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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."
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.
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.
...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
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
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
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
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."
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.