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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."
I thought the general consensus is that if the merger fails that she will booted out.
While Compaq is trying to improve itself for the merger, it seems that HP's only game plan is the merger. Now that's some real corporate foresight!
Bah... I want Carly Fiona to experience some pain for what she did to the HP calc division.
From my vantage point as an IT application manager, a merger between HP and Compaq sits well.
I'm not really interested in either company these days. Compaq basically destroyed itself and the companies it purchased. HP is doing the same to itself.
Their products aren't attractive to me (although both offer a couple cool products), and I have no reason to trust any service offerings offered by HP, Compaq, or a combination of both.
I particularly have to laugh at their consumer line of PCs, with the clear colored plastic which is supposed to make them "cute" like an iMac. Not even close.
So as far as I care, it's up to the shareholders. I guess the choice is to have one big sucky company, or two big sucky companies.
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.
Would you, or anyone else, know how HP's PC division is doing financially?
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.
Just wondering how HP weathered that change, from a "don't just do things right, do them better at any cost" culture to low-margin commodity manufacturing?
Would that also mean no more HP notebooks? That would be a real shame! I own a HP Omnibook 6000 and it's one hell of a notebook. You want one. Trust me. :)
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.
they might as well kiss some of their largest customers goodbye. I know that my company is planning on purchasing about 100K new pc workstations over the next two years. They are also killing off MPE, which accounts for about 600 $250K and up systems that are going to be coming end of life in two years. I would suspect that without PC workstations, it would be better for us to package deal with IBM for workstations and AIX servers instead of only having HP her with HP-UX. I think HP would be wise to give Fiorina the boot. She has wrecked that company.
The merger is her 'child' she will not let anything happen to it. She would go under with its failure anyway. So I think that these comments are made deliberately so it will seem as 'lesser evil' to do the merger and silence some opposing voices.
If programs would be read like poetry, most programmers would be Vogons.
...HP go out of business now.
I mean what does HP do if it doesn't do PCs, because we all know that Fiorina wants to get rid of HP-UX and all of that GOOD stuff.
Yes, that leaves flimsy INKJET PRINTERS! Cool. And digital cameras. Wait, they suck at those, so just printers.
Carly has successfully driven this company into ruin. As she did with her previous ventures. Why doesn't she just file chapter 11 right now to be done with it.
Face it, Carly has driven this company into ruin.
"HP Invent"
Wealth is the product of man's capacity to think. -Ayn Rand
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.
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
As of this post, CNET News is running a 13 part article on "visionary" people in the IT industry. Fiorina is listed on this, as is Steve Ballmer of Microsoft and a handful of other forgetables.
Yet Steve Jobs, who critics and pundits agree has great vision and has molded and changed the PC community dramatically despite the fact his computer does not make actual PCs, isn't listed?
And Carly has been with HP for about 2 years and hasn't really made any significant impact there beyond driving their stock price down.
HP makes decent printer hardware (except that POS OfficeJet series, which I own) and its PC hardware (which I worked on for 2 years) is adequate, albeit unremarkable. Perhaps Fiorina's departure could kill two birds with one stone--HP's PC business (so they can concentrate on what they do best--printers) and Compaq (whose PCs are among the rattiest things to maintain in the market).
/.
Vos teneo officium eram periculosus ut vos recipero is.
For the Record
Posted January 16, 2002
The following memo was written to Embedded and Personal Systems (EPS)
employees from EPS President Iain Morris to set the record straight
regarding recent press reports on the future of Hewlett-Packard's PC
business.
Dear All,
I would like to wish each of you a happy and productive 2002.
I'm writing to you to set the record straight regarding recent press reports
on the future of our PC business. You may have seen an article this Monday
in USA Today which claims that Carly "warned that, should it [the merger]
fail, HP's vaunted printer and imaging businesses would be damaged and HP
might have to shut down its personal computer division."
