10 ms·

H-P's One-Year Plan

279 points by jkopelman 15y ago

rachelbaker 15y ago
They may be the biggest PC maker, but I would not say that is because they make great PCs-they just make A LOT of them. HP used to make great printers and servers. I hope they can get back to a place where they do SOMETHING well.
- dangrossman 15y ago
  They once made a great consumer PC. It was the initial HP Envy 14. All aluminum/magnesium alloy case, oversized multitouch trackpad, island style backlit keyboard, edge to edge glass over a very bright, very dense 1600x900 screen... You couldn't get a better display in a similar size from any brand, even Apple. Compared to the dull, sparse 1366x768 panels every other PC offered, it was amazing. There was true attention to detail and build quality there. I think it was easily the best laptop on the market, and Wired named it PC of the Year at the end of 2010. A few short months later they stopped building it with that display, and put the same cheap 1366x768 panel in it as everything else, then started incorporating its design features into the rest of its lineup... but without the build quality rivaling a MacBook Pro the Envy briefly had. They came close to doing laptops really really well, but gave up on it for unfathomable reasons...
  - pseudonym 15y ago
    I'm not complaining. Me, my fiance, and her friend have gone through probably 5 total HP Laptops over the last 5 years. All 5 were different models and had the power switch connection to the system board go bad after 1-2 years. I ended up cracking and getting a Macbook, but I still have a 6-year-old Thinkpad that runs like new. Those things were, in my opinion, far better quality than anything HP put out. Your mileage may vary, of course; I only have my experiences to go off of.
  - nrp 15y ago
    I wonder if that was related to their acquisition of Voodoo. Perhaps the original Envy was a case of putting an HP badge on a Voodoo design, whereas the later designs were from HP Personal Systems Group.
yuhong 15y ago
>Fire well-performing CEO Mark Hurd Based on what?
- wisty 15y ago
  Earnings. I've heard comments on how he only increased earnings by cracking the whip, and cutting R&D. Maybe that's the case. You can restore R&D, and make employees happy again (though there is a cost). Heads can be replaced. Killing off products is not so easy to reverse. Maybe they are reducing their product lines to focus on what they do best. Or maybe they are just playing the "chop the company into pieces, and hope that the sum of the parts is worth more than the whole" gamble.
  - nazgulnarsil 15y ago
    that way of phrasing makes it sound as if it's a nonsensical move all the time. bureaucratic overhead can grow to the point that destroying it can make the parts worth more than the original whole.
    - wisty 15y ago
      Well, you may be right here. Wikipedia says HP's enterprise net income was about 8.7 billion, in 2010 (off about 57B revenue). It's total net income? $8.761 billion, off 127B revenue). But maybe PC sales help drive enterprise services (as businesses will buy their PCs from HP, then tack on a high-margin service plan, and finally add on some ludicrously profitable consulting jobs). Services are hard to sell. Services masquerading as products are easier. Without the PC business, it might be harder for HP to sell their services bundled with products. Intel scrapped its unprofitable memory division, to focus on CPU, and that was said to be a sound move. But PC builders are savvy customers, and won't buy their CPU from Intel just because they can also get memory there. I'd expect that selling non-core stuff to an enterprise needs a thin edge of the wedge, which the CEO can be fooled into thinking of as a product.
      - hollerith 15y ago
alexqgb 15y ago
On dumping the PC Business: "A beautiful absurdity...like McDonald's getting out of the hamburger business." Zing.
- daemin 15y ago
  HP did 'pivot' in the early days, first into making electronic calculators and then into PC's. Though this latest 'pivot' into a services company smells a lot like what IBM has done, abandon its hardware manufacturing and go into software services and consulting. Some part of me hates that radical a change, especially since how many of these massive software consulting companies are actually needed?
  - kabdib 15y ago
    "We're going to concentrate on our core compentency, software." A couple of ex-housemates of mine (who worked at HP a while back) just laughed. It's like Oracle getting into video games, or Cisco deciding to crank up a steel mill. Software is /not/ one of HP's strengths. I wonder who's selling short?
    - mey 15y ago
      The second most annoying thing about HP printers to me for the past 6 years has been their horrible 600mb driver software packages. (The first simply being the price of ink).
      - nodata 15y ago
        You want the HP Universal Print Driver: http://h20271.www2.hp.com/SMB-AP/cache/380442-0-0-14-121.html http://h20271.www2.hp.com/SMB-AP/cache/380442-0-0-14-121.htm...
        shithead 15y ago
        Thanks for the tip. But, hey, it's HP ... can't change the spots on that cat. Drill down two not-so-obvious links to the download page, and there are SEVEN choices of "universal" driver: Select your product » HP Universal Print Driver for Windows » HP Universal Print Driver for Windows - PCL 5 » HP Universal Print Driver for Windows - PCL 6 » HP Universal Print Driver for Windows - Postscript » HP Universal Print Driver for Windows 64-bit PCL 5 » HP Universal Print Driver for Windows 64-bit PCL 6 » HP Universal Print Driver for Windows 64-bit PS [ http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList.jsp?locale=en_US&taskId=135&prodTypeId=18972&prodSeriesId=503548 http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList... ] Thankfully they forgave us the usual split in NA, EMEA, AP1, AP2, etc, geographic versions, with the only clue being in the cryptic codename in the link.
deepGem 15y ago
Well put. Who in HP's board made the brilliant decision of bringing in Mr ex-SAP as the HP CEO. 1. The dude has no experience running a consumer oriented hardware business. 2. He hasn't run a global company. (SAP, for all it's glory is still an European company). 3. None of SAP's businesses have anything in common with HP's DNA. Not sure why the board committed such a blunder and why they continue to do so as the CEO is taking down one of the well respected companies in the valley.
