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Innovators vs Copiers: HP vs Dell
eaglemoon writes ""The days of engineering-led technology companies are coming to an end," Mr. Dell declared. The NY Times outlines a modern version of a classic innovation theory. Who gets to win in the marketplace - the innovators who invest in R&D like crazy or those that just take cost out of standard products? The current fight between Dell and HP over the printer business is a great natural experiment in verifying this theory." The article does a good job of stating what the real contest is - it's the different theories of corporate structure that's being tested.
Provided they can outlast the drain on their development dollars and recoup the investment. I think Iridium was a good test for that. The people that bought them out for 10 cents on the dollar are making a killing now.
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VCs will generally not invest in companies that don't own their own IP. I'm not saying they know everything, but, to paraphrase Vizzini "never bet against a VC when money is on the line".
Haven't read the article but I don't personally consider HP an innovator anymore. When someone says HP, I think "sore sight for a once great American Company." Morale is supposidly in the toilet in the American shops. Maybe morale is better over in India.
HP's test equipment is nice, and HP printers are great. I actually liked Compaq's x86 servers, and hated Compaq's non-business desktops. Never liked HP desktops, never seen much in the way of HP servers outside of the HP-UX systems. Hockey-PUX is wacked, I'd prefer Solaris or IRIX.
Toss the Dell servers in the trash where they belong, give me a used Compaq server over a new Dell rackmount turd any day. I guess Dell desktops are okay, but you really get what you pay for.
I'm not quite sure why Dell is so popular. Poor Gateway, why are they failing when Dell manages to ship such low grade product and run such poor customer service. And where did Austin, Northgate and Swan go.
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Jim Morgan, who used to be the CEO of Applied Materials used to say there are three phases of competition: innovation, differentiation, and commoditization. AMAT wanted to win in the first phase and make do in the second and get out of the game in the third.
A company needs to pick which phase it will focus on in and stick to that. If HP wants to be an innovation company, they need to know when to bail out of a market with no innovation left (like printers).
Sadly, I see Dell's quote as probably accurate. And, one of the things the patent system was supposed to help prevent. The innovators were supposed to be able to profit (for a time) from their efforts. Assuming bad business practices and/or poor financial handling, they should be able to stay in business. Even if they are not the market leaders - their technology would be, and they'd still be making revenue from the licensing.
It's the mentality of the Dell's that are hurting us. Innovation is required. Yet, to compete with the Dell's, innovation (and R&D) often suffer because R&D costs money. The companies that truly innovate, that really study and work hard with R&D, will have a harder time in our current greed-driven, shareholder value is the only goal mentality market place. Why? Because the R&D takes money from profits, making margins smaller. Therefore, the copycats (Dell) have better margins because the ride the coat tails of the innovator, without having the spend the money to innovate.
. 62,400 repetitions make one truth -- Brave New World, Aldous Huxley
Will the pace of improvements decrease as fewer companies are willing to invest in research and development? It seems to be the case for the last 4 years.
There are at least 2 companies that will innovate. IBM and Apple are all about it. And in many ways for years they have come up with many of the computing advancements that a few years later show up for the rest of the market.
Evolution or ID?
Dell has sold printers for a long time. As far as I can tell, they target buyers who like to buy everything through one web site. The peripherals they sell are nothing special, and the prices aren't that good, but it's easy and convenient to buy everything with one click.
People who want the best are usually willing to shop around for it. Hopefully HP won't be run out of business if Dell is successful in undermining their market, and the next time I want a good, dependable printer I won't have to buy a re-branded Lexmark or some other similar junk.
Am I part of the core demographic for Swedish Fish?
Such slander. Xerox invented. Apple bought the rights to the invention from Xerox, improved it dramatically, and launched a revolution. Microsoft copied Apple.
Japanese automobile makers led in the development of fuel-efficient, low-polluting engines. Look at how long it took GM, Ford, and Chrysler to sell cars with engines that had 3 or the now standard 4 valves per cylinder.