This is not the first time the press has zeroed in on the notion that we
should exit the PC business. Rather than suggesting we exit PCs, Carly was
explaining the importance of the merger -- in the context of a range of
strategic alternatives -- as a way to fix our PC business. She was also
responding to Walter Hewlett's assertion that PCs are a challenging business
(yet he fails to offer any thoughts on how to improve it).
According to the full transcript of the interview, what Carly said was: "It
[the merger] allows us to fix our PC business. We can't get out of our PC
business. If I didn't care about laying off people, I could just shut it
down. But if I shut it down, I'd have to lay off a lot more than 15,000
people across two companies over several years. So, we have to fix our PC
business. And fixing our PC business requires volume and distribution
capability."
To further clarify her remarks, the 15,000 figure has been included in our
filings with the U.S. Securities and Exchange Commission. It refers to the
estimated number of employee reductions of the combined HP and Compaq
workforce, which will total about 15,000 people. It does not specifically
refer to the PC business. The reductions are expected to occur during the
first two years after the merger closes and will be achieved through a
combination of targeted job reductions and attrition.
It is important for you to know that HP remains committed to the PC
business. By merging with Compaq, we believe the cost-savings from the
anticipated synergies and economies of scale will lower the cost structure
of our combined PC business and have a positive impact on margins. We will
also be able to leverage the significant progress Compaq has made developing
its direct distribution capabilities to create a more flexible distribution
model for the combined company and help us address this important industry
issue.
By combining HP's strength in the consumer PC business and Compaq's strength
in the commercial PC business, we will create a more balanced industry
leader. We also intend to create sustainable value in our PC and other
personal systems businesses by innovating across emerging categories and
delivering a new generation of connected access and embedded devices.
The merger also will provide important benefits to HP's imaging and printing
franchise (also mentioned in the USA Today article). By improving operating
margins in our other business segments, we expect to increase our investment
in core IPS research and development and new IPS initiatives such as digital
imaging and digital publishing - investments that are crucial to maintaining
our leadership in the IPS business. According to Carly: "Imaging and
Printing is not a cash cow. It is a growth engine that has to be invested in
if we're to capture the real growth opportunities in Imaging and Printing
going forward."
Our vision is to become a premier provider of the end-to-end solutions our
customers now demand. That requires us to be a leader in imaging and
printing and computing and services. It requires us to be a leader in both
the enterprise and the consumer space. PCs remain an important part of the
end-to-end solutions we provide.
In closing, let me thank all of you again for staying focused on the
business at hand, and for continuing to help HP emerge an even stronger
competitor when the economy rebounds. Here's to delighting our customers,
delivering results and beating the competition.
Thank you,
Iain
The problem with the PC business is that nobody makes any real money from PC's except for Intel and Microsoft. It's a perfect picture of the problem with commodity vs. non-commodity equipment. People consider PC's to be commodity hardware, but that's not the case. A PC is built mostly with commodity hardware -- everything except the CPU and the operating system. Uncoincidentally, the makers of those two components are the only ones able to set their price points high enough to make any real money. (One has some decent competition, and therefore can't set their prices too high... the other has a monopoly and can set their prices outrageously high.)
This is why the fall of the MS monopoly is inevitable. Once the market realizes that the OS can be commoditized as well, Microsoft will be lucky to keep any of the low end at all. Why sell a $500 computer containing a $100 operating system, when you can sell a $400 computer with a free one?
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Steve Jobs introduces the new iMac and a short time later, the head of HP, Carly Fiorina declares that they might get out of the PC industry. Coincidence? I think not!
Strange women lying in ponds distributing swords is no basis for a system of government.
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.
One of the things that Dell's success has been largely atrributed to is that they realize this point, and keep very little inventory on-hand. They avoid getting bitten too bad when the price of a given component drops overnight.
"That's Tron. He fights for the Users."
Darn, and I so enjoyed slashing the living shit out of my hands on the insides of those old Vectras. Too bad we can't preserve that experience for the next generation, eh? Physical pain coupled with a poorly performing computer; now there's a corporate legacy.
