Emerging Tech

Debating HP: Fixed or doomed?

In this week's Great Debate, TechRepublic's Jason Hiner and ZDNet's Larry Dignan will debate HP's latest CEO change and the future of the company.

Hewlett-Packard surprised some people in tech last week by canning CEO Leo Apotheker and quickly replacing him with former eBay CEO and California gubernatorial candidate Meg Whitman. On Tuesday at 2:00PM Eastern over on ZDNet I'll be debating the wisdom of the move with my ZDNet colleague Larry Dignan. I'll be arguing that the move was a good one -- at least for the short term -- while Larry will argue that there's no way Whitman will turn around HP.

This is part of ZDNet’s new series, The Great Debate, and here’s how it works. The moderator sets the topic. The two debaters make their opening statements. Then, we get together for a live one-hour discussion where I toss out questions and both of them have a few minutes to answer and respond to each other’s comments. At the end of the online chat, both of the debaters make a closing statement. Meanwhile, during the whole process, the audience gets an opportunity to vote for one side of the argument (and one debater) or the other, and can also join the discussion by leaving comments.

Some of the issues we'll discuss include:

  • Where did Apotheker fail?
  • What does this change mean for HP's PC and tablet businesses?
  • What changes does Whitman need to make?
  • What does Whitman bring to the table that can help HP?
  • Where are HP's biggest opportunities?
  • What kind of company should HP be in the 21st century?
  • What's the bigger problem for HP: Strategy or execution?

Come join the debate.

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

55 comments
doug
doug

New CEOs come in they want to remove any threats to their power. In an old company like HP this involves shutting down the divisions that have been there a long time. That's why the calculator division was shut down at HP years ago, it got rid of all the old guys who had been there forever and knew everyone. It was the same thing with Leo. If he had got away with getting rid of all the hardware divisions no one could have challenged him. One thing that people have to remember is that these guys have nothing to lose. Leo had already won the lottery, he got 25 million no matter what he did. The only motivation remanding to him was power. He made his bid for absolute power, it failed, so now he has to spend his life on his yacht.

Professor8
Professor8

HP suicided years ago, back when Compaq bought Digital and HP bought Compaq, moved to selling over-priced low-quality printers, cameras... and turned their backs on their core competency in electronics instruments.

ScarF
ScarF

Aaaaah. She's a republican. This tells it all.

da philster
da philster

Once upon a time, Wall Street and shareholders were a necessary part of the equation; they provided capital to grow the industry, create innovative products, create employment, and benefit the community. When all these pieces fit and worked, everyone benefitted, including the shareholder. Something changed. Wall street and shareholders now rule absolutely and forget about everything else. Greed and "15 minute marriages" by the Street are slowly destroying everything that made this Country great. A shame, really.

Colinza
Colinza

HP is micro managed by an army of spreadsheet mechanics thousands of miles from the front with no idea of local conditions or requirements. You can???t even get a mobile phone without it being signed off by the VP of your region. Not even the country manager has the authority for final approval. HP has become a white collar sweatshop obsessed with the shareholders at the expense of all else. The workers are mere cannon fodder in the battle to win the hearts and minds of the shareholders

sabrina b
sabrina b

Doomed. My organization recently entered into a purchase agreement with HP and the level of service I have received has been, to put it kindly, atrocious. Over 2 weeks to get a billing address put into the HP B2B portal? Unacceptable.

rcl4rk
rcl4rk

I don't know much about the internal workings of HP, but for the last 7 years I have been a loyal customer purchasing 3 (personal use) laptops, a digital camera and a printer all HP products. I chose each of my products based upon features and value (HP always seemed to offer more of the features I was looking for at prices below the competition's lesser-equipped models) For the reasons mentioned above, I hope HP sticks around and reconsiders the apparent decision to exit the PC business. Rick C. @rcl4rk

admin
admin

Most of the comments above correctly distill the problem - HP can only survive if it can sell products or services (or both) which customers want to buy. The first mistake is to try and sell those products/services as cheap as possible - NO - customers will remain loyal, and happily pay a premium for percived quality/added value. HP printers have always been a bit more expensive, but they are (sorry- were) percieved as being better. As soon as a company loses customer loyalty (easily done) by cutting on the service/quality they are doomed. This is where HP is now. Can they turn round? - well yes BUT this is very difficult and is done by first admitting to the errors made, second getting leadership with charisma (to rebuild staff moral and public perception), third by getting leadership to produce inovative new products/services which, again the public can see as novel, and desirable. (See Apple for all of the above). Career CEOs and accountants will not save HP

spawnywhippet
spawnywhippet

I agree with Colinza, I'm supposed to be an architect on the cutting edge of designing and rolling out HP's much-vaunted Cloud initiative, but apparently there hasn't been any money to train me or give me payrises or bonuses since 2006. There is however, enough money to employ 3 layers of new management between me and my previous manager in the last 9 months, they were presumably hired to cut costs? With regards to Meg Whitman, I honestly thought it was a practical joke when that was announced, because they couldn't have selected a worse candidate. Then I found out it was for real and had to laugh out loud at the continued ineptitude of the HP board. The only way to save the company is to sack the entire board, move all the senior managers into accountancy roles and put an entrepeneur engineer in charge.

