Hewlett-Packard is using its supply chain, the global network of parts and manufacturing companies it uses, to build more varied and just plain more products faster than ever.
H.P.âs shift raises fundamental questions: Should H.P. be in the business of telling customers what they want, or responding fast when the customers tell that to H.P.? And, will H.P. lose some of the pricing edge it claims it gets by buying a few products in bulk?
Where H.P. once relied heavily on semiconductors from Intel for its computer servers, âweâre now building an ecosystem of multiple chips,â also featuring suppliers like Nvidia, Texas Instruments, and the many companies building processors based on designs from ARM, said David Donatelli, who runs the servers, storage and networking business at H.P.
âItâs going to take a while for the market to understand this,â he said, emphasizing the importance of the shift for H.P. He also said this meant different types of products would come out at a quicker pace.
In personal computers and tablets, the chief executive Meg Whitman said during last monthâs earnings call, âusing multiple operating systems, multiple architectures, and multiple form factors, we are moving quickly to produce the devices that customers want.â
H.P.âs move reflects the changing realities of computer hardware, for both businesses and consumers. Companies have to handle an increasingly diverse set of tasks, including supercomputing, and sending lots of messages across the Internet at a high speed. Consumersâ tastes and expectations are changing quickly too, making it hard to build hit products with a long lifespan.
H.P., with $120 billion in revenue, seems to have decided to adjust its very big operation quicker than ever.
For years, H.P. was content with Intel chips, and Microsoftâs Windows operating system, in personal computers that generally looked about the same. Now, it seems, it wants to try a lot of different things at once.
By making more personal computers, servers, and printers than anyone else, Ms. Whitman previously argued, it had a price edge over anyone. She still says that âin this battle for customers, our supply chain and distribution give us a key advantage.â
The advantage may lie more in ability to put a lot of engineers on different types of products and produce them quickly, reconfiguring supply chains fast when a product hits, than it will on pure pricing power.
In many cases, the products H.P. is buying are vastly different. Nvidia semiconductors are mostly graphics chips typically used in gaming. T.I. makes digital signal processors used to convey audio and video information. ARM chips go in mobile phones. To have all of these in the mix, even inside one server, indicates a heavy deployment of software and hardware engineers creating systems suited to differing needs.
This kind of server is still a small part of H.P.âs market for now, as H.P. still makes enough Intel-based servers and P.C.s to be Intelâs single largest customer. But by talking about things in this way, H.P. is willing to take some of that focused demand away from Intel, losing some of its bargaining power, to redeploy engineers who are now focused on Intel systems.
Mr. Donatelli acknowledged as much. âIt takes a big, powerful company to build an ecosystem like this,â he said. âIt might seem boring or esoteric, but itâs an important business distinction.â
The approach is obviously a big departure from consumer computer companies like Apple, with a very narrow range of products. Even Samsung seems closely identified with its Galaxy phones and tablets.
In servers, Dell, which on Tuesday announced products made for different markets, is still hewing close to a few architectural principles, and indicating it is willing to cut its profit margins to win deals.
H.P.âs approach âis a spaghetti strategy, throwing everything against the wall and hoping that something sticks,â said Marius Haas, the head of Dellâs enterprise business. âIn this life there are finite choices, and trying everything wonât work.â
Possibly. But then, Mr. Haas doesnât have Ms. Whitmanâs supply chain to work with. In a changing market, you try to make whatever you have into a strength.
He didnât mention working with other types of chips, and said Dell would focus on getting higher margins from attaching peripherals, software and services to its products.