--saint
Moderators: Please make sure you understand a commment before you moderate. The parent posts are saying that Fiorina is not doing a good job at HP. They are expressing in a humorous way what many, many people think.
For the humor challenged: HP should get out of the Fiorina business.
Bush's education improvements were
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?
You have violated Robot's Rules of Order and will be asked to leave the future immediately.
Speaking for myself only...
Who cares about HP's PC business? What Carly & Co. should be shot for is letting the crown jewels go to hell in a handbasket. I'm talking about the PRINTER business.
HP printers used to have the reputation of being built like tanks, and quite rightly (I personally saw a LJII that fell off a 4 foot table in the Northridge quake. After it was picked up and the toner reseated, it worked just fine.).
Nowadays, they're cheap flimsy plastic crap.
Fascism starts when the efficiency of the government becomes more important than the rights of the people.
What even IS a "name brand" PC ?
What does HP or Dell ADD to create the "value" behind the name?
I only buy white box PCs where I hand pick the specific MoBo (with the chipset I need), graphics card, every last part... including the brand of floppy drive (like it makes a difference). The point is I am making the choice, and I know I won't be stuck with a VIA chipset that doesn't play well with my audiocard in my DAW. I can purchase it prebuilt for cheaper than I can buy all the parts individually (for some odd reason). It ends up being a better PC than a "branded" one- I know I haven't cut corners on the motherboard (God only knows what you get in a branded PC), I'm not PAYING for preinstalled software that I'll never use (and it truly is NOT free), and I actually receive an OEM CD of the OS- something you cannot find with a branded PC... and with Windows, you really don't want a "recovery CD" that will wipe the HD.
What does that leave us? TECH SUPPORT! So branded PCs supply their own support. In a business environment, I doubt most companies go to outside support like Dell or HP. Tech support for home PCs usually consists of, "insert recovery CD and start fresh" (from what people tell me... adding "there has to be a better way...I mean, my modem just won't dial...." )
And speaking of tech support, the BIG push into the sub-$1000 market where margins are lowest invited the least computer savvy into the forray, and that customer base must certainly be the most expensive segment to support. I envision that the point where they need tech support the most, where the learning curve is the steepest and 99% of their problems are "user error" they are faced with a rude awakening that poisons them from ever being a repeat customer with that company. Troll any windows support newsgroup and you quickly see how restless the natives are.
If anyone knows anything about PCs, they never need tech support... yet many branded makers can charge an extra $100 or so for "deluxe support," making me wonder how much money is already imbedded in the price of a new PC for support... whether it is used or not.
Add the fact that many bozo retailers such as Best Buy will simply replace an entire PC for the tiniest problem (often operator error from anecdotes co-workers have told me). The sheer number of "refurbished" PCs at Dell tells exactly how quick Dell is to keep customers happy... and their own policies are a bit warped. A co-worker was "told by tech support" she needed a new hard drive on her new Dell PC, that she should "send it back"- the entire PC. A fifth grader can replace a HD... she ended up with a new, different PC at Dell's expense. It is like getting a new car because you have gum stuck to the floormat! They must simply bleed money trying to provide support to everyday customers.
Finally, I think waaay back, "IBM clones" had a bad reputation for assorted compatibility issues... and ordinary people equated a white box PC with meaning "generic" or a cheap "knock-off." There is nothing generic about a white box. I am actually guaranteed MORE compatibility than buying a branded PC- every single part in the white box is "brand name" if I build it that way.
I agree that the tide will turn as the market is saturated with PCs, and people realize they don't need a new monitor, etc... every time they upgrade (the branded companies really push package deals to consumers), people realize tech support is a joke (and rely on friends and the informal network of tech support that naturally develops... "I'll just call my nephew"), and people realize they receive more for their money elsewhere.
Those that suggest you "dance like no one is watching" really want to see you make a complete fool of yourself.