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Why HP Should Sell Its PC Business To Save It
packetrat writes "Hewlett Packard may not be in danger as a company, but its future in the PC business is in doubt, thanks to former CEO Leo Apotheker's maneuvers to turn HP into IBM. This article at Ars says Meg Whitman should go ahead and sell off the PC business — mostly because HP's management is so inept, it would likely do better without them. Agilent seems to be doing okay since it was spun off in 1999, but HP may have spun off its soul in the process."
They should just concentrate on the one really profitable thing they do - making ink.
Or they should just sell off their assets, and then pay the shareholders off.
It's soul was eaten by Carly.
Have you read my blog lately?
Good HP is long dead.
New HP deserves death.
None of this is news.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
If the corporate management is really the issue simply establish a separate management that is on its own but with the ability to continue to return high earnings? You shoot the general but do not sell the troops. The real issue will be what will computers look like and behave like in the future. The chances are the next big thing is not before us quite yet. Smarter and more powerful devices will exist but somehow they just won't be quite what we anticipate. Operating systems and software will be far more valuable as proliferation of diversified hardware expands.
Agilent seems to be doing okay? How many businesses has Agilent sold off? How has Agilent done with respect to holding on to market share? I work with several former Agilent employees. Perhaps my view (as a former HP employee myself) is a bit skewed, but I would not say Agilent has done 'ok' since being spun off of HP.
As far as HP spinning off its PC business, I think as long as it is profitable it is worth hanging on to. As many analysts have said HP has benefits with regard to supply chain management and costs for its server business when it comes to component sharing with PCs. There are other benefits for sales and support to both servers and PCs being in the same company. Spinning off PCs would not necessarily help servers and would lose some momentum for PCs.
Just because the PC organization is successful right now does not mean it would be successful if spun out. See Agilent.
HP crisis seems to be a more of a media invented problem that affected the Wall Street perception. sure.. HP board had made dumb things too. You don't announce that it may be an spin off or not.. you just do it and report that you did it. The media posted stupid things all days, like if HP was a dying company that is going to be bought by any other company.. that's not possible right now. The HP management did stupid things.. how it is possible that Tod Bradley got out to the press to say that he wanted to lead the spin off.. to make public political preasure???' WTF The only thing good that Meg Whitman is doing is making their stupid management to stop saying dumb things to the press. She must remove the Mark Hurd circle from HP and put decent management that she can "MANAGE".
Yeah, if the global market leader isn't sure about the business, then they really should sell it to someone who actually cares about the business and will grow it. Indecisive waffling is not good for any business.
HP hardware is not what it used to be anyhow. Noisiest freakn' servers on the planet. You'd swear they go out of their way to find extra-noisy turbo-whine fans for their rack mount hardware.
I do not fail; I succeed at finding out what does not work.
This seems to be the problem. An enterprise business focused company seems to suck in the consumer market. A Consumer market company have hard times to get into enterprise environments. So, can a balance be created? ...do you want to help companies make money? or do you want to take the money from teenagers and college students while they said WOW when seeing you product? can you do both?
After IBM PCD was sold off to Lenovo, the quality has decreased.
Their well-known Thinkpad product line transitioned from a no compromise option to a lesser product. First, the high-quality Flexview displays went. Next was any non-widescreen display, followed by the split into the current models seen today. In trying to globalize a US brand, they killed what made the Thinkpads unique - being able to pay a good amount of money, and get a no-nonsense, no-compromise product.
As for HP:
The damage at HP was done during Fiorina's time. You want to blame anyone, you pin it on her. Not Hurd, or Apotheker.
Engineering a product for the Third World and then simply changing the product manuals/power plugs for the First World always results in an inferior product. Selling it off to an interest in the Third World guarantees this outcome.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
HP and Netflix really ought to merge. After spinning off the PC division.
http://alternatives.rzero.com/
... have gone way down in quality. It *used* to be the safe thing to buy especially if you are running a linux research lab at a university. Most universities require you to buy from recognized suppliers, with a preference for the campus computer store. Most of the other purchases are for windows, and the few linux labs, usually in Computer Science, Computer Engineering and occasionally Physics have to figure out. HP printers use to be the safe bet. They ran their own brand of postscript, but by and large they worked. Now, its a crapshoot. I made the mistake of buying two 1606dn for the lab. We barely got them to work and half the functionality is missing. We can only set the duplex options on the main printer preference page, and it often prints multiple test pages after each print job.