- archangel_one 15y ago
  Disagree on point 2; we see some of SAP's tentacles down here in New Zealand which is about as far from Europe as it's possible to get. Wikipedia seems to think they're pretty global too (http://en.wikipedia.org/wiki/SAP_AG http://en.wikipedia.org/wiki/SAP_AG). Having said that, I don't think it would be the biggest issue anyway; 1 and 3 are much bigger problems for HP and you're spot-on with those.
  - dangrossman 15y ago
    SAP's US headquarters is near me in Pennsylvania. I interviewed for a software developer job there once. I was told, by the interviewer, that the programming jobs in the US are boring because the real work is done in Germany...
    - samt 15y ago
      The PA office is a bit of a glorified regional sales office. SAP Labs in Palo Alto however does a lot of interesting and original dev work. There are quite a few very good engineers there who would take real offense at this statement.
    - mahmud 15y ago
      Non-boring SAP job?
      - flopflopflop 15y ago
buddylw 15y ago
This is a terrible article. Their main error was buying palm. That was a huge gamble that was very unlikely to pay off in this market. You can't beat a 'free' OS on cost and you don't have the magic marketing and design to make a high-end product more desirable than Apple. There was effectively 0 chance web OS would be a "hit," and a low chance that it would even sell at all. The only other valid point in the article is that they haven't handled their PR well. I guess I am alone here, but I was very impressed that HP was willing to cut it's losses on palm/web OS so quickly. Also, for better or worse, a publicly traded company needs to grow. If you look at HP's financial report...there is definitely room for growth in enterprise software. I think buying Autonomy (a profitable company) is a good direction for them to go (though I do admit they paid a very high price).
- jonknee 15y ago
  The huge gamble was the 10x larger purchase of a software company unrelated to HPs business...
  - deleted 15y ago
    [deleted]
  - sceptre 15y ago
    And a company that was worth 2 billion dollars with a decreasing revenue stream. As an ex employee of autonomy i can definitely say that HP made a very very big mistake.
    - buddylw 15y ago
      2 billion? I think you are forgetting about their recent acquisition of Iron Mountain Digital. I would say the companies were worth 4-6 B. They still paid too much, but there is a big difference between paying 400% over value and paying 60% over value.
      - jonknee 15y ago
        ... Iron Mountain Digital was bought three months ago for $380M. If they were worth $2B before, they haven't doubled or tripled their worth because they spent $380M of their cash reserves.
deleted 15y ago
[deleted]
daimyoyo 15y ago
It's a real shame that HP has lost it's mind because I really wanted to get a Veer as my next smartphone. I like the design of the phone itself, and I really wanted to give webOS a try but I am just not confident that HP will continue to support it. After all they've demonstrated that they are willing to lose a significant amount of money to divest themselves of the consumer mobile industry.
andrewcross 15y ago
Well a very entertaining read, I question it's validity. I've never been a big HP fan, but I find it hard to believe this is even close to being the whole situation at HP.
ansy 15y ago
It is astounding how people, WSJ contributors inclusive, only see HP as a pusher of cheap laptops and crappy inkjet printers. Assuming I'm reading these numbers correctly[1], the PC division posted earnings of $567 million in Q3 2011. Compare that to $1.2 billion in earnings on enterprise services, $699 million from enterprise hardware, and $892 million from printing and imaging. Revenue from commercial printers was twice the revenue gained from consumer printers. All told, while the consumer business is a respectable chunk of change even to HP, the consumer business has the thinnest margins, is shrinking, and at the end of the day earns much less than the enterprise side of the house. HP makes a killing on enterprise services already. More than double the earnings of its entire PC business. Buying high margin software products like Autonomy for its services division to push on customers is easy money. The fact that HP's software business only earned $151 million on $790 million in revenue in Q3 2011 is a tremendous lost opportunity. HP is not a consumer company anymore. It doesn't need a consumer oriented CEO. It's an enterprise company that needs an enterprise CEO. Yet somehow, even "financial commentators" fail to recognize any of this. A very disappointing article from the WSJ. [1] http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-newsArticle&ID=1598003 http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-n...
- bradfa 15y ago
  Sounds like HP is doing what IBM did not too long ago. Getting out of commodity markets and into markets where profits are higher and it's easier to differentiate yourself from the masses. IBM is still strong in what they do even though they got out of the PC business and pretty much everything else consumer focused. Now HP is doing the same thing and they're getting torn a new one. Plus, figure that even if the consumer business made about $800 million last quarter (between PCs and printers), selling those businesses off for a couple billion, putting the cash in the bank, then laying off all the employees (or transferring them to the buyer) will fill the bank account, reduce head count (and expenses), and allow for more focus on less products that each have higher margins. Putting it that way, it sounds like combining the Apple and IBM business models to me. Simplify and specialize, focused on the enterprise (where the money is these days).
- ScottBurson 15y ago
  Agreed, the column is ridiculously biased. The author thinks Hurd was so great, but it was Hurd who first paid over $1B for Palm and then, when asked what HP's plans were in phones, said "Oh, we only bought Palm for the IP". Apotheker isn't perfect, and there have been missteps to be sure, but on the whole, as an HP employee (recently, via the Fortify acquisition), I think Apotheker has a much better plan for HP than Hurd or Fiorina did.

