In an interview last week with CRN, an HP official was happy, serene and confident. When it came to the tablet market, he wasn’t threatened by Microsoft’s Surface tablets. Nope, in fact, he was fine with it, and he believes that HP can compete even with the mighty Apple when its tablet hits the market later this year. Dream on.
Delusion is great especially from a company that tried to enter the tablet market once before with the HP TouchPad and failed so spectacularly that it was on the market for a whole 45 days before the company pulled the plug and held a $99, Get-’Em-While-They-Last, fire sale. I think based on this, we’ve earned the right to be a tad skeptical about such pronouncements.
This is HP after all, the same company that’s gone through 3 CEOs in the last four years, the same company that has so many SKUs for each product type, even their own engineers can’t keep track, and yes, the same company that is in the process of laying off 27,000 of its employees.
In other words, this is a company in free fall that seems out of touch with the current market.
Now HP expects us to believe, it has some super-duper, ultra-cool, top-secret features that are going to somehow give it the traction in the tablet market where so many others including HP itself have failed. If HP were smart it would have carried through with Leo Apotheker’s plan to spin off the PC division altogether. Just a year ago, the Wall Street Journal reported that HP was planning to do just that, but when Apotheker was fired 6 weeks later, those plans went out the window.
Apotheker might not be a high-tech visionary, but he recognized that it was tough to make money in the PC business because the margins were so tight. It’s especially tough when you create hundreds of different products and people can’t figure out what you sell. Look at the simplicity of Apple’s MacBook Pro laptop line. There are six basic models. That’s it. You can customize each one, of course, but you don’t have to deal with dozens of different models of basically the same laptop.
Now we have false bravado from HP’s senior vice president of Americas sales for HP’s printing and personal systems division, who would have us believe that something really special is coming, but he’s not saying what. You know, what? I’m not even remotely curious because chances are whatever HP produces will barely make a ripple in the tablet market when it’s released.
HP lacks even a modicum of tablet market leverage, and even though it might sound cruel, until HP actually produces a tablet that interests people, even a little, nobody cares at this point about whatever HP happens to have up its sleeve. The proof will be in the deliverable. Until then, excuse me while I yawn and snicker a little.
When HP suddenly jettisoned the TouchPad and webOS a couple of weeks ago, the move shocked me because it made no sense whatsoever to dump the company’s chief mobile component. webOS and TouchPad gave HP some mobile street cred in its battle with Google, Apple and Microsoft and it gave the PC division a mobile piece it was sorely lacking.
Today, as I read about HP’s plan to spin off the PC division–which means keep it, but run it as a separate company–it makes even less sense. While the PC has a long life ahead of it, as many have written we are clearly headed into a post-PC era and this is especially true on the consumer level as smart phones and tablets replace PCs for tasks such as email, reading, playing games, watching media and so forth.
Writing on Twitter today, analyst Michael Gartenberg, criticized HP’s decision to ax the TouchPad saying:
“HP forgot the Tablet market right now is a marathon, not a sprint. It was about going the distance not speed.”
He’s right of course. HP had barely had the device on the market for 6 weeks (49 days to be exact). To just give up on it and sell off every webOS device in a cut-price fire sale makes little sense and doesn’t bode well for CEO Leo Apotheker’s leadership or vision.
Any future that doesn’t include mobile is doomed to failure in my view and revealing his plan to trash webOS devices in such a public way was simply bad business. In fact, one former HP board member was quoted in the New York Times as calling HP’s plans corporate suicide:
“I didn’t know there was such a thing as corporate suicide, but now we know that there is,” a former H.P. director, the venture capitalist Tom Perkins, told me this week. “It’s just astonishing.”
It’s hard to argue given the speed with which Apotheker has take a once mighty company and driven it straight down, apparently along with stock prices, which fell mightily on the day after HP announced it was giving up on the TouchPad and webOS, selling or spinning off its lucrative PC division and overpaying for Autonomy for $10 billion.
But the worst decision in my view is the one to walk away from the mobile strategy set in motion by former CEO Mark Hurd, who started this downward sprial when he was caught in scandal last summer and was forced to resign by the Board of Directors.
In fact, Oracle CEO Larry Ellison, who is never short of bombastic opinion, likened the firing to the canning of Steve Jobs at Apple in the late 1980s. I’m not sure I would go that far, but so far it has turned out to be a horrible move, made worse by hiring a man lacking any vision whatsoever in Apotheker (much like John Sculley, the man who replaced Jobs back in the day).
If HP wants to keep its PC division as a separate company, great, but to do so without a tablet and smart phone line is a recipe for failure.
In another bizarre revelation to this twisted tale, The LA Times reported today that HP may in fact bring back the TouchPad after the company spins off the PC division.
If you’re anything like me you are completely confused at this point, because if that’s the case, the TouchPad was on the market already and there was no good reason to kill it–only to bring it back at some point.
At this point, HP has lost so much credibility in the mobile space, that trying to lure back burned developers, suppliers and dealers is going to be nearly impossible.