Atlas stands on the earth and carries the celestial sphere on his shoulders.
Aside from the likes of Intel and AMD, PCs are a commodity. There is *zero* profit to building a PC in the US unless it's a rare custom gaming or workstation rig. In fact, some say that Dell loses money on every PC and laptop sold, but make up for it in extended warranty plans and accessories. That's how bad selling a PC in America has become. PCs are cheap, easy to build, and with crap quality that most companies and users could give two-shits about. In fact, it's far easier to throw away that disposable computer when it gets infected with a virus. Hell, throw it away when the user becomes frustrated. So cheap that user aggravation is a good enough motivator to buy another (the messed up their local profile for example) and get a hardware upgrade in the process.
And don't get me started on the cost of PC support. Even Comcast will provide cleanup services for a low monthly fee. The days of a mom and pop computer shop are long over. Those that remain don't even know their number is up. Quite a relic.
Life is not for the lazy.
How long will it take Dell to screw it up?
By your logic, you'd be fine if everyone sold junk - even if it meant there was no alternative.
That's the way you kill products and companies, especially Thinkpads.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
Makes as much sense as Google acquiring Motorola for the same platform and patents for android.
I would like to see HP/Google enterprise hosted google apps appliances hooked up to Chromebooks as a replacement for the Microsoft Quagmire.
Memristors alone will make HP hugely profitable from licensing. Memristors will likely be the great computing discovery of the next decade or two.
I work for a company that was spun off by HP then spun off by that resulting company. Twice removed we are now doing quite well. You lose the benefits and negatives that come with being part of a large company...but the net result can be positive. HP has become a REALLY large company, even since I left there 3.5 years ago (for their twice-emancipated child). I think it is very possible that HP is too large (both in scope of products/services and number of people) to be effectively managed by a single CEO + management team...and that is one of the underlying causes of the turmoil seen for the past decade. In that respect it does make sense to spin off the PC business.
HP's size and structure is also inhibiting to some types of innovation and entrepreneurial spirit. HP had this online backup solution (I think called "HP Upstart") that was the result of buying/integrating a start-up in that space. They wanted to grow it and make it into a large offering for consumers, enterprise customers, etc. Problem is it is simply not possible to create a profitable online backup service when forced to do things the standard way in HP DataCenters which makes your cost significantly higher than the price folks like BackBlaze charge (while being profitable).
Their PC division is their number one cash cow. Things maybe razor thin for retailers but certainly HP. Notice how an $10 ram upgrade costs $50 when ordering? Or how they can give a 50% discount on corporate desktops when asked?
Their PC brand is their number one asset after they sold the rest of their profitable crap to agelient or whatever the name of that company is called. You always focus on your strengths and never deviate in another area if you want to survive by dumping the former.
They invested the costs and it is time to raise their prices after buying Compaq. You can't keep buying assets and selling them at a loss. To me this is no different than Walmart selling its store operations to focus on auto making or bringing in Bryers CEO to Yahoo so they can make ice cream. Its stupid and not what the companies do nor are its strengths. If they want to get into services do that but do not sell your cash cow or your image. No one in business will want to touch your stuff again otherwise
http://saveie6.com/
In the PC space there is no road to real innovation. Operating margins are 5 percent at best, in a good year. You cannot differentiate with your prime products because another company owns the entire user experience. One failed product and you've left the shareholders with no profits at all. And if you experiment with new ways of doing things like Android on ARM Microsoft is going to pull your co-marketing dollars and leave you with no profits at all and no hope of getting any. The path is really just not there.
Apple did it, but look how: they built their own brand and earned a brand premium through differentiation and outstanding design. With those premiums they invested in innovation without being sucked into the trap of surrendering the user experience. With each new thing they could charge more and better premiums until they could reach escape velocity with an ecosystem that's uniquely theirs.
No PC OEM can pull that off without letting go of those no-margin PC revenues. No doubt it's a tough sell to the shareholders and the board. But it's the right thing to do. Ultimately HP cut the chains it or we'll get our innovation from new players like Samsung, HTC and so on rather than traditional PC OEMs. We've seen the future, and it ain't this.
Help stamp out iliturcy.
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Maybe, just maybe, they hire someone who knows what theyre doing with the PC business, and give customers good options...
The printer-before-last was an H-P color printer with expensive cartridges; never again.
