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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.
Sure, there's something to be said for running a solid business around commodity products, even if they do cost a lot (compared to say, paper plates). It really is a good business to be in. The printer business, which the article focuses on, fits Dell's ideas pretty well.
But when I look for a new computer to buy, I look to Apple and I look at Dell. There's a big difference there.
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.
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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 innovation was in creating products that filled a formerly unidentified need. Those lovely early HP calculators are an example. The first reliable laser printers are an example. The personal computer is an example.
When each of these was being developed, the technology industry - heck the whole personal computer industry - was in its infancy, and just about anything with a semi-conductor as "innovative".
Those are now mature products, which is where companies like Dell appear. Their role is not to address needs that other companies haven't seen, but to build a business that exploits mature technology with identified market.
Innovation will come from left field, and will involved products or processes that few of us will see coming.
Three Squirrels
All I can say is "Thank God I've still got my LaserJet III." I'm sure that it will long outlive every POS printer that's being sold today, and I'm sure I'll always be able to find toner cartridges for it.
I hate to see HP forced into competition with a company like Dell. Dell is the Walmart of computer hardware, it's cheap, it probably works okay for a while, but but eventually it's gonna crap the bed and you'll have to buy a new one. HP stuff USED to last forever, but now they're starting to sell wally-peripherals as well. It all goes back to our disposeable culture. But some of us (like me) would much rather pay a little more for something that will last a lot longer, or even pay a little less for something that's already old but that will STILL last a lot longer (like my LJ III).
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www.n1ywb.com
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).
Dell doesn't design its own printers! They're simply run-of-the-mill Lexmark units with a Dell logo. But here's the shady part. The Dell printers are modified so that only the special Dell cartridges fit. The Lexmark cartridges had the same pin configuration, but the Dell cartridge holders are shaped a bit differently. If the cheaper Lexmark (or generic) cart is modified a little bit, they work just fine.
I have a laser printer--but Canon seems to be the best deal in inkjets right now. Black carts for most of their printers are only like $7.
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?
I disagree with the first part, but agree with the reason. Take PK-ZIP, Ethernet, RS-232, and Eclipse for example. Their creators released the specifications to the world. Suddenly, their product is compatible with a lot more machines out there, so people will buy products centered around it.
In fact, that's one of those business models that was mentioned in the OSS compatibility handbook [
The point is, innovation can survive in a copycat-filled world. You ju
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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.