
H-P's One-Year Plan - jkopelman
http://online.wsj.com/article/SB10001424053111904787404576535211589514334.html
======
ansy
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-n...](http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-
newsArticle&ID=1598003)

~~~
bradfa
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).

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

Zing.

~~~
daemin
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
"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
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
You want the HP Universal Print Driver: [http://h20271.www2.hp.com/SMB-
AP/cache/380442-0-0-14-121.htm...](http://h20271.www2.hp.com/SMB-
AP/cache/380442-0-0-14-121.html)

~~~
shithead
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...](http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList.jsp?locale=en_US&taskId=135&prodTypeId=18972&prodSeriesId=503548)
]

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.

~~~
nodata
It's still better than seven separate installers per printer each of which is
10 times bigger :)

~~~
seabee
A polished turd is still a turd. The point is other printer mfrs get it right,
so why can't HP?

------
deepGem
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
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>).

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
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...

~~~
mahmud
Non-boring SAP job?

~~~
flopflopflop
From a pure techie point of view you can do great stuff there as a programmer.
But the end-result is just nog as sexy as having developed games for an iphone
or invented the New Social Thing. But your software scales over 100 gigs of
RAM, is blazingly fast and can process transaction records in the order of
10,000s per second; that's non-boring to me :P

~~~
hessenwolf
Yes... but I think quite many of us older than 23 would rather program SAP
than games or Iphone apps, although I wouldn't hazard a guess at the
proportion.

------
yuhong
>Fire _well-performing_ CEO Mark Hurd

Based on what?

~~~
sliverstorm
Well, at least under his watch the company wasn't headed nowhere quite as fast
as they seem to be now.

~~~
ScottBurson
That's not clear at all. The Palm acquisition was Hurd's doing. This column is
knocking Apotheker for killing it, but a pretty good case can be made that
keeping it going would just be throwing good money after bad.

~~~
AppSec
And a counter argument could be that given time, HP could have done something
productive with WebOS -- the TouchPad, Pre, etc.

WebOS was/is thought by many to be the best mobile OS without a company big
enough to push it. HP could have been that company. Especially with the PC
business providing some buffer for profit loss while issues with the other
hardware were worked out.

------
rachelbaker
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
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
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.

------
daimyoyo
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
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.

------
buddylw
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
The huge gamble was the 10x larger purchase of a software company unrelated to
HPs business...

~~~
sceptre
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
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
... 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.

