Turning change into opportunities for growth: This tech company takes innovation to the next level! [Monday Marketing Marvels]
September 21, 2020
(verb). To make changes in something established, especially by introducing new methods, ideas, or products. ― Google Dictionary
What are things that you often associate with the word “innovate”?
When it comes to innovation, this tech company continues to establish itself as one of the potential game changers in the industry.
Hewlett-Packard Inc., or HP Inc., is an American information technology company headquartered in Palo Alto, California.
In 1939, Bill Hewlett and David Packard put their electrical engineering degrees to work and founded Hewlett-Packard Company. The duo focused on technological innovation in the hardware space, starting with their first successful product, the HP200A, an audio oscillator.
Over the next seventy years, the company expanded its product line to include calculators, printers, and computers.
It was only in the 2010s that HP Company decided to enter the software services industry.
Due to the emergence of cloud technology and smartphones, HP Company decided to split itself into two entities in November 2015 in order to compete more effectively in the technological market.
The two entities were named HP Inc., which took over the company’s personal computer and printer divisions, and Hewlett Packard Enterprise, which specialized in the company’s enterprise products and business services divisions.
HP Inc.’s reinventing journey began with its vision to create and develop technologies that make everyone’s lives better.
In order for the company to achieve this vision, HP Inc. opened itself to new ideas, methods, products, and market changes.
With the help of its experienced management team, HP Inc. crafted a new business strategy based on three pillars: Core, Growth, and Future.
The company’s foundation?
Protecting the Core.
For decades, HP Inc. has been one of the leading brands in the personal computer systems and printing industry.
With constant innovation, the company keeps its products and solutions fresh, highly relevant, and driven to meet consumer demands.
In the office printing setup, HP Inc. launched a new line of ink, laser, and PageWide printers as well as a range of Managed Print Services.
As for consumer printing, the company’s pocket-sized Sprocket (a portable photo printer that is easily connectable to smartphones) became a hit, especially to millennials who love taking Instagram-worthy photos and printing them out immediately.
In the personal systems scene, HP Inc. took a profitable share with its new commercial products like laptops EliteBook Folio G1 and ZBook Workstations.
The company also introduced the Spectre 13, the world’s thinnest laptop, and the Omen X gaming system to address consumer categories like gaming and entertainment.
Under this pillar, HP Inc. reinvented the A3 copier market by introducing the A3 portfolio, which includes 16 next-generation HP PageWide and Laser Jet printers.
Aside from that, HP Inc. introduced new commercial mobility solutions like the Elite x3, an all-in-one device that received 24 industry awards at the Mobile World Congress in 2016.
In 2017, HP Inc. acquired Samsung’s printer business under a USD 1.05 billion agreement.
The company also continues its pursuit of growth and excellence in graphics printing as the industry shifts from analog to digital printing.
Creating the future.
With the help of HP Labs, one of the distinguished private research laboratories in the world, HP Inc. takes a long-term perspective on the trends that are currently shaping consumer behavior.
The company believes that the world is on the verge of the Fourth Industrial Revolution, which is characterized by the merging of the digital and physical worlds.
HP Inc. called this revolution the “Blended Reality.”
Taking the lead on defining this future reality, the company launched the HP Jet Fusion 3D Solution, an innovative commercial 3D printing system.
The Jet Fusion technology is capable of printing each layer of new material and agents on top of a previous layer that is still molten―delivering strong, detailed, and functional 3D printed parts.
HP Inc.’s new Sprout Pro (a technology that is built with a PC, high resolution cameras, Touch Mat, 2D, and 3D scanning capabilities) also marks the company’s investment into immersive computing, as well as virtual and augmented reality.
In order to increase awareness of its products, HP Inc. ventured into pop culture and collaborated with social influencers and celebrities to market its brand.
Here are some of the company’s famous marketing campaigns:
In order to promote the value of its secure printers, HP Inc. tapped American actor Christian Slater to play the “wolf,” or the hacker who steals confidential company information through unprotected printers.
The campaign aims to show various ways hackers can steal important data and is also part of HP Inc.’s goal to increase awareness of cyber attacks.
After launching the campaign, HP Inc.’s security solutions products (products that use advanced isolation technology to guard against malware and viruses) contributed to its USD 12.5 billion sales in 2017.
Reinvent Mindsets is a campaign series that promotes HP Inc.’s criteria in hiring its employees.
The Let’s Get in Touch campaign shows how African-Americans are three times more likely to not get the job despite their qualifications.
In the video, HP Inc. sends the message that talent is the company’s only criteria.
As of July 2020, HP Inc. is the world’s second largest personal computer vendor by unit sales, following the Chinese-owned company Lenovo.
In the past five years, HP Inc. has recorded a revenue of:
USD 50.5 billion in 2015
USD 48.2 billion in 2016
USD 52.2 billion in 2017
USD 58.1 billion in 2018
USD 58.3 billion in 2019
Clearly, HP Inc. ’s business pillars and marketing strategy has led the company on a path to achieve its vision for a future of “blended reality.”
HP Inc.’s Earning Power: Valens Research vs. As-reported numbers
HP Inc. (HPQ) makes for a great case study that we come back to regularly. One great reason?
The company has proven itself to be a better earning power generator than investors might think.
So, how well has HPQ been growing its business in the past years?
The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results higher on average than what traditional databases show.
The blue bars in the chart above represent HPQ’s earning power (Uniform Return On Assets). HPQ has seen cyclical but generally improving profitability. From 2004-2011, Uniform ROA expanded from 11% to 22% in 2011, before declining to 13%-15% levels in 2012-2013. Thereafter, Uniform ROA gradually improved until it achieved a peak of 45% in 2019.
The global ROA is just 6%.
While HPQ’s Uniform ROA shows twice the cost-of-capital returns, as-reported ROA portrays a different story.
The orange bars are the company’s as-reported financial information. If you relied on these numbers, HPQ’s profitability is understated, when the blue bars achieved a peak of 45% in 2019, as-reported ROA (return on assets, a measure of earning power) is only at 8%, much lower than what TRUE economic metrics show.
That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.
The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Its returns have been well above the market.
The numbers show that it has been doing well and making a profit.
Changing a culture is more than just a “launch-and-leave” approach.
Thanks to its “keep reinventing” motto, HP Inc. is able to adopt a growth mindset with the commitment to meet the demands of the ever changing technological landscape.
This enables the company to develop products and services that make life better everywhere―for every person, every organization, and every community across the globe.
Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.
…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.
The true ROI in marketing can’t be separated from the business as a whole.
What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?
At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.
Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.
However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).
By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.
We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.
Hope you found this week’s marketing marvel interesting and helpful.
Stay tuned for next week’s Monday Marketing Marvels!