Why Lexmark And HP's Fight Over Dahlgren Matters

The litigation that has erupted over former Lexmark-turned-Hewlett-Packard printer executive could significantly affect the fortunes of both companies--and ultimately their partners--in the vendors' respective weakest spots.

As reported earlier this week, both companies are suing each other over HP's hiring of six-year Lexmark veteran Bruce Dahlgren. The question this brings up, of course, is why HP is investing so much in indemnifying Dahlgren when it has its own deep bench of talented executives in its imaging and printing group.

While officials at both companies declined to comment on pending litigation, Lexmark diminishes the loss of Dahlgren, saying it has no plans to replace him. Marty Canning, vice president and general manger of Lexmark's worldwide PS&D, has taken on Dahlgren's responsibilities.

Nonetheless, Dahlgren was key to Lexmark's much-heralded vertical focus and the delivery of workflow and document-management solutions, particularly as it relates to large enterprises and its early success in transitioning standalone printers into MFPs.

However, Lexmark's plan is to bring that expertise to the SMB market, an area it has lagged, while Dahlgren is charged with helping HP move from a more product-delivery focus to a solutions-orientation among large enterprises, an area it has fallen behind.

Peter Grant, a research vice president at Gartner who has known Dahlgren for many years, says his defection to HP was a major loss to Lexmark.

"If you look at the enterprise business five or six years ago, Lexmark was an innovator and Bruce was a leader in this area of seeing the opportunity for converting their printers to multifunction products, making them smart devices and wrapping them up with services," Grant says.

Dahlgren also championed the establishing Lexmark's Printing and Solutions Showcase at its Lexington, Ken., headquarters, which has been used to show hundreds of customers and partners scores of actual vertical solutions, Grant adds.

"HP has actually followed behind Lexmark in making its monochrome LaserJets into printer-based MFPs," he says. Specifically, Lexmark, through its channel partners, successfully pioneered drawing large clients from a solutions point of view, providing vertically oriented document and workflow applications.

"Bruce knew this stuff, and he was helping them lock in all these customers in the enterprise," Grant says. "If he helps HP, it limits the upside for Lexmark if HP figures this out."