HP gambles $100M on securing its Net position

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Backed by a $100 million advertising and marketing campaign, Hewlett-Packard Co. has launched an Internet strategy based on new "e-speak" software and e-services.

The move, which the company says is the logical evolution of today's Internet, is backed by a budget four times what HP previously spent on Internet-related ad and marketing efforts.

Palo Alto, Calif.-based HP laid out its e-services strategy last month. The concept builds on new Internet software, which HP dubs e-speak, that allows users to scour the Web to complete a task or conduct transactions for almost any product or service, whether it's putting together complicated travel itineraries or buying a dozen carpenter's nails.

HP intends to make the new software available free through the Web to developers as soon as it's finished, possibly as early as the third quarter. The company clearly hopes the software will emerge as an industry standard, like Sun Microsystems' Java and Jini technologies.

Interactive generation

To trumpet e-speak and e-services, HP is placing ads where they are likely to be seen by what Nick Earle, senior VP-chief marketing officer of the HP Enterprise Computing Solutions Organization, calls "Generation I," for "interactive."

"We're aiming for the VPs of interactive marketing, people who will be running companies in the future," Mr. Earle says. "These are the people who are figuring out how to reinvent the company and they don't necessarily respect the old ways or rules of marketing."

In the digital economy "everything has to do with services, not with a company's product," he says.

HP, through Saatchi & Saatchi, San Francisco, is touting its new strategy in standard business media such as newspapers, including The Wall Street Journal, USA Today, The New York Times and San Jose Mercury News, as well as in business magazines such as Business Week, Forbes and Fortune.

Outdoor advertising is a major component of HP's e-services campaign, with New York, San Francisco, Boston, London, Paris and Frankfurt, Germany, targeted for wall paintings and "wild" postings -- small ads that appear seemingly randomly on construction walls.

"Outdoor, especially outdoor that's not the traditional 30-sheet billboard, is seen as cool by our target audience," says Julie Bauer, president-CEO, Saatchi & Saatchi, San Francisco.

"Outdoor, in public spaces in urban environments, is where we reach the Gen-I types," agrees Mr. Earle, "because that's where word-of-mouth buzz begins, whether it's new fashion or new trends."

HP also will be a major presence through signs in airport lounges. It is promoting e-speak on its Web site and other Web news and technology sites, such as CNET and Business Week Online. TV ads will break later this year.

Catching up in e-commerce

HP, long a major player in personal computers, printers and scanners, has been lagging when it comes to e-commerce.

"Taking control of the dialogue and stating their point of view is really important to HP, because until now, HP has needed a compelling market vision, something that they can bring a lot of eyeballs to," says Matthew Nordan, a computing analyst with Forrester Research, Cambridge, Mass. "They have been noticeably absent from the e-commerce discussion. By now, everyone knows that Sun is the, and IBM enables e-business, but where is HP?

"They were getting beaten up [on Wall Street] for their lack of vision, and they needed to do something big that would place them squarely back in the discussion. That they can tie e-speak to a higher-level vision of where the company is going is even more important."

Mr. Nordan says one of HP's major competitors in this arena is likely to be Microsoft Corp., which is working on BizTalk, its universal e-services language.

HP's goal is to make e-commerce even easier than it is now. "With the foundations of e-business and e-commerce now in place, we believe that businesses and consumers are ready to extract full value from the Net with e-services," says Lewis Platt, HP chairman-CEO. "Companies are now looking for ways to extend their reach beyond Web sites and Internet storefronts and Web brochures. E-services offer new ways to reach customers, new ways to make money and new ways to manage IT resources."

Rather than having to launch separate searches or visit numerous Web sites to determine the best price for a particular product or service, e-speak will arrange for that search with a simple request placed at a Web site that uses the new computer language.

That kind of one-click software would certainly affect e-commerce activity. Today, e-commerce between businesses accounts for 84% of all Internet transactions. That is expected to climb to 92% by 2003, according to Forrester Research. The company projects that business-to-business online commerce will reach $1.3 trillion in 2003, or 9% of U.S. business trade.

New partnerships

To back up its effort, HP has lined up an impressive list of partners and alliances, including:

  • A strategic alliance with Qwest Communications International that expands on the companies' commitment to fuel the development of the emerging market for "apps on tap," business applications delivered as pay-as-you-go services on the Net.

  • Plans with Microsoft and PSINet to deliver and host pay-as-you-go messaging services.

  • Plans with Answer Financial, the government of Sweden and Internet Travel Network to create a new generation of portals to deliver a range of e-services.

  • Plans to drive the development of e-services with Andersen Consulting, EDS Corp. and Ernst & Young L.L.P. and strategic co-delivery relationships between HP and Internet consulting companies Sapient Corp. and Viant Corp.
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