The mobile space is so competitive to begin with, but by making a series of perplexing decisions, HP has just made it even harder for themselves and for what appears to be no good reason that I can see.
I wrote a post (HP Jumps on Cloud Bandwagon) concentrating on Apotheker’s cloud vision, but there was much more to the speech than that, chiefly a declaration of (web)OS Independence from Microsoft with a promise of webOS running on every HP consumer device (including printers).
After I wrote the piece, friend and fellow technology journalist Tom Henderson wrote me an amusing email, which for all intents and purposes told me I missed the real news, and it seems he was right.
As Henderson pointed out, Apotheker, in so many words put Microsoft on notice that that his company’s little $1.2 billion Palm purchase last year turned them from beggars to players for what amounts to enterprise pocket change. To be fair to my own analytical skills, I did recognize at the time of the purchase that this was about competing with Google, Microsoft and Apple, but I saw it as a pure mobile play when it appears to be much more than that.
As I wrote at the time: “Make no mistake though, this is all about getting the best of Microsoft, Google and Apple. And with this purchase, HP gave notice it was grabbing a place at the mobile table.”
Turns out HP had bigger fish to fry. While Apotheker made lots of noise about how Microsoft was a great partner, he let them know in no uncertain terms that HP was going to be a player in its own right with plans to put webOS on every device in the ecosystem.
The implications of this are clear. First of all, HP is no longer beholden to Redmond in any way, shape or form. What’s more, Microsoft is now a direct competitor for both customers and developers. If the vision carries through to fruition, every developer on the planet has to start paying attention to webOS, just for the numbers alone.
And that’s precisely what makes it a brilliant, if risky play. Apple has succeeded with iOS by making it impossible to ignore. HP is banking on the same strategy. You can’t ignore an OS that’s has a potential base of 100 million devices (if you believe the hyperbole).
Regardless, it’s also a strategy that leaves HP hanging out alone in the cold, cruel marketplace. Does IT want to deal with supporting yet another OS? Will general consumers want to buy PCs with an unfamiliar operating system? It’s impossible to say until we watch it play out.
But one thing is very clear, Apotheker has decided to take a stand with a bold vision for the company. If it succeeds, it’s a brilliant play. If it fails, it has exposed one of the world’s great technology companies to serious risk.
One thing’s for sure, I haven’t written about HP in months and I just wrote two successive blog posts about them. Apotheker has succeeded in getting us to talk about his company and, for that he has won the first battle. The war for hearts and minds is another matter altogether, and HP has decided to go it alone.
New CEO Leo Apotheker made clear in a speech yesterday that HP plans to build a new cloud business where it will offer services for developers to build and host applications in the cloud. In fact, HP is going far beyond its current mission selling hardware to competing with services like Verizon, Rackspace and Amazon in the Infrastructure as a Service business (IaaS) business.Apotheker said his company would help customers build a hybrid cloud where part of the data and hardware remains behind the firewall and part of it in the cloud, and would also provide a full range of cloud services including Infrastructure as a Service (IaaS – hosted server and storage) along with Platform as a Service (Paas – a Cloud service for building applications).
HP is already well behind the competition, especially IBM and the previously mentioned pure play cloud infrastructure providers. But Apotheker addressed that saying straight out, “I don’t think we’re playing catch up with anyone, certainly not when it comes to IBM.”
Of course he can put up a brave front for the world, but it doesn’t hide the fact the HP faces an uphill battle here. As Apotheker himself pointed out, they need to build to a huge scale to make this cost effective and that means building data centers around the world. It will involve a huge capital investment and it will take time and money.
And while HP builds out its Cloud business, the other are forging ahead with theirs. There’s no way to sugar coat that.
It’s all well and good for Apotheker to recognize that he has to move his company into the Cloud to be a strategic player moving forward, but getting them there is another matter, and the speech was short on details.
In fact, Forrester analyst Frank Gillett as quoted on SiliconValley.com said the Cloud announcement left him scratching his head because of the lack of substance.
But of course Apotheker wasn’t just announcing his company’s new cloud initiative, he also took the opportunity to talk about the new line of mobile phones and tablets running WebOS that will be coming out this year. And make no mistake, there is an obvious link between its mobile vision and its cloud one.
Apotheker left no doubt that he considered WebOS a world class mobile platoform (but then what you expect him to say?) and would be running every HP device including tablets, smart phones, PCs and printers by 2012.
Much like with Microsoft, HP is a big company with a lot of money and big microphone, but it takes more than words to build this kind of business. It takes a huge commitment of internal employee resources and capital expenditures.
This from a company, which under former CEOs Carly Fiorina and the disgraced Mark Hurd, made more news sucking up to Wall Street investors with cost cut-backs and layoffs instead of innovation and investment.
It will be interesting to see if Apotheker can take HP and return it to its glory days as an innovative company that’s not afraid to invest in R&D. One thing’s clear though: It will take more than a good speech to make HP a serious cloud player.
Photo by cpeachok on Flickr Used under Creative Commons License. ]]>