## 3 Servitization Scenarios of Top 5 IT Enterprises
### HP Servitization Scenario  
(1) Changes Assessment by Business Segment  
HP kept its primary business segments and added products or services to their segments. This strategy was primarily due to their diversified portfolio, which was accumulated beforehand [6]. Additionally, HP decided that its portfolio was too broad. Therefore, they split the company into two corporations, which took effect on November 1, 2015. The old corporation coordinates the personal systems group and printing. The new corporation is responsible for the enterprise segment, enterprise services, HP financial services and the software segment. This step signifies the importance of specific and supplementing segments. Figure 19 depicts the results of the analysis of the HP transition towards Servitization over a decade, starting from 2005 [39; 77; 78; 79; 80; 81; 82; 83; 84; 85; 86; 87; 88; 89]. Figure 19: Own illustration after McKinsey and according to HP’s annual reports. Figure 18: Positive/Negative Effects of Servitization—Microsoft. Several of the terms used in the figure are as follows: Enterprise Group (EG), Enterprise Services (ES), Enterprise Storage and Servers (ESS), HP Financial Services (HPFS), HPS (HP Services), Imaging and Printing Group (IPG), Personal Systems Group (PSG) [77; 78; 79; 80; 81; 82; 83; 84; 85; 86; 87; 88; 89]. Continuing with our analysis of changes by segment, Figures 20-22 [77; 78; 79; 80; 81; 82; 83; 84; 85; 86; 87; 88; 89] show our results. The hardware offering ranges from small PCs to compound servers for enterprises. The core focus on hardware decreased over the period, as HP realized that the entire industry was switching to new IT practices. Another amendment to the hardware offering delivered by HP was their change to selling entire solutions, which were technically integrated hardware, instead of selling products independently. With the acquisition of various software companies, HP began to propose complementary software applications, which were expected to increase customer satisfaction. Most of the software HP has been selling was previously tested over their own cost-cutting program through the decade. Figure 21: Own Illustration of Software Offering according to HP’s annual reports. Figure 22: Own Illustration of Services Offering according to HP’s annual reports. Through the acquisition of EDS, the service offering changed, and the information transformation services HP delivered increased. Additionally, HP increasingly transitioned to delivering their internal knowledge as a service, as the industry was interested in optimizations and outsourcing. (2) Revenue Distribution  
Our analysis indicates that HP remains a hardware-focused IT company. This is illustrated in Figures 23 and 24 [77; 78; 79; 80; 81; 82; 83; 84; 85; 86; 87; 88; 89]. Nevertheless, a decrease in the hardware segment and an increase in software and services has been observed. As the focus of HP shifted towards services, there has been a trend towards a reduction in hardware. Furthermore, a focus on service-oriented PSS has led to a steady increase in the service segment. (3) Transition Analysis--Challenges  
HP had to face a shrinking hardware market. As profit margins were sinking, HP had to address that issue. They attempted to solve the problem with a decrease in labor and through internal process restructuring. Furthermore, HP was challenged with the requirement that new IT business models had to be adapted to the needs of the customers. This dynamic required a rethinking of key activities and a re-analysis of the market. As the transition only occurred in the enterprise sector and not in the private sector, HP had to diversify its businesses. Additionally, the shift towards services provoked a significant change in the sales model and generally generated increased gross margins. Hardware usually has gross margins that depend on the contracted materials and suppliers. Services gross margins depend on the company's internal knowledge base and internal labor, which fluctuates.