Wu, an analyst with American Technology Research. "Does it focus more on the standard systems and try to compete on price, like Dell, or does it go more to the proprietary side and invest more in research and development?"

After some poor execution, things also had been looking up on the enterprise side of the business, says Carl Claunch, analyst with Gartner . For him, that makes the timing of Fiorina's departure curious.

"Execution was actually starting to get more positive from HP, but it wasn't fully consistent across the company," Claunch says. "The storage unit, for instance, is in terrible shape. Those areas lower on the priority list were clearly languishing. Clearly, there wasn't enough Carly to go around."