Businessmodel of HP

Customer Segments

HP has a mass market business model, with no significant differentiation between customers. Its customer segments are consumers, small and medium-sized businesses (SMBs), and large enterprises, including organizations in the education, health, and government sectors.

Value Proposition

HP offers three primary value propositions: innovation, accessibility, and brand/status.

The company has built innovation into its culture. It has been responsible for many industry “firsts”, ranging from scientific calculators to laser printers. In addition to the R&D groups it operates within individual business segments, it maintains HP Labs, facilities dedicated to brainstorming and developing groundbreaking technology solutions.

The company has placed a strong emphasis on product accessibility. It maintains a specific policy that says it is “committed to providing products and services that are accessible for people with disabilities,“ a part of its diversity imperative. It designs the offerings to be used on a standalone basis or in conjunction with assistive devices. Examples of HP’s efforts include designing switches, buttons, and controls to enable ease of access and using effective contrast levels on product text.

The company has a powerful brand. It was one of the first personal computer providers, so it is well-established. It was also the top PC manufacturer in the world for six years (2007 to 2013). Finally, it has received many honors from prestigious sources, including recognition as one of the “World’s Most Valuable Brands” (Forbes), one of the “Best Global Brands” (Interbrand), one of the “Top 100 Most Powerful Brands” (CoreBrand), and one of the “50 Most Innovative Companies” (BCG).

Channels

HP’s main channels for individual consumers and SMBs are its website and major retailers (e.g., Best Buy) at which it sells its products. For large enterprises, it assigns a dedicated account manager for purchases. Other channels it uses include resellers and independent software vendors (ISVs).

Customer Relationships

HP’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. The company’s website includes various self-help resources, including videos and answers to commonly asked questions. That said, there is a community component in the form of forums where peers lend advice and a personal assistance element in the form of phone and live chat support, and training and certification programs.

Key Activities

HP’s business model entails designing and developing its products and services. It utilizes outsourced manufacturers (OMs) for the production of its offerings in an effort to reduce costs and time-to-market; they are primarily located in Asia.

Key Partners

HP maintains the following key partnerships:

• Retail chains that sell its products through their brick-and-mortar outlets or websites
• Resellers that sell its products and services to specific customer groups
• Distribution partners that supply its products to resellers
• Original equipment manufacturers (OEMs) that incorporate its products/services into their own solutions and then sell the combined offering
• Independent software vendors (ISVs) that sell its products and services to their clients
• Systems integrators that offer their expertise in the sale of its products and services
• Advisory firms that offer IT and management consulting services utilizing HP products/services ### Key Resources

HP’s main resource is its engineering staff, whose members engage in significant research and development efforts to produce regular new innovations. An important physical resource is its group of HP Labs. The company places a high priority on its intellectual property, and as of October 2015 it has over 18,000 patents. Lastly, its customer service staff members are essential for support.

Cost Structure

HP has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is cost of products, a variable expense. Other major drivers are cost of services (a variable cost), selling/administrative costs (fixed cost), and research and development costs (fixed).

Revenue Streams

HP has three revenue streams:

Products – The company generates revenue from the sale of hardware and software products.

Services – The company generates revenue from maintenance and support contracts, as well as well as the sale of outsourcing services.

Licensing – The company generates revenue from the sale of perpetual software licenses.