HP 2015 Annual Report Download - page 49

Table of Contents
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initiative also targets shifting ink into SMBs through our OfficeJet Pro X printers which leverage our Page-Wide Array technology. In the
commercial market, our focus is on placing higher value printer units which also offers a positive annuity of toner and ink and accelerating
growth in graphics. We are accomplishing this in several growth areas: in multi-function and Enterprise Ink printers with recently introduced
products that are increasing demand, in managed print services, which presents a strong after-market supplies opportunity, and in graphics
with product innovation such as our Indigo product line. We plan to continue this focus on shifting the mix in the installed base to more
value-added units, and expanding our innovative ink, laser and graphics programs.
•In EG, we are experiencing challenges due to multiple market trends, including the increasing demand for hyperscale computing infrastructure
products, the transition to cloud computing and a highly competitive pricing environment. In addition, demand for our Business Critical
Systems ("BCS") products continues to weaken as has the overall market for UNIX products. The effect of lower BCS and traditional storage
revenue along with a higher mix of ISS density optimized server products and midrange Converged Storage solutions is impacting support
attach opportunities in Technology Services ("TS"). To be successful in overcoming these challenges, we must address business model shifts
and go-to-market execution challenges, while continuing to pursue new product innovation that builds on our existing capabilities in areas
such as cloud and data center computing, software-defined networking, storage, blade servers and wireless networking.
•In ES, we are facing challenges, including managing the revenue runoff from several large contracts, pressured public sector spending, a
competitive pricing environment and market pressures from a mixed economic recovery in Europe, the Middle East and Africa ("EMEA"). We
are also experiencing commoditization in the IT infrastructure services market that is placing pressure on traditional ITO pricing and cost
structures. There is also an industry-wide shift to highly automated, asset-light delivery of IT infrastructure and applications leading to
headcount consolidation. To be successful in addressing these challenges, we must execute on the ES multi-year turnaround plan, which
includes a cost reduction initiative to align our costs to our revenue trajectory, a focus on new logo wins and Strategic Enterprise Services
("SES") and initiatives to improve execution in sales performance and accountability, contracting practices and pricing.
•In Software, we are facing challenges, including the market shift to SaaS and go-to-market execution challenges. To be successful in
addressing these challenges, we must improve our go-to-market execution with multiple product delivery models which better address
customer needs and achieve broader integration across our overall product portfolio as we work to capitalize on important market
opportunities in cloud, big data and security.
To address these challenges, we continue to pursue innovation with a view towards developing new products and services aligned with market demand,
industry trends and the needs of our customers and partners. In addition, we need to continue to improve our operations, with a particular focus on enhancing
our end-to-end processes and efficiencies. We also need to continue to optimize our sales coverage models, align our sales incentives with our strategic goals,
improve channel execution, strengthen our capabilities in our areas of strategic focus, and develop and capitalize on market opportunities.
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Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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