Colinza
Colinza

Most, if not all, people working in HP Technology Services worldwide, have not had salary increases in over 7 YEARS! How do you sustain morale and focus under these conditions? How does the cloud based HP board expect anyone to function in the marketplace with these restraints? They can???t always buy their way out of a tight corner through dubious aquisitions. There is no long-term continuity in this company.

rrdepew
rrdepew

HP forgot they were a test-and-measurement company. Computers and stuff were sexy; instruments weren't. So they spun off the T&M business, and Agilent is doing sort of okay on their own. Then Leo decided to get out of the PC, tablet, and printer business. The only original HP content in that list was the printers. HP forgot that their printer business paid the light bills for all the other divisions during the hard times. One more thing: HP killed their calculator business because, as the CEO falsely declared, it wasn't "profitable." It was actually turning a profit and paying its own bills. What it wasn't doing was generating a large enough percentage of HP's revenue to carry any weight in the executive offices. HP forgot that HP had created the high-end calculator, and that satisfied users of HP calculators went on to buy other HP products. (You can still buy an HP calculator, but it's a piece of crap. That's a story for another time.) Until HP remembers who they are, and what made HP successful (and unique), they will never again be successful, no matter who the CEO is. Most of HP's older rank and file remember. Most of the executives, from division manager on up, have no idea.

subhasayam
subhasayam

First of all , HP is the biggest leader in IT, We hope new CEO Make Policy +.

janitorman
janitorman

was before the Compaq insanity. I vowed, I'd never buy a computer or printer from a merged company like that ever again. That fiasco almost killed them, because people WANTED HP not COMPAQ computers (not that it matters they're all built in China anyway now.) At the time, they had a series of faulty CD/DVD drives which had been installed in some units. I called when mine failed, got a real person, gave them warranty info, and they shipped out a replacement immediately. I have a feeling that wouldn't happen today. I'm now a firm believer in ZT systems, made in America, with good warranty support. To heck with the big corporations if they're just going to treat employees and customers like they don't matter. Employees and customers are the only way they stay in business, and THAT is the bottom line, not stockholder profits, (which will suffer if these two important things are ignored) or some ego of VP's or members of some board somewhere, who basically have it made after they've made their first few years salary and can retire comfortably after making more in two years than a typical worker makes in a lifetime!

kktm
kktm

I won't be buying any more critical products from HP. They show they can start something and abandon it when things get tough. They won't get my business any longer for servers or desktops. Maybe printers but will consider other options in future if at all possible. The big chains like costco should remove HP from shelves. Cant be trusted. Goodbye HP.....

SpiritualMadMan
SpiritualMadMan

I remember my son getting stuck with a dead laptop one month after the voluntary replacement ran out during the nVidia fiasco. And, my wife's 17 inch died two months after they fixed it. NO MORE! We were treated badly and had to fight for what little we got. My daughters Dell was DOA and they DHL'd it at their cost both ways. Not a flicker since... HP recently won the NMCI contract. But, so far there hasn't really been much change for the better. All users are still the enemy and can't be trusted. Sorry HP but, it will take more than a new CEO to save a doomed ship. Unless, you have a drastic change in customer service!

Baldrick9
Baldrick9

I've seen it before. Companies run by Entrepreneurs that then get taken over and run by career managers, sometimes accountants. The latter group have no vision beyond "controlling costs". The company itself then gets "commoditised" in a sense and then slowly dies. Accountants are taught a fundamental premise: "scarcity". They run everything on this basis, that resources are limited. Entrepreneurs OTOH ignore this and use vision to create value. Creating value is the source of business growth. Cost control, whilst important, is secondary to this. Accountants don't realise that there are some things that are not subject to the rule of scarcity; "soft" things like ideas, human ingenuity and creativity, manifesting in digital information (which can be copied and distributed ad-infinitum). Ideas need to be "coaxed" out of people. This truly does make people a company's greatest asset - which was the original HP Way.

