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Embarrassing U-turn or a further betrayal – can customers continue to trust Hewlett-Packard?

Issue #1116 – Considering that the banner headline for Hewlett-Packard’s spring 2011 analysts’ conference in San Francisco was “Everybody On – seamless, secure, context-aware experiences for a connected world”, it seems to be totally incongruous for Léo Apotheker to be announcing the possibility of spinning the PSG division (Personal Systems Group) off. Without PSG, a Hewlett-Packard with this vision is impossible.

To assist in understanding the significance of the March conference in San Francisco, see TCPglobal articles entitled, (March 2011) and (December 2009).

Hewlett-Packard has stood head and shoulders above every other IT company in terms of both global revenue and market reach for years, with a portfolio that touches almost every area of IT. Had its foray into the consumer electronics market a few years ago succeeded, Hewlett-Packard would almost literally have taken over the technology world.

This new vision was centred around the company’s acquisition of Palm last year, with a heavy reliance on the WebOS operating system.

When I first heard that Hewlett-Packard was buying Palm, my reaction was, “What? Why on earth would they want to do that?” However, once the developing strategy was explained in some detail in San Francisco in March of this year, I saw a clear and logical vision – Hewlett-Packard was becoming more unified and developing a more common and expansive goal and corporate ethos than any IT company before it. PCs would integrate with phones would integrate with tablets would integrate with MFPs – which would all sit in the cloud bringing a greater degree of online integration for the world’s populace than ever before.

Below is an image below taken from the San Francisco presentation, almost representing a weather forecast for Hewlett-Packard . It clearly includes all types of personal computing devices, from PCs, through tablets to smart phones. And, WebOS was to play an integral part in the development of this master plan to take over the world.

The future definitely looked bright for Hewlett-Packard.

HP Weather Forecast

However, it is interesting to note that even this presentation slide has the footnote, ”The information contained herein is subject to change without notice”! Clearly, this is a true statement!

Could it be that Mr Apotheker, coming from software giant SAP, is actually so far out of tune with hardware that he only has a vision for driving Hewlett-Packard further into the software realm and not take the hardware arms of the business into the future? After all, the announcement that PSG would be separated off came at the same time as the company announced its intent to buy UK software company Autonomy – an acquisition that has itself not been well received in parts of the IT community.

Perhaps Hewlett-Packard did bite off more than it could chew by taking on Palm and WebOS; perhaps sales of the Pre and Touchpad tablet devices have been less than inspiring but, ‘was Rome built in a day’? Was Cologne Cathedral in Germany built in less than 640 years? ‘Was Hewlett-Packard always the No.1 PC manufacturer’? ‘Was Hewlett-Packard always the premier global IT company’?

‘Building’ a new business is exactly that – it is a process that takes time. To amputate the PC division at a time like this; to cut off its nose to spite its face; and to truncate it’s unique market reach, could land Hewlett-Packard is serious trouble in the future.

  • Will global corporations remain loyal to Hewlett-Packard when PCs and other hardware/services are provided and supported by different companies?
  • How will Hewlett-Packard staff feel? It would seem to me that this represents a further betrayal of trust and loyalty even after the end of the Hurd years.
  • Will consumers be able to make a new association with the new brand?
  • Is there any chance at all that the printer division (IPG) will remain unaffected, either physically, financially, emotionally or in respect to morale?

All this disruption and uncertainty, together with severe laser printer shortages over the last month or so, are doing no one any good at all.

It certainly appears to have caused a major stir within the Hewlett-Packard ranks. An IPG analysts briefing had been scheduled for the day after the news about PSG and WebOS broke – it was cancelled at less than short notice! Although there has been no suggestion of this, one has to suspect that some degree of panic arose within the Hewlett-Packard ranks and the briefing was cancelled (rescheduled for the following week) specifically to avoid it being hijacked by the breaking news!

Léo ApothekerLéo Apotheker – Hewlett-Packard CEO

Hewlett-Packard is successful because its products are so wide-ranging and because it produces high quality hardware that is trusted for use in multiple IT environments. One would hardly want to compare Hewlett-Packard with Apple for groupie status but it does compare with the IBM of 30+ years ago – ’no one ever got fired for buying IBM’!

Perhaps the choice of Léo Apotheker as CEO was not the smart move it first appeared to be?

Or, could this all be a very curious brand of marketing spin to raise the Hewlett-Packard name further out of the crowd? Will we actually see WebOS and PSG remain with Hewlett-Packard for the long term?

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