On Wednesday, Hewlett-Packard (News - Alert) (HP) announced that revenue dropped by eight percent for the third fiscal quarter ending July 31. The news led to a shakeup as enterprise group chief Dave Donatelli was reassigned and replaced by chief operating officer Bill Veghte (News - Alert). Chief marketing officer Marty Homlish and PC chief Todd Bradley were also among the reassigned execs.

The software division was the only one that increased revenue from the previous year.

HP cut its workforce by 3,800 in the previous quarter and plans to cut 26,000 by the end of October. The cuts should help in the short term, but if the company can’t generate more revenue, cutting employees will only go so far.

Many areas HP counts on for success aren’t helping. It is getting undercut on price in the PC and server market from companies like Lenovo (News - Alert), Acer and Asus. Although HP offers tablets and a Chromebook, it still loses the battle on price to rival mobile devices. Printing revenue dropped four percent and storage device revenue dropped 37 percent.

HP might very well be in a similar position to the buggy whip companies in the infancy of the automobile era that Danny DeVito alluded to in Other People’s Money. Doing better at developing obsolete products won’t solve the problem.

It would likely take a radical change to turn around HP. It cannot continue to be higher margin and PC-centric while selling to a consumer market that looks for the best deal and wants mobile devices.

One of the things that made HP a strong company is hurting it in 2013. Its brand grew in strength on the success of its minicomputers like the HP 3000. In the height of the PC era, HP printers were considered top of the line. The image of HP as a leader in legacy systems isn’t helping it today.

One possible strategy would be to place less emphasis on notebooks and PCs and more emphasis on mobile devices. CEO Meg Whitman’s comments during a quarterly conference call seemed as if she was waiting for things to get better in the PC market:

"The PC market has not stabilized as much as I had anticipated it would," Whitman said. "That stabilization has yet to occur."

Another possible strategy would be to focus on the cloud market. More and more companies are using cloud service providers to handle much of their IT needs instead of doing it in-house.

HP’s recent quarterly report is the latest in a trend of decline for the computer giant. The market has changed direction significantly and so far, HP has not reacted quickly enough. The good news is that the company is big enough to weather the storm if it changes strategy.