TsarNikky
TsarNikky

If their past hardware driver and technical support is indication, they no longer rate being in any kind of top tier. Maybe, second tier. And if they really screw up, drop to third tier.

Mandolinface
Mandolinface

Like so many, HP used to be an American manufacturer but is now just another Chinese importer. We're in the next phase--where not just manufacturing, but design and engineering are increasingly outsourced to China and others. In the phase after that, the once-American brands--reduced to a few accountants and marketing people--just fade away.

rycklent
rycklent

Over the last 12 months, HPQ has dropped over 42%; IBM has jumped nearly 32%. Every misstep by the HPQ board -- which included Whitman -- not only spooked investors, but also the enterprise customers HPQ so dearly wants and needs. Large IT operations need stability and well-defined roadmaps for both products and services, which is why IBM's steady, undramatic but focused performance has reinforced their success. After all, didn't Whitman hire IBM to fix eBay during its surging growth? IBM's market cap is now more than 4x HPQ. I think HP's days as a tech conglomerate are numbered. Spinning off smaller, more nimble segments might save some products, services and jobs, but its days of dominance are over.

gckondos
gckondos

While we will never know goes on behind closed doors the real problem seems to be the board itself. All of the classic indications of "micro-managing" are there. The main purpose of a board of directors is to hire somebody to run the businness, then let them do it. No CEO can suceed if the board is constantly interfering with his decisions and programs.

rick.jury
rick.jury

is it pcs, is it printers, is it servers, is it software, is it outsource, is it acquiring other companies and trying to do everything at bargain basement price?

CNXTim
CNXTim

I worked in a senior marketing role for a major electronic printing company in the '70's, *80's and '90's. When the Microsoft Windows GDI technology had delivered the end of HP's (mostly purloined) market dominant PCL, they sent a team of "experts" worldwide to engender FUD about the "evils" of GDI in a pathetic attempt to discredit the imminent arrival of low- cost PC connected printers. My excellent tech support guy and I conceived a full frontal confrontational attack delivered with vigor from the audience during a crowded seminar to bring these lies undone - it worked, They cancelled the rest of their roadshow.. My contempt for HP and what it had become continues with reason to this day - good riddance.

PassingWind
PassingWind

For most of the past 25 years I respected HP. I confidently bought their products. Then one day a technician brought to my attention a design fault in a product we had installed everywhere with (misplaced) confidence. We reported it. When nothing happened we used the old-style HP-like 'tell the boss' feedback route. Meanwhile we found a workaround. The top level feedback got an automated response - absolutely nothing else. HP had no functioning process for taking on board bad news. The workaround was bearable but not a long term solution in a business-like environment. We replaced all the product with a competitor's and crossed that division of HP off our list.

mckinnej
mckinnej

I find it hard to trust HP now regardless of their leadership. They have abandoned their entire PC market and customer base. Who is to say they won't repeat that behavior in the future? After all, they dumped the test equipment the company was founded on so there is a pattern. I certainly wouldn't want to bet my company on them. I think I'll seek out more stable and reliable partners. HP is on my "avoid" list for the foreseeable future. They will have to clear their entire board and deliver at least 5 years of solid performance before I would consider trusting them again.

metso
metso

Hewlett and Packard must be turning in their graves. They created a model company that, since they passed on, has become an anti-model. The selection of Whitman doubles the rate of decline.

ess
ess

Meg Whitman....I'd say more but I'm laughing to hard to type...!!

GuntherGump
GuntherGump

Until they fix this "inside the box" vision - they're doomed. Also - hiring CEO's of well repute doesn't save a company - I thought they'd learned that lesson. Apparently not. If I were an employee or stock holder - I'd really be mad.

llsdigitek1350
llsdigitek1350

HP got out of the instrument business, now getting out of PC's & Tablets & Printers. What do they think they will do? Sell Ice Cream.... They will be bankrupt. They completely lost their vision since the founders died... Like a whale they will be belly up soon.

padapa
padapa

They just blew the best chance they had to develop a higher value product with WebOS and their tablet. They don't have ANY vision at all. SycoRant said all the rest very well.

g01d4
g01d4

Whitman et al fall into the executive categories of either one-hit wonders (competence and luck - typically in market timing) or one-trick ponies. HP is out of luck and its problems go beyond nails looking for a hammer.

hassanhaseeb
hassanhaseeb

I don't really understand managerial politics inside big organizations but believe that HP, the gold fish, of past still has the capability not just to surface but also to give competitors a hard time. The total speculation behind HP tablet was absolutely fantastic and a layman like me total started thinking how can a company just simply make a product like touchpad completely redundant. Being in tablet computer age, this product was most prominent competitor to Apple's ipad and the only flick it needed was some more applications that HP could easily do like what Microsoft is doing to make its versatile Windows phone 7 a success.

senigma
senigma

After Meg's foray into politics,I'm doubting her ability to perceive and deal with problems. She blew through $100 million of her own money, she'll be less cautious with that of others. HP stock is on my sell list.