Japanese automobile makers took American quality control approaches, and actually applied them. And made better cars.
My next car (my current ride has an American brand, was built in Kansas City, but was based on a european design; I've had it for 7 years, and it was 9 months old when I bought it. 150,000 not-so-trouble-free miles.) will be built in Kentucky or Ohio.
So I threw out my last POS inkjet printer years ago, and got a real laserprinter (HP LaserJet 4000TN) instead. The pinnacle of b&w printing. Fast. Stunning quality. Toner cartridges so large that one will last me around 10 years at my current rate of consumption.
And colour? If I want that, I put it on a floppy and get it printed at the photoshop down the street. 60c canadian (about 40c US) for a 4x6 printed on real kodak photo paper, by a real dye sublimation printer that costs as much as a fancy car.
The fault? A bug in Dell's RAID card firmware that would cause the card to eventually destroy the data beyond repair... A bug of the type that would NEVER get out the door in a HP or IBM product...
Don't be so sure. A few years ago my research group got a couple of brand new, top of the line RS6000 workstations. Set them up, ported the various apps and started running.
Oops, they fell off the network. Hmm. Only way to get it back was to reboot. They promptly fell off the network again. Anytime you tried to move a big file between machines they'd die.
IBM had removed a hardware check for malformed packets in the latest and greatest ethernet cards. Hey- they had software correction in the firmware, that would work fine. Except that nobody had actually bothered to test it, and it didn't work in some cases.
I agree IBM is better than some of the competition, but I don't trust anyone.
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For a long time it was considered "bad mojo" to make a machine that was easy to service. That implied that the system NEEDED to be serviced, so we'd better make it easy. In the time I've been paying attention to PC systems, it's gone from needing special tools to open, all the way to machines that can be disassembled with one finger. (Not that finger, people.)
IBM had handles on some of their systems, and they were ridiculed because that must have meant that they needed to be carried in to service...
Dell wasn't the first, but it sure was a kick in the butt to the other manufacturers.
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You could view it that way. Or you could look at some of the products HP has rolled out in the printer category the last couple years.
For instance, the HP Laserjet 3330mfp. It's a multifunction device just like everyone else's. Only... you can throw an IP print server on it, and make ALL of its functions available to everyone on your network. Oh, and ALL of its functions work simultaneously. So one of your users can be faxing through the unit while another is scanning from the glass and a third is printing.
In a world full of USB-only multifunction devices where you're lucky if you can share the printer function peer-to-peer due to proprietary "status monitor/sender" panels and such (Canon L6000 for instance CANNOT be redirected), this product is astonishingly innovative.
I should state that I am an HP-authorized warranty repair tech. I don't work for HP, but I do service their gear.
"Oh no... he found the
Its just like how you might using a PowerPC chip co-developed by Apple/IBM and Motorola but dont realize it because its in your cellphone or PDA or even your GameCube...
The difference between HP and Dell is that HP is diverse, even Microsoft isnt JUST in the OS field but does other work.... but if computers are the only thing that you think about when you think technology, you dont realize that. Dell just jumps onto the bandwagon and buys things from other people and puts them together and says they built it.... lets not forget those "printers" are Lexmark printers rebadged. This is the exact same phillosophy Apple used back in the 80's and early 90's with their inkjet printers. They where Canons and HP's.
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Disclaimer: I've got an MBA ('m also a programemr).
Dell's quote is this: "The days of engineering-led technology companies are coming to an end."
It looks like the basic opinion on this here at /. has broken down into two camps:
Fact is, both of those are right. It is shortsighted; but within the short-run time frame -- and the business sphere HP and Dell are operating in right now -- he's exactly right. Hell, HP knows it, too -- that's why they're in trouble and know it.
As the article points out, there are two types of companies: innovators and copycats. In the short run, the copycats will always eat the innovator's lunch. Naturally. They've got lower start-up costs, lower R & D costs, lower overhead all around. Thus, they undercut the innovator's price and outsell them.
