HP is a Supply Chain Powerhouse

Anyone who doubts HP’s ability to impact how Palm smartphones (among all of the other webOS devices) are manufactured and distributed should check out this overview of HP’s supply chain. Simply put, HP is a supply chain monster, meaning that it has economies of scale in making webOS devices that Palm (and probably Apple and other smartphone makers) could only dream of.

Some highlights:

Here’s a look at HP’s supply chain by the numbers courtesy of Prophet:

$60 billion: Sum of purchases for what Prophet calls “the world’s largest IT” supply chain. That tally includes components, logistics, transportation, warehousing and services associated with the supply chain.

2: Number of PCs produced or shipped every second. Two printers are also produced or shipped every second.

15 seconds: Time it takes HP to produce or ship a server.

$50: Supply chain costs related to a PC. Prophet says supply chain costs refers to “transformation,” or manufacturing, and items like transportation and duties. The cost of manufacturing and transformation in a PC is now less than the cost of memory in a computer.

A company that drives $60 billion through its supply chain has some serious leverage when it comes to selecting components and manufacturers. Whereas Palm might have struggled to get the best components at the best prices (an Apple strength, incidentally) and in dictating terms to manufacturers, HP has sufficient clout to render these challenges a thing of the past. We can expect that HP will apply this strength to ensuring that only the best components are used in making webOS devices, and that there are no repeats of the build issues that marred the Pre’s release.

In addition, HP has its costs down to the point where they can commoditize products and drive prices well below the competition. That means that webOS devices can either be price-leaders in the market, or they can offer significantly more value for the same money. Apple needs its high margins to survive, whereas HP has demonstrated an ability to make quality products cost much less—which means we should see low-priced webOS devices alongside very powerful yet still affordable flagship products that beat Apple at its own game.

July 31 simply cannot come quickly enough in terms of learning more about the future of Palm and webOS.

Trackbacks

  1. [...] This post was mentioned on Twitter by Mark Coppock, Nathan Barker and Nathan Barker, Sharon Copeland. Sharon Copeland said: RT @aboutpalmpre: Don't overlook @HP's supply chain power when it comes to @Palm and #webOS: http://bit.ly/ae8BxX [...]

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