
A Simple Explanation for Why HP Abandoned Palm - A-K
http://daringfireball.net/2011/08/hp_apotheker
======
acangiano
I think his interpretation of the facts is very plausible. Sadly, Larry
Ellison was absolutely right when he said, at the time of Hurd's scandal, "the
HP Board just made the worst personnel decision since the idiots on the Apple
Board fired Steve Jobs many years ago."

Good CEOs who can revamp stagnant companies are hard to come by, particularly
in the consumer space. Hurd was that CEO, Apotheker is not. And getting out of
the consumer space, at a time when there are several paradigm shifts going on,
means missing huge opportunities.

~~~
blinkingled
Firing Hurd was the right thing to do - I will argue that they were late. Hurd
was seen as aligning with Oracle and making decisions that did not conflict
with Oracle. EDS, conveniently missed Sun acquisition, consumer focus in lieu
of enterprise paints a consistent picture. There is a reason Hurd now works at
Oracle and Larry did not like him getting fired. Besides show me what he did
apart from cost cutting.

Apotheker comes from Oracle's competitor SAP. To that effect he isn't shy of
focusing on interests that happen to conflict with Oracle's. To that end, what
Gruber is saying is right - the board always wanted more Enterprise focus and
that required going against Oracle. That's what Apotheker is doing.

As for missed opportunities - it does not matter. HP just does not have the
DNA to do great in the already saturated PC and phone/tablets market. Not
having to deal with that means they can focus their resources and capital
where they are well oiled to do great. It only mattered if HP managed to get a
CEO that can change its DNA - Neither Hurd nor Apotheker were into that. If
they could have found a great consumer focused CEO with proven and relevant
record, then it would have been worthwhile to risk competing in consumer space
when it meant losing focus on Enterprise. Otherwise its just not really smart.

And they are still not giving up on webOS. But the only catches here are they
don't yet know what to do with webOS and the Oracle/Itanium problem. With PSG
off their bottom line they could now afford to ignore webOS until they find
the right thing for it and focus their hardware resources to sell more
proliants and fix the Itanium problem. That's the idea.

~~~
palish
Wait --- what? They fired Hurd as a direct consequence of him paying a hooker.

What's that got to do with strategy? Or are we claiming that it's "okay to
lie" about why someone is being fired..?

~~~
teyc
Hurd didn't pay a hooker. At worst he was having an affair with a events
organiser. With full hindsight, I'd say the board wanted Hurd and consumer
business out.

~~~
wisty
At worst, he used company funds to pay for his affair. That's a big no-no.

------
cletus
I tend to agree with the basic reasoning but there's one thing I don't
understand.

Why cancel the TouchPad? Why not just spin that out with the hardware business
to Compaq (which is the idea, yes?)? It seems they've devalued that unit by
killing WebOS.

All PC makers are on razor thin margins... apart from Apple. A post from
yesterday [1] painted an interesting picture where Dell, through a series of
seemingly rational decisions, essentially taught Asus the PC business,
allowing the Taiwanese manufacturers to eat US PC makers for breakfast in
later years.

[1]: <http://news.ycombinator.com/item?id=2907187>

~~~
chollida1
> Why not just spin that out with the hardware business to Compaq (which is
> the idea, yes?)? It seems they've devalued that unit by killing WebOS.

I'd imagine one of the biggest reasons is patents. If they spin out the
business they have to sell the patents. If they're going into a new market
where they don't traditionally have alot of expertise their only chance of not
getting sued into oblivion is to be able to cross license patents.

Spinning off the Palm patent portfolio significantly hurts them in this
regard.

With the price of patents being what it is these days, it might have been
worth more to them to keep the patents and bury the project.

~~~
nknight
What? Why would they have to sell the patents? Keep the patents, license them
to the spin-off, no?

~~~
raganwald
In the current legal environment, my guess is that a technology with patent
licenses is nearly worthless compared to a technology with patents. Note that
if someone wants to _license_ webOS, naturally they license the patents. But
who would want to buy the business but not the IP? That’s like licensing the
operating system, being responsible for maintaining it, and paying a massive
fee for the license up front. Such a business would be hard to run and hard to
sell since you aren’t buying the IP and therefore can’t resell it.

------
sek
WebOS was for Hurd just a fig leaf to make a future orientated impression, in
reality were all the profits he made short term.

What HP needs now is focus and that is what Apotheker is doing. Some people
are disappointed that it is not consumer orientated, but when you look at the
"smart phone wars" this seems reasonable to me. HP can't compete with Google,
Apple and Microsoft there. Look at Nokia and Blackberry.

~~~
masklinn
> What HP needs now is focus and that is what Apotheker is doing.

Yes and no. Focusing would be to reduce the surface of the corporation to its
core business, basically what Jobs did when he got back to Apple.

What Apotheker is doing is to change HP's business altogether.

~~~
skrebbel
> What Apotheker is doing is to change HP's business altogether.

No he isn't, he's reducing its scope to the most profitable and future-proof
business units. HP is one of the world's biggest enterprise software business.
Yes, also before they bought Autonomy. They just _also_ make PCs and printers
and the likes, which makes consumers not know any better than "HP is a PC and
printer maker".