The scanner I bought for work was an H-P scanner. In all my years of buying computers and peripherals for work and for my own use, it was, by far, the most worthless piece of crap I ever saw! Never again.
I won't miss you, H-P.
Circle the wagons and fire inward. Entropy increases without bounds.
I'd hardly say that Agilent is a good example to raise. They are seriously mismanaged, and simply are tied to a business with a much longer product cycle. It has taken more years for them to reach the same level of apparent rot, but only because instruments have a 10-20 product life, while computers have a 0.5-1 year product life. Agilent has had to resort to re-badging their PXI instruments from their rivals (i.e. they buy their PXI 26.5 GHz spectrum analyzer from Phase Matrix, who is now owned by National Instruments). The place has driven off or laid off most of its key talent. Agilent is a festering hulk, it it just not quite as bad as HP is.
HP name becoming radioactive.
HP used to be a quality brand, but that was at least a decade ago.
Now they represent overpriced ink, _crap_ PC clones and laptops and gross mismanagement.
Acquiring EDS only adds another horrible reputation to the pot. Perhaps they should buy the ghost of Packard-Bell to further enhance their image? SAIC? The 'Church' of Scientology? (I hear it's going cheap)
They shouldn't spin off their PC business, it is crap. They should spinoff their server business (and any other business still delivering anything like good quality) before the corporate reputation drags everything down.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
There is no alternate universe where the bottom doesn't fall out of the generic PC market and kill the quality of all IBM and HP PC's, should they still be making them. That is a fact of life that IBM and HP had to deal with in their own way. IBM spun off their PC's and HP kept them and ran them into the ground. In both cases, quality went down. It was always going to go down. You can't go from an average sales price of around $1000 to an average sales price of around $500 without losing quality.
People used to say that if Apple were to make Intel PC's they would crush the Windows PC makers. Well, Apple started making Intel PC's in 2006 and they crushed the Windows PC makers, who all had to run down to the $500 low-end market to survive. People used to say that if Apple were to make a $500 low-end PC, they would crush the Windows PC makers. Well, in 2010, Apple started making a $500 low-end PC and they crushed the Windows PC makers. ALL Windows PC makers. Doesn't matter what brand is on the Windows PC. Whether at IBM or Lenovo, whether at HP or a spin-off, the market is what matters. If the market won't support building a quality PC, you have to build junk. If you build junk, that reflects on your other businesses and your brand. So HP either has to become a junk brand or get out of PC's. Since they make most of their money on something other than PC's, get out! Get out now. Get out 5 years ago!
One of their biggest revenue centers is contracting for NSA (along with various other TLA's), traveling to foreign countries installing surveillance equipment in the local telephony infrastructure.
HP killed TouchPad by not making their own software for the 10 years previous. They can't correct for the fact that they put their balls into Microsoft's hands by putting WebKit and Linux on some ARM hardware. They just simply did not have enough software to compete with Apple and Microsoft at their own games.
Someone should write a paper or a book about the destruction of American business by the MBA. Really is it logical that a computer companies top person isn't an EE? Is it logical that a software companies top person isn't a programmer? Is it logical that a car companies top person isn't a automotive engineer?
I confess that I once had the arrogant engineer's stereotypical perception of MBAs. This made business school so much more fun for me. I was constantly amused by having my former beliefs turn out to be complete nonsense.
... One of the later was a marketing professor. I once would have expected learning how to manipulate people in a particular marketing class, however we actually learned how to conduct surveys to determine people's actual preferences rather than their stated preferences, how to build a mathematical model of the market, how to simulate the introduction of a new product into that market and determine the market share it may capture, etc. Sure its a mathematical model and has various limitations but the process was mathematical, scientific and defensible given the state of the art. I was thrilled to learn that when a marketing person makes a prediction regarding expected market share the number may be scientific in nature, not just some number pulled out of ... um ... the air.
Having an MBA and experience in the industry that your company operates in are not mutually exclusive. I am an engineer that recently earned an MBA. About 1/3 of my class were engineers or scientists of some sort. For those whose experience was managerial in nature many managed things directly on the factory floor, production line, etc. I would suggest that the popular perception of MBAs is no more accurate than the popular perception of programmers and hackers.
Similar things were also true of the professors that I had. Some were more the traditional academic in background but others were former electrical engineers, mechanical engineers,
Now do all MBAs follow the mathematical process I just described, certainly not. Just as not all programmers following the good methods and practices that they were taught when they were in school. Every field has individuals who know what they are supposed to do but do otherwise. This is just as true for engineers as it is for MBAs.