279 points by jkopelman 15y ago

They may be the biggest PC maker, but I would not say that is because they make great PCs-they just make A LOT of them. HP used to make great printers and servers. I hope they can get back to a place where they do SOMETHING well.

dangrossman 15y ago
They once made a great consumer PC. It was the initial HP Envy 14. All aluminum/magnesium alloy case, oversized multitouch trackpad, island style backlit keyboard, edge to edge glass over a very bright, very dense 1600x900 screen... You couldn't get a better display in a similar size from any brand, even Apple. Compared to the dull, sparse 1366x768 panels every other PC offered, it was amazing. There was true attention to detail and build quality there. I think it was easily the best laptop on the market, and Wired named it PC of the Year at the end of 2010. A few short months later they stopped building it with that display, and put the same cheap 1366x768 panel in it as everything else, then started incorporating its design features into the rest of its lineup... but without the build quality rivaling a MacBook Pro the Envy briefly had. They came close to doing laptops really really well, but gave up on it for unfathomable reasons...
- pseudonym 15y ago
  I'm not complaining. Me, my fiance, and her friend have gone through probably 5 total HP Laptops over the last 5 years. All 5 were different models and had the power switch connection to the system board go bad after 1-2 years. I ended up cracking and getting a Macbook, but I still have a 6-year-old Thinkpad that runs like new. Those things were, in my opinion, far better quality than anything HP put out. Your mileage may vary, of course; I only have my experiences to go off of.
- nrp 15y ago
  I wonder if that was related to their acquisition of Voodoo. Perhaps the original Envy was a case of putting an HP badge on a Voodoo design, whereas the later designs were from HP Personal Systems Group.

yuhong 15y ago

>Fire well-performing CEO Mark Hurd Based on what?

