What Should Meg Whitman Do?

An article on Forbes today provides some suggestions to Meg Whitman as to what to do with HP. Basically, the author says that dropping mobile devices was a mistake, the Autonomy deal is good (but expensive) and that HP should keep the PC division and instead sell or spin-off Printers and Imaging. Their rationale behind keeping the PC division is that is has “customer synergies” and “supply chain synergies”, and puts HP at a disadvantage with the rise of the consumerization of IT.

The only thing I agree with there is the idea of maybe selling Printers and Imaging. HP pretty much gives the printers away for cost, and instead makes money on ink (lots of money on ink. Like lots and lots). The rationale in the article makes sense: these products don’t help much with HP’s supply chain, and it, along with the PCs, are really the only consumer devices left for HP. Since this division, according to the author, doesn’t provide real “synergies” for consumers, selling it off won’t hurt HP.

But then they go on to contradict themselves about consumer synergies in the PC market. Guess what? There aren’t any. Companies don’t select their server technology primarily based on what they have on people’s desks or in their laptop cases. They select them based on other criteria: cost, reliability, on-going service and support, available services, other technologies I can get at the same time, and history with the manufacturer. The end-user devices and server-side components are largely disconnected, and that disconnect gets bigger as end-user technology for companies is provided more by the employees and not by the employer. And the goal of “one-stop shopping” for small and medium businesses? No one cares. Most SMBs that I’ve worked for, or run, work through other suppliers to get their end-user technology. We only ever dealt directly with the likes of IBM or HP for servers and related technologies and services (and tried Dell briefly, and were disappointed that they couldn’t offer us much more than “here are your boxes”). We didn’t buy end-user products direct from the manufacturers, with the exception of Dell, which we treated as a supplier akin to CDW.

Keeping PCs, and going back in time to keep WebOS, won’t give HP any advantage as corporate technology becomes more consumer-driven. Why? First, their mobile platform, no matter its strengths, was dead on arrival. Pretty much any new platform in this space will be, at least in the short and medium term. Why? Because they won’t have apps and content, which is what consumers want. Like it or not, for now the only mobile platforms that matter are Android and iOS.  If HP had kept WebOS, and does keep the PC business, all it does is provide them with a division that produces low-margin commodity products that provides a drain on the bottom line with no real upside for the enterprise-side of the business. While HP has a large piece of the PC pie, it doesn’t control that market and it isn’t the overwhelming supplier of that technology to end-users. As such, there’s no compelling reason other than perception or price to choose an HP device over something from Asus, Dell or Lenovo.

Let’s face it, HP never really had any overwhelming resonance with the consumer. People buy HP’s PCs (and lots of them) partly because of the name, but mainly because they had decent features and a reasonable price. They make a decent PC, there is on question. HP, prior to the Compaq acquisition, wasn’t really a consumer products company anyways. The closest was with calculators and scientific instruments, and even that has been reduced in significance. HP’s real place has been in the server rooms and wiring closets providing infrastructure, and with EDS coming on board, services to make that infrastructure useful. Yes, those services include the end-user devices, but the logo on the box wasn’t as important. Its what HP provided, through technologies and services, that made those end-user devices useful.

Does that mean HP abandons end-users completely? Not at all. Where the real value for end-users, for HP, is providing technologies to provide secure and reliable access to corporate resources. HP wants those resources running on HP servers, using HP technologies, and with companies using services from HP to best use and deploy those technologies. That means providing additional features and apps for Android and iOS. That means providing technologies for Windows, and possibly MacOS. It means recognizing that HP’s enterprise story is stronger when it can work with the broadest array of consumer devices, particularly as more of those devices are provided by employees as consumers, not as directives from IT. It also means realizing that having your own end-user hardware doesn’t make your enterprise infrastructure and services story any stronger, and limiting yourself to just your own end-user devices marginalizes the rest of the business.

IBM is HP’s strongest competitor when it comes to “the complete package”: hardware, software and services for companies to set up what they need to do business on the server side. By not being tied to a single platform for the end-user, IBM’s services (for web-base stores, corporate cloud computing, virtualized servers, etc etc) have very broad access. Even Dell, another competitor on the server side, is largely relegated to providing hardware, although they do have some services. Dell offers little in the way of additional technology for their servers. HP and IBM are in stronger positions, because they sell more than boxes that get shoved into a rack. They also provide the tools and technologies companies need to make those boses useful, and services to help customers put the pieces together.

In some ways, getting rid of mobile devices and the PC business, and possibly selling the printer business, will allow HP to get back to its roots, and focus on its strengths. It also keeps them from putting too much emphasis on their own end-user hardware, to the detriment of other devices that are in use today. Now, if they could just get a board that could a) provide some useful guidance and leadership and b) stop leaking important information, HP would be heading in the right direction.

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