~~~
masklinn
Uh... before they decided to end it, "PCs and printers and the like" made up
the majority of HP's business.

HPSD is a very tiny fraction of HP: 14000 employees out of 320000 worldwide,
and that's after having bought 15 companies in barely 5 years. We're talking
$3.5bn _revenue_ , out of $126bn for the whole company. HP is a very small
software business, it's a big hardware and _services_ business: HPES, formerly
EDS, makes up ~$35bn of HP's revenue

~~~
teyc
That reminds me, HP acquired an Australian company Tower Software back in 2008
[1]. That was three years ago. I think these acquisitions have paid dividends
and now HP are signalling they are "all in" and put up all their chips in the
software and services space.

[1] <http://www.hp.com/hpinfo/newsroom/press/2008/080331xb.html>

------
dgreensp
I have no faith in HP's leadership.

I was talking to an insider last year about how HP wanted to be a computer
maker. I said, "I know them for their printers, they make awesome printers."
He said, "Yeah, they're not so interested in printers these days. They think
the money's in computers."

I guess it's whatever the "money's in" this week.

------
nikcub
The HP board made the decision, and I am surprised that nobody has yet made
the link between Andreessen's editorial in the WSJ (he sits on the HP board)
and this recent shakeup.

~~~
chalst
Links, since I looked for them myself:

1\. _Why software is eating the world_ , 20th August.
[http://online.wsj.com/article/SB1000142405311190348090457651...](http://online.wsj.com/article/SB10001424053111903480904576512250915629460.html)

2\. HN thread: <http://news.ycombinator.com/item?id=2905410>

------
ayanb
HP has a highly distinguished board of directors. I find it strange that no
one is highlighting the fact that Léo Apotheker is definitely enjoying the
vote of confidence of the top level executives, otherwise this would have
never been possible.

~~~
bvi
Remember, HP's board underwent a major shakeup once Léo came in:
[http://management.fortune.cnn.com/2011/01/28/hp%E2%80%99s-bo...](http://management.fortune.cnn.com/2011/01/28/hp%E2%80%99s-board-
shakeup-apothekers-master-plan/)

~~~
codedivine
Indeed, I just looked at
[http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-g...](http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-
govboard)

There are 14 board members in total including Leo the CEO. Out of 13, 6 were
appointed in 2011 while the board leader (Lane) was appointed at the same time
as Leo Apotheker. That means out of 14, only 6 precede Leo.

------
forgotAgain
HP also wants to be in the cloud. After the past week I think they've killed
that as well. Who would lock themselves in to HP at this point?

------
Tichy
That's stating the obvious. Another question would be, why was Apotheker
hired? Whoever did that must have expected something like that?

------
llambda
I guess this is why the vision of the CEO matters so much to investors (think
Jobs). But regardless, HP was in trouble. I wonder if they would have stayed
in the hardware business even if Hurd had stayed on. Maybe WebOS was not long
for the company regardless of who was at the helm; its unequivocal success
notwithstanding, maybe it'd have been abandoned anyway.

------
rwmj
This quote: "Autonomy — a company I’d never heard of before but which more or
less sounds like a rival to SAP" tells you everything you need to know about
the blogger. He knows very little about the software business, and is just
making up opinions based on his gut feeling, without backing it up with
knowledge or evidence.

~~~
VengefulCynic
Have you been to Autonomy's website? Seriously... go have a look... have a
look at the 'Introduction to Autonomy' page:
[http://www.autonomy.com/content/Autonomy/introduction/index....](http://www.autonomy.com/content/Autonomy/introduction/index.en.html)

"Organizations already benefiting from Autonomy technology include Avis, BAE
Systems, BBC, BMW, Coca-Cola, CNN, Ericsson, Fiat, Financial Times,
GlaxoSmithKline, Isabel Healthcare, KPMG, Linklaters, Lloyds TSB, NASA,
Nestle, Oracle, Philips, Safeway, Schneider Electric, Shell, T-Mobile, The
European Commission, The U.K. Houses of Parliament, The U.S. Department of
Homeland Security and The U.S. Securities and Exchange Commission."

If Autonomy isn't enterprise software on the order of SAP (if not exactly the
same business), they sure write confusing marketing copy.

------
dr_
Just because Hurd decided to bet big on WebOS - it doesn't mean that bet was
ever going to pay off. Gruber is correct and HP and Apotheker are going along
with their plan as intended. The tablet/phone business was a long shot and
their PC business over time was going to get weaker, they don't own the OS and
hardware is tough to compete in with Chinese manufacturers. Their best shot at
long term survival was enterprise software, and that's what they are doing.
Perhaps they could come up with some kind of enterprise solution for WebOS in
the future, but it's probably not their focus right now.

------
nivertech
_"Autonomy — a company I’d never heard of before"_

Autonomy is a leader in their field

