Can Hewlett-Packard bounce back? Third quarter results are in and they don’t look good. Total revenue is down 5% year over year, and profits tanked on a $9.2 billion noncash write-down on the 2008 EDS acquisition.
What’s HP’s strategy? Meg Whitman has now been CEO of the struggling giant for a year. She compares HP’s turnaround to that of Starbucks, saying “Usually these kinds of turnarounds take anywhere between four or five years… There’s nothing fancy about these turnarounds. This is not advanced business, this is 101.”
I question if refocusing on core competencies is enough. Maybe HP needs to get into the smartphone and tablet markets. Maybe it needs to expand its services business. Think I’m wrong? Then bet your money on HP stock and get rich. HPQ trades at its lowest point in a decade and sells for an rock bottom forward P/E of 4.2.
HP… and many others will need to find new markets or do new things.
1. The actual equipment makers are releasing products themselves. Apple releases its own products. Microsoft is venturing in that realm too. What is left of simply reselling is a very low-margin business.
2. Services is very tricky. Again, the actual product companies are increasingly accessible on their own. Microsoft/Apple… are hosting their own services. As are a myriad of other companies. So there is less room for HP to simply go to customer sites and install such services. I don’t want to overemphasize this point. But it is a dangerous trend for companies like HP.
I don’t know what HP is going to do. IBM made a good transition to services. It’s possible I guess…
But it’s going to be a major uphill battle.
…and retreating from PCs and consumer devices. Didn’t they announce they were getting out of the PC market a while back? What happened to that? Maybe it wouldn’t be such a bad idea after all. They seem to have a bad reputation of overheating laptops. The Z1 AIO workstation looks cool but is out of my price range and a lot more expensive than an equivalent PC + monitor of the same specs. And it looks like Intel’s Thin Mini-ITX platform will soon take over that space.
The BeOS CURSE?
What do you mean? HP owns nothing of Be Assets. And ACCESS that does is doing quite well, look at their nikkei status.
Some years ago Apple was a computer company. If they had concentrated in their core bussiness they wouldn´t have made the iPod and the iPhone.
When I think of HP, I think of printers, scanners and stuff like that. I’ve owned a few things by them, and when it comes to printers theirs are the only ones I buy (because, you know, Linux support is pretty important to a me, plus I’ve always had good experiences with their printers in the past). I never did get the point of them getting into the PC business, never bought one myself, and would never recommend anyone else to get one. I guess it’s just that “HP = computer peripherals” image I have. The fat that they bought Compaq–a company I couldn’t stand–sure didn’t help their image in my mind.
Either way, whatever happens to them, I don’t care what happens to their PC division (they can drop it for all I care), but I would be upset if anything happened to their peripherals division. Also, while I haven’t bought any of their portable computing devices like tablets, I don’t mind seeing them stay in there. But PCs… again, that just doesn’t seem right to me.
Actually some of the Compaq stuff was pretty well built, especially their small business offerings. i have a Compaq I use at the shop as a nettop and that thing has been running 8 solid years, never a bit of trouble, just a really well built machine.
What killed HP for me was when they were stupid enough to get into Dell’s race to the bottom and for several years there it seemed like the two of them were having a contest to see who could build the worst junk towers possible. Anybody ever have to work on one of those Pavilion mini-towers? What a giant POS! Micro PSU you could only get from HP and was ALWAYS woefully underpowered, no room for the fans to breathe, much less for expanding squat, the entire design was just shockingly bad.
So I’d say their problem is gonna be how to get their rep back after years of selling total junkers. Before the race to the bottom i used to buy HP and they were well built, now I’ve moved on to Asus and Samsung for laptops and home built for desktops just to try to avoid the junkers. I will give them credit on their larger laptops, my oldest insisted on going out and buying his own instead of shopping online and the HP 17 inch he’s had for 2 years now, works like the day he bought it, but its gonna take more than a couple of good laptops to fix their bad rep.
One of HP’s focuses is already the services business.
For example they are creating their own cloud offering based on OpenStack and they want corporations to use their system to build private clouds. Which can be combined to create hybrid clouds.
Whatever that means 😉
Fog computing.
(if a large enough number of ~techies would start using this term, eventually that could result in general adoption …overall, I believe “fog” is a much more precise analogy)
Edited 2012-08-30 08:58 UTC
The example I mentioned it is basically infrastructure (tooling) to run lot of virtual machines.
Which is something that is used a lot in a lot of enterprises.
Basically HP delivers a packaged solution of an open source project.
Here’s a novel idea. Sack Whitman and hire an engineer or scientist as CEO. The best way to send a high tech company broke is to employ someone from a consumer goods marketing background (eg Steve Ballmer, Mike Spindler or Carly Fiorino) as CEO.
Mercedes-Benz has a policy that all the highest level executives require a PhD in mechanical engineering . They are still going strong after 130 years.
[edit -typo]
Edited 2012-08-30 08:33 UTC
What is happening now to HP is the revenge of the pissed customer.
Great printers, great scanners: BUGGY, UGLY, impossible to get rid of, SLOW supporting software.
Laptops overbloated with weird software that never is used.
HP for years manufactures products that make you angry towards HP when you try to use them.
If “great products bring great profits” then this is NOT hp’s case…
HP scanners work decently only on … Linux!
O tempora o mores.
Edited 2012-08-30 08:39 UTC
I find their mobile workstations well built and dependable. And they look good, too.
Shockingly I find out from sources within the printer community that HP doesn’t even make their own printer internals.
Now Konica Minolta does make their own stuff… but only for their high end MFPs, the smaller KM printers are also made by someone else.
At work we have a Dell printer, when you open it it says Lexmark and Lexmark is owned by IBM.
If it were me my focus would be on the enterprise first and foremost – being able to deliver and end to end solution, from the server to the workstation to the laptop and out to the tablet and smart phone. Become the one stop shop where the CIO can go to HP and say, “here is a shit tonne of money, give me something that works” and then HP weave their magic and voila a solution. The problem is that they’ve been unfocused, they’ve had their brands split, split and then split again, Compaq is something that made little sense from the beginning and should be just written off as a really bad experiment. The server side of the equation they should kill off Itanium – the volume isn’t there, Intel really doesn’t care and the cost really can’t be justified in the long run. IMHO if they really do want to keep HP-UX and OpenVMS going along then maybe they need to look at x64 being a viable platform to standardise their server business on rather than the disjointed situation today.
Well I think the problem with HP (and most other companies of similar status) is that they offer too many things.
I was looking at their laptop lines. Way too many choices, way too much cost for them. There should be just a couple of different lines and a configurable number of choices for each machine. The end of it. But since they would limit the 100 different models to just a handful, make them worth. Give them unique features and not a “me too”. make them recognizable (this is an HP machine).
Also on the servers. They have practically no software. Oracle just killed them (no matter what the courts decided). Look at IBM – it was all the core software from the OS to the database to the productivity and the services as well. That is how they manage to keep all the hardware floating. HP wanted to stay on the proprietary terrain and thought it would do that cheaply with Itanium, so it bet on Intel. I think HP would be better off keeping their design teams after PA RISC rather than using Intel (look at how many millions they are giving Intel!).
WebOS. Now that is an epic failure. They tossed it so fast that it is inexplicable. The whole concept to combine things from smartphones to tablets to printers was a great idea in my opinion. They should have licensed it and keep it alive.