4 ms·

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 emp

by 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
    >Without the PC business, it might be harder for HP to sell their services bundled with products. I wonder how many of IBM's consulting customers don't buy significant amounts of IBM (mainframe and proprietary mid-range) hardware.
  - paganel 15y ago
    > 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). Just anecdotical, but I've seen this happening at least in one case: my wife's employer, a reasonable large European gas&oil company. They first bought HP computers and very expensive printers, and then, obviously, they also signed a consulting contract with HP's local reseller at pretty high rates.
hga 15y ago
Well, he said one of his first and most important tasks was to decrease the amount of bureaucracy HP's salesmen had to fight to get their job done; as I recall they were only able to devote about 30% of their time to actual sales. I can certainly recall a number of anecdotes from the Carly years about an unresponsive and unrealistic sales organization that along with Sun's near total dysfunction in sales between what could be charged on a credit card and mainframe level deals made Dell the default server vendor. People wanted to buy higher quality kit, but Dell was the only company that was willing to to give them the time of day. (Hmmm, I'll bet this put a lot of money into Supermicro and perhaps Tyan's pockets, since building your own could be an attractive proposition.)

by wisty 15y ago

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
  >Without the PC business, it might be harder for HP to sell their services bundled with products. I wonder how many of IBM's consulting customers don't buy significant amounts of IBM (mainframe and proprietary mid-range) hardware.
- paganel 15y ago
  > 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). Just anecdotical, but I've seen this happening at least in one case: my wife's employer, a reasonable large European gas&oil company. They first bought HP computers and very expensive printers, and then, obviously, they also signed a consulting contract with HP's local reseller at pretty high rates.

hga 15y ago

Well, he said one of his first and most important tasks was to decrease the amount of bureaucracy HP's salesmen had to fight to get their job done; as I recall they were only able to devote about 30% of their time to actual sales. I can certainly recall a number of anecdotes from the Carly years about an unresponsive and unrealistic sales organization that along with Sun's near total dysfunction in sales between what could be charged on a credit card and mainframe level deals made Dell the default server vendor. People wanted to buy higher quality kit, but Dell was the only company that was willing to to give them the time of day. (Hmmm, I'll bet this put a lot of money into Supermicro and perhaps Tyan's pockets, since building your own could be an attractive proposition.)