~~~
masklinn
Which is very small and hard to see, especially for one Gruber which does not
work as a corporate drone

~~~
nivertech
NLP, Text Categorization, Unstructured Data is a huge field.

I worked in a startup, whose competition was Autonomy's consumer internet
spin-off in 2001

------
bugsy
I don't see what the big advantage is of CEOs few have heard of being dragged
in to nuke existing companies and rebuild them in the image of the old company
he used to work at. Why not just nuke the company out of spite (or
alternatively sell off all assets and give to charity if not spiteful) and
have the CEO stay at the old place and keep doing the same thing. Same outcome
but not as painfully dragged out.

Obviously if you keep doing multi billion dollar acquisitions, and then trash
it all and fire everyone a couple years later when you switch CEOS, and then
when things get even worse, fire that CEO with a golden parachute and bring it
his cousin to do it all again, pretty soon your company headquarters are going
to be an abandoned grassy field.

Talk about burn rate!

------
daimyoyo
It's really too bad. I really wanted webOS to gain some traction but now that
HP has all but killed it, it seems incredibly unlikely that webOS will be
anything more than a footnote in history.

~~~
agilemanic
same here. I really liked webOS and thought about buying a Pre, but it was
just too small. That's why I was looking forward to the Touchpad. Big screen
and a very nice OS :-/

------
thewileyone
Wow ... first time I'm agreeing with Gruber whole-heartedly.

------
nvictor
walmart - sold out

target - sold out

best buy - sold out

online hp shop - sold out

office depot - sold out

amazon - ripping off customers with original price

newegg - rip off also

where am i gonna get my touchpad future android mega device? ;(

------
buster
Atleast now HP now has a pretty valuable portfolio of patents of Palm

------
dramaticus3
fireball is a visionary genius

~~~
j_col
Up-voting because I'm assuming you're being ironic ;-)

------
anigbrowl
Autonomy is nothing like SAP. What a ridiculous, empty post.

~~~
webfuel
On the wikipedia page for Autonomy Corporation, under competitors, you'll find
_SAP NetWeaver Enterprise Search plus SAP Business Objects Text Analysis_

[http://en.wikipedia.org/wiki/List_of_enterprise_search_vendo...](http://en.wikipedia.org/wiki/List_of_enterprise_search_vendors)

~~~
allertonm
I tend to agree with anigbrowl. While there are some overlapping products,
those things are a tiny fraction of what SAP sells and far from their core
business (I used to work for SAP Business Objects.)

~~~
bradleyland
If looked at closely enough, no two businesses are alike. The question is,
what's relevant to the discussion? In the scope of comparing consumer products
vs business consulting, we can paint with broad enough strokes to call SAP and
Autonomy "similar" businesses.

~~~
allertonm
Perhaps so, but in this case you don't have to look too closely.

Autonomy & SAP have similar _customers_ , true. But the suggestion in Gruber's
post is that the purchase of Autonomy is a substitute for a purchase of SAP.
Which is a bit like saying the purchase of a front drivers side door mirror is
a substitute for the purchase of a car.

(Downvotes too, jeez.)

~~~
bradleyland
I'm stating this earnestly to try and explain why I think you're receiving a
negative reaction. You'll chose how to take it. I sincerely mean no offense by
it.

You're being downvoted because you are arguing a point that no one is making.

 _No one is saying that SAP and Autonomy are in the same business._

It's almost like you're _choosing_ not to get it, just so you can talk about
the differences between SAP and Autonomy.

This is, more or less, the thesis of Gruber's post:

> The thing is, Apotheker’s relevant experience was serving as CEO of SAP.
> What’s SAP? SAP is an enterprise software and consulting company. Honestly,
> we all should have seen this coming. You don’t bring in an enterprise
> consulting guy to turn around a PC and device maker. You bring in an
> enterprise consulting guy to turn a PC and device maker into an enterprise
> consulting company.

The only portion of the post where Gruber makes even a remotely questionable
comparison is this statement:

> Autonomy — a company I’d never heard of before but which more or less sounds
> like a rival to SAP

He off-handedly likens Autonomy to SAP. Maybe that's wrong, but it _doesn't
matter_.

Follow us all here:

Fact: HP was a hardware products company.

Fact: Apotheker was head of SAP, an "enterprise consulting" company.

Inference: Apotheker is going to take HP in an "enterprise consulting"
direction, not a "hardware products" direction.

Arguing whether Autonomy and SAP are the same business is tangential to the
point.

~~~
allertonm
I don't have downvoting capability, otherwise I'd downvote you for
condescension.

Gruber's a great writer for the most part, but this particular instance of his
work is pretty trite and hardly a unique observation. His lack of knowledge
about the players in the space should give a clue to readers about how much
weight to give the rest of his insights about this subject.

~~~
Anti-Ratfish
I don't get it. The bit that is contentious is so far from the point of his
post that it's not of importance. Why be bothered by it?

------
iand
He's never heard of Autonomy so therefore assumes it's similar to SAP? Hmmm.

~~~
rimantas
Why do you assume he assumes instead of doing some little research?

~~~
iand
I'm quoting him: "Autonomy — a company I’d never heard of before but which
more or less sounds like a rival to SAP."

That indicates he didn't do much research. Another thing that indicates lack
of research is that his comparison of Autonomy to SAP is wrong.