HP has no future in client PC's. They have to get out ASAP. They don't know a damn thing about competing for the consumer's attention. Consumer PC's are sociology, not specs. Nobody cares what is inside a MacBook Air, they just want one.
What used to be the PC market is now just servers. HP's notebooks are a server in a notebook, they are not comparable to Apple's notebooks. HP should be running for the back room I-T business it knows.
A friend of mine who is a petite woman was told by her doctor not to carry her HP notebook anymore, it was too heavy. She pulled her trapezius muscle carrying it, which is one of the most painful muscle pulls there is. She put the carry bag for the notebook onto a 2 wheeler so she could drag it through the airport. Then she saw my MacBook Air and went out to Apple Store the same day and bought one for herself and for the past year she has been carrying it everywhere in her purse. And it is multiple times faster and more capable than the HP boat anchor it replaced. And she found Mac OS and iWork to be superior to the Windows XP and Office 2003 she was used to, as well as 10 years newer. Is HP going to follow Apple down that road? Is HP going to secure large supplies of flash storage chips, learn how to cut metal to make thin notebooks, and somehow, someway find a way to put some sex into their client systems? Because consumers don't reverse their expectations. They see MacBook Air and iPad and they don't look at a giant HP boat anchor the same way again. They find out how you can just go to Genius Bar to get everything you were getting at Geek Squad for free.
And the time of CIO's buying lots of 10,000 HP PC's is winding down. Companies are giving their users their slice of the I-T budget, and 50% or more of them are going to Apple Store.
In 5 years, there will only be 2 PC makers: Apple and Microsoft. And I'm not sure about Microsoft. There is no place for HP in client systems.
My experience is that nowadays all MBAs know is how to reduce costs and thus move your product downmarket. They can talk for hours about how to save 5 cents in shipping costs, but have no idea how to produce a superior product that would allow you to double your price and people happily dole out the cash (apropos of Apple and the late Steve Jobs).
Strange, I earned an MBA in 2008 and my experience is exactly the opposite. Apple was an example frequently used by professors in product development and marketing classes. Apple was also a common topic for student research papers in these areas and even in macroeconomics classes (ie how does Apple plan for or adapt to the business cycle - they don't, they just rely on superior design and superior marketing to power through economic downturns).
I attended a business school at a state university, I believe we were rated in the top 50 nationally. I have a hard time believing that what we were learning was terribly different from other universities. You sure the guys you refer to actually went to business school, or did so sometime in recent *decades*? Not some kind of online diploma mill?
It's soul was eaten by Carly.
They sold their when they spun off Agilent.
I wonder if HP has dreams of patent riches from Memristors?
http://www.theregister.co.uk/2011/10/10/memristor_in_18_months/
Interesting technology, that.
I do not fail; I succeed at finding out what does not work.
<dream>
of HP rises Compaq and it's server division, Digital, led by none other than former AMD CEO and Alpha co-architect, Dirk Meyer.
</dream>
but seriously, the big picture shows making & supporting computers is less useful than making solutions that utilize computers for efficiency.
They discovered the memristor. anyone who says otherwise does not belong on slashdot.
Apple only loosely competes with PC makers.
Sure, at some level their devices do the same sorts of things, but if somebody buys a PC there is a 99% chance they want to run Windows on it. I don't know anybody who buys Apple products to install Windows on them.
The PC makers do compete with each other, which is what keeps their prices down. Collectively they have WAY more market share than Apple. Googling around the only figures I could find were from a few years back, but back then Dell sold 4X as many desktops/laptops as Apple, and that is only one company. Now, Apple likely makes more money than Dell on those sales, but again that is because they're different markets. If you want an OSX PC you have to buy it from Apple, but if you want a Windows PC you have lots of choices.
On other platforms Apple does better, but it isn't a slam dunk for all of them. They're ahead on mp3 players and tablets, and that's about it. They do well as a single vendor on phones, but they have just over half the market share of the leader (which is a combination of many vendors).
None of this is to knock Apple - they do well for themselves. They're just in a different market. Lots of companies try to be in that market, but few manage to pull it off. However, there is a lot of money to be made selling the devices that the other 90% of consumers use.