wisty 15y ago
Earnings. I've heard comments on how he only increased earnings by cracking the whip, and cutting R&D. Maybe that's the case. You can restore R&D, and make employees happy again (though there is a cost). Heads can be replaced. Killing off products is not so easy to reverse. Maybe they are reducing their product lines to focus on what they do best. Or maybe they are just playing the "chop the company into pieces, and hope that the sum of the parts is worth more than the whole" gamble.
- nazgulnarsil 15y ago
  that way of phrasing makes it sound as if it's a nonsensical move all the time. bureaucratic overhead can grow to the point that destroying it can make the parts worth more than the original whole.
  - wisty 15y ago
    Well, you may be right here. Wikipedia says HP's enterprise net income was about 8.7 billion, in 2010 (off about 57B revenue). It's total net income? $8.761 billion, off 127B revenue). But maybe PC sales help drive enterprise services (as businesses will buy their PCs from HP, then tack on a high-margin service plan, and finally add on some ludicrously profitable consulting jobs). Services are hard to sell. Services masquerading as products are easier. Without the PC business, it might be harder for HP to sell their services bundled with products. Intel scrapped its unprofitable memory division, to focus on CPU, and that was said to be a sound move. But PC builders are savvy customers, and won't buy their CPU from Intel just because they can also get memory there. I'd expect that selling non-core stuff to an enterprise needs a thin edge of the wedge, which the CEO can be fooled into thinking of as a product.
    - hollerith 15y ago

alexqgb 15y ago

On dumping the PC Business: "A beautiful absurdity...like McDonald's getting out of the hamburger business." Zing.

daemin 15y ago
HP did 'pivot' in the early days, first into making electronic calculators and then into PC's. Though this latest 'pivot' into a services company smells a lot like what IBM has done, abandon its hardware manufacturing and go into software services and consulting. Some part of me hates that radical a change, especially since how many of these massive software consulting companies are actually needed?
- kabdib 15y ago
  "We're going to concentrate on our core compentency, software." A couple of ex-housemates of mine (who worked at HP a while back) just laughed. It's like Oracle getting into video games, or Cisco deciding to crank up a steel mill. Software is /not/ one of HP's strengths. I wonder who's selling short?
  - mey 15y ago
    The second most annoying thing about HP printers to me for the past 6 years has been their horrible 600mb driver software packages. (The first simply being the price of ink).
    - nodata 15y ago
      You want the HP Universal Print Driver: http://h20271.www2.hp.com/SMB-AP/cache/380442-0-0-14-121.html http://h20271.www2.hp.com/SMB-AP/cache/380442-0-0-14-121.htm...
      - shithead 15y ago
        Thanks for the tip. But, hey, it's HP ... can't change the spots on that cat. Drill down two not-so-obvious links to the download page, and there are SEVEN choices of "universal" driver: Select your product » HP Universal Print Driver for Windows » HP Universal Print Driver for Windows - PCL 5 » HP Universal Print Driver for Windows - PCL 6 » HP Universal Print Driver for Windows - Postscript » HP Universal Print Driver for Windows 64-bit PCL 5 » HP Universal Print Driver for Windows 64-bit PCL 6 » HP Universal Print Driver for Windows 64-bit PS [ http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList.jsp?locale=en_US&taskId=135&prodTypeId=18972&prodSeriesId=503548 http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList... ] Thankfully they forgave us the usual split in NA, EMEA, AP1, AP2, etc, geographic versions, with the only clue being in the cryptic codename in the link.

deepGem 15y ago

Well put. Who in HP's board made the brilliant decision of bringing in Mr ex-SAP as the HP CEO. 1. The dude has no experience running a consumer oriented hardware business. 2. He hasn't run a global company. (SAP, for all it's glory is still an European company). 3. None of SAP's businesses have anything in common with HP's DNA. Not sure why the board committed such a blunder and why they continue to do so as the CEO is taking down one of the well respected companies in the valley.

archangel_one 15y ago
Disagree on point 2; we see some of SAP's tentacles down here in New Zealand which is about as far from Europe as it's possible to get. Wikipedia seems to think they're pretty global too (http://en.wikipedia.org/wiki/SAP_AG http://en.wikipedia.org/wiki/SAP_AG). Having said that, I don't think it would be the biggest issue anyway; 1 and 3 are much bigger problems for HP and you're spot-on with those.
- dangrossman 15y ago
  SAP's US headquarters is near me in Pennsylvania. I interviewed for a software developer job there once. I was told, by the interviewer, that the programming jobs in the US are boring because the real work is done in Germany...
  - samt 15y ago
    The PA office is a bit of a glorified regional sales office. SAP Labs in Palo Alto however does a lot of interesting and original dev work. There are quite a few very good engineers there who would take real offense at this statement.
  - mahmud 15y ago
    Non-boring SAP job?
    - flopflopflop 15y ago

