HP 2013 Annual Report Download - page 16

Sales, Marketing and Distribution
We manage our business and report our financial results based on the business segments described
above. Our customers are organized by consumer and commercial customer groups, and purchases of
HP products, solutions and services may be fulfilled directly by HP or indirectly through a variety of
partners, including:
• retailers that sell our products to the public through their own physical or Internet stores;
• resellers that sell our products and services, frequently with their own value-added products or
services, to targeted customer groups;
• distribution partners that supply our solutions to resellers;
• original equipment manufacturers (‘‘OEMs’’) that integrate our products and services with their
own products and services, and sell the integrated solution;
• independent software vendors that provide their clients with specialized software products and
often assist us in selling our products and services to clients purchasing their products;
• systems integrators that provide expertise in designing and implementing custom IT solutions
and often partner with us to extend their expertise or influence the sale of our products and
services; and
• advisory firms that provide various levels of management and IT consulting, including some
systems integration work, and typically partner with us on client solutions that require our
unique products and services.
The mix of our business by channel or direct sales differs substantially by business and region. We
believe that customer buying patterns and different regional market conditions require us to tailor our
sales, marketing and distribution efforts accordingly. We are focused on driving the depth and breadth
of our coverage, in addition to efficiencies and productivity, gains in both our direct and indirect
businesses. So, while each of our business segments manages the execution of its own go-to-market and
distribution strategy, our business segments also collaborate to ensure strategic and process alignment
where appropriate. For example, we typically assign an account manager, generally from EG or ES, to
manage relationships across our business with large enterprise customers. The account manager is
supported by a team of specialists with product and services expertise. For other customers and for
consumers, PPS typically manages direct online sales as well as channel relationships with retailers,
while our business segments collaborate to manage relationships with commercial resellers targeting
SMBs where appropriate.
Manufacturing and Materials
We utilize a significant number of outsourced manufacturers (‘‘OMs’’) around the world to
manufacture HP-designed products. The use of OMs is intended to generate cost efficiencies and
reduce time to market for HP-designed products. We use multiple OMs to maintain flexibility in our
supply chain and manufacturing processes. In some circumstances, third-party OEMs manufacture
products that we purchase and resell under the HP brand. In addition to our use of OMs, we currently
manufacture a limited number of finished products from components and subassemblies that we
acquire from a wide range of vendors.
We utilize two primary methods of fulfilling demand for products: building products to order and
configuring products to order. We build products to order to maximize manufacturing and logistics
efficiencies by producing high volumes of basic product configurations. Alternatively, configuring
products to order permits configuration of units to a customer’s particular hardware and software
customization requirements. Our inventory management and distribution practices in both building
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