The very worst thing a technology company can have is either a bean counter or idiot MBA at the helm. In that situation, the company has at maximum 15 years of plodding, sucking, dying life left in it (with reputation going down the crapper in a very slow continuous spiral down the bowl into oblivion). Engineers are good-enough businessmen, and its about 50 times as hard to be an average engineer as it is to be an absolute genius business grad. HP lost all of their managing engineers when the founders left and the suits took over. Now everything has gone to shit. I have an old 3 ring binder sitting on my desk that says "HEWLETT PACKARD" on it (along with the HP logo). I keep it because its a good binder, and also because it has historical significance. It came out when the founders were still alive, and made quality products. All the smart engineers left HP 25 years ago during one of several Stalinist purges. HP used to be like Google is today: smart innovation was promoted and encouraged and the company made a lot of money and also made a lot of engineers rich. Innovation got sacrificed in 'brilliant cost cutting moves', AKA "Stalinist Purge". Now HP is an excellent reflection of America right now. The lights are still on, but the building is empty.
Thinkpad has only to be better than enough of the competition. They don't need to be vastly better to sell.
The competitors are working hard at sucking too.
BTW if you want quality, spring for a MilSpec Toughbook or Itronix or similar. You can use some of those to smash Thinkpads in your spare time and they'll still work.
"This post is an artistic work of fiction and falsehood. Only a fool would take anything posted here as fact."
They could alternately announce price hikes, name changes and spin offs until customers get so fed up, they start buying crayons and paper to draw their own entertainment.
Ross Youngblood
I think adobe should buy the WebOS division from HP. that way they can leverage CS onto those phones. It'll be the FlashPhone..
Some of it still resides in the Imaging & Printing Group - because of its success, the last trio of opportunists jet-setters (aka CEO's) have not inflicted as much damage as on the rest of the company... there is hope - but a true visionary (not a wall street driven gold digger) is required... not sure the latest one is that.
HP just isn't HP anymore and simply doesn't matter to me. Agilent is HP.
... why don't they keep the PC business and sell off Whitman and the rest of the board? Oh, right, they're less than worthless.
If selling their PC business off could save it, that would be because it would finally release it from the string of aggressively stupid CEOs HP seems to get saddled with. Paying record bonuses or top of massive layoffs is no way to run a company.
I apologize for this second post but immediately after the previous long reply a much more elegant and concise response occurred to me.
An MBA is an add-on. It is not a core area of expertise, it is cross training in disciplines that the "student" is most likely unfamiliar with. It provides the "student" with a broad but general understanding of the entire organization, where the "student" had previously only possessed a detailed understanding of a particular segment of the organization and little to no knowledge, or an erroneous understanding, of other segments. It provides a basis from which the "student" may developed a more detailed understanding of formerly unfamiliar segments.
Yes as an add on it may be useful. As a core it is even useful in some businesses like Retail. But in tech an MBA that is just an MBA just doesn't make logical sense. Maybe Cook will be different but then he may lead Apple into a cycle of decline. For a company to be great and do great things I believe their must be a passion to do more than make the most amount of money. I am sure when Steve Jobs took over Apple that the logical thing might have looked like producing PCs running Windows and leverage Apples design and name to go after Dell and Gateway.
That would have made Apple at best an also ran or at worst Apple would be in the same boat as Commodore.
Dell is a prime example of an MBA style of company. They make a good product at a good price but their is no real passion. They seek good enough to make the most profit.
Google, Microsoft back with Gates, and Apple are examples of pasion driven companies.
And MBA should not be the head of a tech company. Someone that loves technology and knows it inside and out should be. if they happen to have an MBA all the better.
See my blog http://ilovecookes.blogspot.com/ for light hearted technical information.
What's sad is, that HP burned WebOS in the cradle.
The WebOS fanboys wont like this. But WebOS was stillborn, it never had a chance from the moment Palm pushed it out and abandoned it at the CDMA airport. With no GSM phone they couldn't compete on the world market (the very lucrative markets of Asia and Europe) and they kept making more and more mistakes by depreciating the product. By the time HP got it, WebOS was a rotted, zombified mess. It was all HP could do to spray it with Glen 20 and claim it's not dead, please ignore the bits of flesh falling off.
By the time HP had a product ready, WebOS was so far behind in features there was no way WebOS could compete with IOS and WP7, let alone Android.
Calling someone a "hater" only means you can not rationally rebut their argument.
IBM is now mainly a software consultancy company which makes some top of the line computers like Power7 based ones. But if HP were to sell off their PC business, other than just ink, they'd be an Itanium company. Any future in that platform?