Fiorina Says HP May Get Out Of The PC Business

Mikelgan writes: "Interex (the global HP user's group) is reporting that HP CEO Carly Fiorina told USA Today that HP may get out of the PC business altogether if the merger with Compaq fails. Here's the story."

Comments

Sounds good to me

[Anonymous Coward]

HP getting out of the business leaves very few PC makers left in the retail market. You'll be left with Compaq, Gateway (at their stores), Apple (in both Retail and their own stores), and Sony (in 'select' stores).

Dell is still all mail order and with IBM and Toshiba beginning to transition what's left of their PC lineups over to web based orders as well, customers will walk into CompUSA, Sears, or Circuit City and will face themselves with two choices: Compaq or Apple?

I think this is a good decision by HP. They make a killing off of printers and cartridges, as well as scanners and other peripherals. With margins in the PC market severely low (unless you're Apple), this could be a good move for them.

Red Herring Article

[Average]

Did anyone else see the Red Herring 'Open Letter' (not yet online, got the dead tree yesterday), saying "Quit Carly Quit" in no uncertain terms?

HP. HP had a powerful business. 'Scopes, testing equipment, laser printers, calculators. People paid for that brand name. Like IBM, no one ever got fired for buying a LaserJet.

Guess what, those days are *GONE* and gone for good. I blame Fiorina, and a lot of other folks do to.

Re:Finances...

[sphealey]

HP used to be a company that made good test equipment, sold it at the highest prices, and supported it very well (also at the highest price). Now that's been spun off to the bizarrely named Agilent, leaving HP with the low-margin PC's and printers. The trouble with making PC's is that the market is very price competitive -- you've got to cut prices to just above cost to sell anything. Maybe you can make it up in volume. Or maybe you let your expenses get a teeny bit too high, and you're losing money every time you make a sale.

Indeed. The problem is that many good, solid companies were enticed/driven/seduced (take your pick) by the 1998-2000 period to believe that 100%/year sales growth was possible, that 150%/year stock price appreciation was sustainable and necessary, and that trees grew to the sky. As a result they made structural changes (e.g. "sell that boring old Test & Measurement Division - they only earn 45%) to maintain this rate of growth.

Of course, it turned out that trees don't grow to the sky. Bet HP wishes they had some of those boring, "slow" growing divisions back. And Lucent, and many others. Oops.

sPh

A (potentially) black day for the PC business

[WIAKywbfatw]

If Hewlett Packard were to pull out of the PC (note, big if) it would be the end of some of the best desktop and server products in the industry.

From their consumer, soho, business and workstation PCs (such as the Brio, Vectra and Kayak ranges) all the way up to their server offerings, HP have consistently produced top-notch products.

Well designed, reliable machines with excellent utilities (is there a management suite out there that's better than TopTools?) backed up by a professional and knowledgeable support structure have made HP PCs a dream to work with - as both a end user and a system administrator.

Sure, the printing business may be the company's major cash cow but it's its systems that really impress me.

I've been fortunate to have reviewed PCs from dozens of manufacturers, and I can honestly say that if I bought a PC (I tend to build my own) there would only be two companies I'd buy from. HP is one of them.

But let's be realistic here. HP has a massive installed user base, including many blue chip corporates. It's not going to abandon making PCs and those customers (many of whom will have support contracts that guarantee the availability of their preferred desktop and servers for years to come) any more than it's going to abandon its print business.

From the sounds of it, this is classic boardroom spin ("if X doesn't happen then we'll be forced to do Y") aimed squarely at getting Fiorina the votes she desperately needs to push through the HP/Compaq merger on which she seems to have mortgaged her career.

Quite frankly, if this comment was a serious statement of HP's intent then it would have been made to a more respected media outlet, such as the Wall Street Journal or a Ziff Davis title, or via a major press conference, rather than the less-than-heavyweight USA Today.

Re:Stocking inventory on a sinking ship

[King_TJ]

Actually, I think you bring up an interesting point. The industry got driven away from "generic clone" PCs due to the big vendors getting unbeatable pricing on quantity assembly.

Now, they're suffering from the very strategy that originally let them take over the market.

I wouldn't mind at all if all these big players decided mass-marketed PCs were worthless and got back out of the business. Then, the little guys could get back in and build hand-assembled PCs again. The mass-marketed "name brand" PC has really turned it into a commodity purchase, just like an appliance or box of office supplies. I don't think that turned out to be such a good thing for anyone who really likes computers.

It served the (quite useful) purpose of putting PCs in the hands of "average Joes" and offices everywhere. Now, this has been accomplished to the point of market saturation, and it's time to go back to hand-assembled custom PCs, made to order, for the people who care enough to have better quality computers.

Advice to Carly...

[n6mod]

I've been thinking of putting this in a letter to Carly for some time now. Of course, more people will read it here (a few) than if I send it to her (zero), so here goes:

Ms. Fiorina,

As a Silicon Valley native, I have been very concerned with what has happened to a local institution under your control. Over the past few years, we have seen Hewlett-Packard shrivel from a industry giant in several sectors to a PC and server vendor that is struggling to be considered tier-one.

As such, I offer the following advice:

1. Give calculators to Agilent.
You and Mr. Morris made a lot of enemies by announcing the dissolution of ACO. However, handing the reins to Agilent seems like a simple solution. It seems that the vast majority of HP calculator customers are likely to be Agilent customers anyway. Even though you and Mr. Morris have destroyed ACO, HP calculators have survived gaps in R&D efforts before. Perhaps Mr. Barnholt's team will be able to rehire some of the talent in Australia, and failing that I'm sure that he can recruit some excellent embedded system developers, both from inside and outside of HP and Agilent.

2. Give the Hewlett-Packard name to Agilent.
I'm sure that Mr. Barnholt would be delighted to bring the prestige of the Hewlett-Packard name back to the Test and Measurement business. Furthermore, this move would neatly solve many of your current problems. The copies of The HP Way sent to you by your employees and observers must surely be piling up by now, getting rid of the HP name will likely get the Hewlett and Packard heirs off your back, since their forefathers' legacy would be Mr. Barnholt's to protect.

These two moves would leave you free to pursue your aspirations to build a printer and server powerhouse, and might even keep you in the PC business, despite your recent comments.

You would, however, need a name for this new company. Might I suggest Compaq?