A number of senior executives of HP-Hewlett Packard (NYSE: HPQ) visited Israel recently including HP senior VP imaging and printing group (IPG) Europe, Middle East, and Africa (EMEA) Bernard Meric, VP and regional manager international sales Europe Jan Zadak, and VP IPG international sales Europe Herbert Koak.
HP is the largest IP company in Europe. Meric is in charge of 45,000 employees at 41 local subsidiaries, which general an annual sales turnover of $31.6 billion 40% of HP’s worldwide revenue.
Meric told “Globes” on Tuesday that the executives’ visit would reinforce the importance that the company attaches to Israel, and its commitment to continue operating there in two main channels: sales and marketing, and R&D and manufacturing. HP Israel employs 2,000 workers, mostly in its centers in Ra’anana, Ness Ziona, Kiryat Gat, and Haifa.
During 2004, HP hired over 150 new employees in Israel. HP Israel is HP’s largest branch in EMEA. The company recently inaugurated the ink factory of its HP-Indigo division in Kiryat Gat, erected at a cost of NIS 100 million, increased its support for HP Labs at The Technion - Israel Institute of Technology, and began construction of the programming laboratories for its RFID projects in Ra’anana.
Meric has 30 years of experience in IT management, including more than 20 years at HP. He was global manager of the personal systems group (PSG), and VP and manager for customer relations management (CRM) for the EMEA region. His current post, which he assumed in August, is senior VP IPG for the EMEA region, where the company’s business has surged.
Meric was appointed to his current post after Hewlett Packard chairperson and CEO Carly Fiorina fired a number of senior executives in the company, following disappointing results in the first half of 2004.
Meric told “Globes” on Monday, “HP regards its business in Israel as special.” He said nothing in particular about increasing investment in the company’s R&D centers in Israel, but HP definitely plans to reinforce and preserve the country’s place in HP. “Activities in Israel are divided into two main sections: sales and marketing of the company’s products to the local market, and R&D. Following the acquisition of Indigo, we established the ink division, and we’re delighted with the results. The Indigo team has been fully integrated into the company. The market amounts to $400 million annually, and is growing by 20% a year. We’ll certainly continue investing in it in the future,” Meric stated.
”Globes”: Even though you’re aware that the Israeli government is making deep cuts in its support for R&D by foreign companies?
Meric: ”I prefer not to comment on this issue.”
Wouldn’t it be more worthwhile to establish centers in countries where costs are much lower, such as India and China?
”HP decides on setting up its centers according to specialization. For example, we have engineers developing printers in Barcelona. Some may argue whether Spain is the right place, but it’s the right place for us, because they’re the experts in that field. The same is true for Israel. Israel has special capabilities. The team of what used to be Indigo has proven expertise and critical mass, so there’s no reason why we shouldn’t keep this special location.”
Strengthening the PSG
At the beginning of this week, HP announced the consolidation of its IPG and PSG divisions. Figures for the 2004 fiscal year show that the merged division has an aggregate sales turnover of $48 billion, 60% of HP’s revenue, and an aggregate profit of over $4 billion.
The change, which appears administrative, comes shortly after IBM (NYSE: IBM) sold its PSG division to a Chinese company. Meric says that merging the divisions is actually a tactical change. “As part of HP’s strategy for creating a digital entertainment product line, the consolidation of the divisions will help achieve the vision. I think it will give us a special position, compared with our competitors, some of which have recently gotten rid of their PSG business. We’re doing the opposite; we’re strengthening our activity in personal systems. In the long term, we hope that the merger of the divisions will have the potential to leverage the company’s products,” he explains.
Meric says that consolidation and integration in the sector is unavoidable. He plans to integrate entertainment devices with computers. “HP aims to create a new generation of products in media and digital entertainment. Home users want everything to be connected: camera, television, and music players. What this does is create home entertainment centers. We’ll put products on the market in the coming year. Household products are a market estimated at $35 billion. This market is still growing,” he declares.
Will HP concentrate more on home users?
”We’ll continue operating in all categories: the new generation of products for home users, and a range of products for enterprises, from PCs to servers and storage products.
”The recent big deals have been in services for enterprises: a large deal with Nokia, and another in Germany. We’re getting stronger in services, a field that is growing rapidly.”
Published by Globes [online] - www.globes.co.il - on January 20, 2005