buddylw 15y ago

This is a terrible article. Their main error was buying palm. That was a huge gamble that was very unlikely to pay off in this market. You can't beat a 'free' OS on cost and you don't have the magic marketing and design to make a high-end product more desirable than Apple. There was effectively 0 chance web OS would be a "hit," and a low chance that it would even sell at all. The only other valid point in the article is that they haven't handled their PR well. I guess I am alone here, but I was very impressed that HP was willing to cut it's losses on palm/web OS so quickly. Also, for better or worse, a publicly traded company needs to grow. If you look at HP's financial report...there is definitely room for growth in enterprise software. I think buying Autonomy (a profitable company) is a good direction for them to go (though I do admit they paid a very high price).

jonknee 15y ago
The huge gamble was the 10x larger purchase of a software company unrelated to HPs business...
- deleted 15y ago
  [deleted]
- sceptre 15y ago
  And a company that was worth 2 billion dollars with a decreasing revenue stream. As an ex employee of autonomy i can definitely say that HP made a very very big mistake.
  - buddylw 15y ago
    2 billion? I think you are forgetting about their recent acquisition of Iron Mountain Digital. I would say the companies were worth 4-6 B. They still paid too much, but there is a big difference between paying 400% over value and paying 60% over value.
    - jonknee 15y ago
      ... Iron Mountain Digital was bought three months ago for $380M. If they were worth $2B before, they haven't doubled or tripled their worth because they spent $380M of their cash reserves.

deleted 15y ago

[deleted]

daimyoyo 15y ago

It's a real shame that HP has lost it's mind because I really wanted to get a Veer as my next smartphone. I like the design of the phone itself, and I really wanted to give webOS a try but I am just not confident that HP will continue to support it. After all they've demonstrated that they are willing to lose a significant amount of money to divest themselves of the consumer mobile industry.

andrewcross 15y ago

Well a very entertaining read, I question it's validity. I've never been a big HP fan, but I find it hard to believe this is even close to being the whole situation at HP.

ansy 15y ago

It is astounding how people, WSJ contributors inclusive, only see HP as a pusher of cheap laptops and crappy inkjet printers. Assuming I'm reading these numbers correctly[1], the PC division posted earnings of $567 million in Q3 2011. Compare that to $1.2 billion in earnings on enterprise services, $699 million from enterprise hardware, and $892 million from printing and imaging. Revenue from commercial printers was twice the revenue gained from consumer printers. All told, while the consumer business is a respectable chunk of change even to HP, the consumer business has the thinnest margins, is shrinking, and at the end of the day earns much less than the enterprise side of the house. HP makes a killing on enterprise services already. More than double the earnings of its entire PC business. Buying high margin software products like Autonomy for its services division to push on customers is easy money. The fact that HP's software business only earned $151 million on $790 million in revenue in Q3 2011 is a tremendous lost opportunity. HP is not a consumer company anymore. It doesn't need a consumer oriented CEO. It's an enterprise company that needs an enterprise CEO. Yet somehow, even "financial commentators" fail to recognize any of this. A very disappointing article from the WSJ. [1] http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-newsArticle&ID=1598003 http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-n...

bradfa 15y ago
Sounds like HP is doing what IBM did not too long ago. Getting out of commodity markets and into markets where profits are higher and it's easier to differentiate yourself from the masses. IBM is still strong in what they do even though they got out of the PC business and pretty much everything else consumer focused. Now HP is doing the same thing and they're getting torn a new one. Plus, figure that even if the consumer business made about $800 million last quarter (between PCs and printers), selling those businesses off for a couple billion, putting the cash in the bank, then laying off all the employees (or transferring them to the buyer) will fill the bank account, reduce head count (and expenses), and allow for more focus on less products that each have higher margins. Putting it that way, it sounds like combining the Apple and IBM business models to me. Simplify and specialize, focused on the enterprise (where the money is these days).
ScottBurson 15y ago
Agreed, the column is ridiculously biased. The author thinks Hurd was so great, but it was Hurd who first paid over $1B for Palm and then, when asked what HP's plans were in phones, said "Oh, we only bought Palm for the IP". Apotheker isn't perfect, and there have been missteps to be sure, but on the whole, as an HP employee (recently, via the Fortify acquisition), I think Apotheker has a much better plan for HP than Hurd or Fiorina did.