This trend is accelerated when quality becomes fairly consistent accross the board. That is, when the copycats are still ramping up, their quality is poor. Thus, in the old days you would hear, "Spend the money for the HP -- brand X is cheap but sucks." You don't usually hear that, anymore, regarding printers. Sucks for HP.
But here's the kicker: when the Next Big Thing comes around, who will it come from? Dell or HP? Yep, HP. Innovators will survive not by getting pulled in to a lowest-price mud-fight -- no, they'll survive by innovating their way out of trouble. In fifteen years, do you think HP or Dell still be here? My money's on HP. Dell's a great commodity company: pretty good boxes, cheap. So was Tandy, and where are they?
It's the same thing with IBM. IBM has been a leader in nearly every single office productivity market they've competed in for, what, like 50 years? Typewriters, word processors, servers, PC's, etc. Big Blue has out-lived nearly every competitor who was at one time undercutting their market. Why? Because they innovated into the next Era -- and the copycats got caught in a mass extinction.
It's evolution on a corporate scale, baby. Those that adapt to the changing market, survive. Those that don't, don't. HP and IBM change the marketplace. Dell just hangs on and hopes they don't change it too much.
So Mr. Dell's right, for now, and doomed, eventually.
"The days of engineering-led technology companies are coming to an end," Mr. Dell declared.
This reminds me a lot of IBM and their IBM Compatible PC days. It's exactly what Dell is doing is what allowed others like Compaq to grow into the PC market. They took what was compatible to the IBM sys arch and built around it. Eventually IBM started playing the engineering-led game where they wouldn't release specs until they had their IBM PCs on the market then the PC-Compatibles could go after it. Innovators are kind of setting themselves up for competition like this when they're keeping the innovations a secret. Back to Compaq, for a while they innovated the items that were sold with their PCs but just like Dell they pushed it back on the MFGs to do the R&D.
Look where Compaq is now. In the belly of the beast that said Dell isn't doing anything. It's just distributing other people's products.. That's what Ms Fiorina said and that is exactly what Compaq was before HP bought them up.
Mr Dell watch out. Your company might be next.
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I don't think it's so much that Dell innovates on cost instead of performance...it's that Dell innovates on supply chain management rather than on product design and manufacturing. Keep in mind - Dell's supply chain innovations not only made custom-built hardware cheap, it made it realistic. What good is cheap custom-built hardware if it takes three months for the custom order to arrive at the consumer's door?
I think Dell is just as concerned about performance as cost, it's just that Dell is a management company and HP is (was?) an R&D/engineering company.
Most interesting thing of all to me is that the two compete in the same market while coming from such totally different business plans.
I am an architect, I work with large format plotters and printers all day. If the printer breaks, jams badly or the printer head wears out or clogs at a critical time or if there is performance degradation it can be a disaster, and can blow deadlines or we may end up not having critical graphics at important meetings. These are all technical and performance issues which are very important. If the software sucks, it is a constant hassle. HP is the only company I know that has made ink jet printers which last a long time and continue to perform under these high demand situations. I would never buy a Dell unless they can develop rock solid technology that is equal to what HP has. They can't do that by using a Frankenstein collection of technology I don't think, there will always be a critical feature that can fail. Maybe in the future they can do that, but right now I don't trust them.
I have used some other cheap printers, most of them end up in the trash can after 9 months, it is cheaper than trying to fix them. Every HP we have used has lasted a long time and we have had few problems, all we do is switch ink cartridges. I have no doubt Dell will be cheap, but I doubt they will have the same quality as HP. In the end, they will probably end up in the trash bin. Cheap crap doesn't inspire customer loyalty.
That is the bottom line for me, not whether one innovates or not. I really don't care who makes the product as long as it works and works well under demanding circumstances and the print out looks good. That is why HP is the leader IMHO.