HP Running In Circles?

I saw news today that HP might be firing Leo Apotheker, and replacing him with Meg Whitman. Wow, as if the litany of leaks, bad news and just generally out-of-control behaviour isn’t enough, now the company is looking to sack the top guy. Maybe these antics make sense from inside HP, but from the outside, it appears to be a company that is lost and out of control. First, they spend a billion-plus to buy Palm, expend more to pump up the prospects of WebOS with much chest-thumping about how they are going to take on Apple (although according to other comments, they didn’t see Apple as a competitor). Then, when the first tablets hit the shelves, HP doesn’t even give the new product 2 months, and it shuts it down. And not just the tablet in question, the whole product line! But, wait, there’s more. While they are busy shutting down something that was supposed to be a large part of HP’s future, they turn around and spend more billions on Autonomy. Just to add to the ambiance of this, we have leaked memos about quarterly numbers, which results in hastily rescheduled earnings calls and a flurry of press releases, throwing investors and analysts into confusion. Oh, and they are going to “spin off” the PC business. Sell it? Create a new company? Just re-brand it? Who the heck knows.

Look, I don’t have a problem with the WebOS thing, conceptually, although it is sad in some ways. I was a big fan of Palm devices back when they first came out, and owned a number of them over the years. Again, conceptually, killing off a failing product makes sense. Better to end it sooner, rather than lose a ton of bucks hoping a product catches on but never does. Too many companies stick with dead or dying products, seemingly in hopes of a miracle that never comes. But, to spend as much as HP did ($1.2 billion on Palm, who knows how much in development after the purchase, plus the marketing costs for advertising, etc) and not even give the flagship product a 2-month lifespan isn’t “being prudent”. It seems to be  more a combination of unrealistic expectations and panic.

Focusing on the enterprise isn’t a bad idea. HP has a sizeable chunk of the services market as well as a significant presence in enterprise infrastructure. The PC business, for now, isn’t a money-loser, but it is a drag on the overall profitability, given the thin margins on PCs these days. Despite what Michael Dell thinks, HP still has enough clout to negotiate good deals with suppliers, even without the PC business. IBM doesn’t have a problem being competitive in the server space, so why would HP? Moving away from the consumer market (which was never really HP’s thing, that was something they picked up from Compaq) is a good idea in my mind.

HP’s problem, though, is that the wiser decisions (like stepping back from the PC market, focus on enterprise and cloud services) is being lost in the noise and confusion of leaks, panicked earnings calls and press releases, and the whole WebOS thing. HP’s board and senior management needs to stop “reacting” and start “acting”, as in “think first” and then come up with a rational plan of action and follow it. All they seem to be doing, right now, is looking for the least offensive course of action that will make “bad things go away” right now. It appears that good decisions might be a complete accident. Make enough random decisions, and probability says that one of them might actually turn out to be right.

The company, its employees and its shareholders deserve better than this. HP’s history and legacy deserver better than this.

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