SycoRant
SycoRant

I worked for HP under the Platt administration thinking it was still the great company founded by Dave and Bill. One of the worst mistakes I ever made. I soon found out that paranoia ran amok, and fear and blame ruled. The last HP CEO who had any degree of competence was John Young. Platt, Fioriana, Wayman, Hurd, Lesjak and Apotheker all had giant egos, and zero competence. They need to fire the board and bring in a CEO who will resurrect the real HP Way.

ScarF
ScarF

Mr. Bush,... thank you for the negative votes. It's a reassurance to take them from you.

tavent
tavent

HP's tradition, according to the Dave Packard book, was to fund from inside, not from Wall Street. Carly changed that, and spent most of her time schmoozing The Street. Which means they, who are all about "short-term-gains and making the trading floor look good" had much more influence upon what HP did, than they should have. But Carly did what Carly knew. The Board should have known that when they hired her. So I'm not blaming Carly, I'm blaming the Board. And for hiring Meg Whitman (which I also assumed was a media joke/rumor) I blame the Board. They are on drugs, and not the good kind.

Papa_Bill
Papa_Bill

that they're killing off major American businesses? Are the boardrooms doing the same? Is this what drives the recent tendency to micromanage companies previously loaded with highly experienced and driven experts? Learn the answers to these and more questions in the next installment of "Death of an Innovator"!

Papa_Bill
Papa_Bill

I have 4 HP computers, I had 2 HP Pocket PC's, And pretty much grew up with HP's second-to-none test equipment. I have been a loyal supporter all my adult life and part of my youth. I and heartbroken to see what used to be among the greatest American technology companies evaporating into an also-ran backroom outfit. I've got some Dells I've had pretty good luck with. Maybe I'll convert. Since this HP business is behaving so much like MS, I might go Linux, too.

biancaluna
biancaluna

HP in Asia Pac has never been very good at hardware support, Dell has a much better supply chain than HP. I suspect the NMCI contract is a services contract, and has limited to do with workstation hardware. Totally different segment, both of the HP business and the ICT environment.

barrywaynevaughn
barrywaynevaughn

Very well said - I just left HP after 15 years and you hit the nail on the head. Everything with Mark Hurd was about controlling cost - there was not vision beyond this and now we're seeing the lack of a long-term vision.

ghazanfar_is
ghazanfar_is

Rick you the man. Your comment hits spot on the problem with HP. If MW can can streamline and grow a core capability HP can bounce back.

GuntherGump
GuntherGump

They have everything they need, but still can't seem to get their act together.

biancaluna
biancaluna

I disagree. I think Syco missed a few important facts - we all do if we do not realise that HP is not one company but many. There is no margin in hardware, the largest market share holder has a what 3% margin in that part of the business and that is seen as profitable? I think we need to look at where the industry is heading, and recognise the importance of the services. I agree that HP had no vision, they have destroyed everything in the services arm they acquired a few years ago. Can we also look at IBM, and what happened when they spun off their PC business to Lenovo. Let's get some more information about business process, about profit margins, about industry trends before we decide to hold on for dear life to the product. I wonder why posters are not questioning the Autonomy acquisition, but focus on PCs? Are we all missing a few pieces of the puzzle, I wonder.

saberrattler
saberrattler

I agree. HP is down but not out. Large corporations like this seldom collapse completely. It was a few years ago that everyone thought Xerox was done for. They were in such bad shape, their stock dropped to 3 dollars a share. Most of my IT friends were saying they were done for. But one guy I worked with took the opposite track; he said now was the time to buy their stock, as it would probably never be that low again. Everyone said he was crazy but he went ahead and did it. Granted, they're not the company they used to be, but they're still alive and their stock is slowly coming back. The same has been said about Eastman Kodak on more than one occasion, and yet they're still in the game. And how many times did we think that Apple was finished? HP will survive, but it will never be what it once was.

biancaluna
biancaluna

In fact, what is HP but a convergence of acquired companies. HP is not good at transitions, I thought they would have learned their lesson with Compaq.But several years after the EDS merger (which delivers 30% of the profit by the way) HP has caused a terrible mess with disparate system and a lack of recognition of cultural fit. HP is based on making a buck at every level and does not understand service delivery. So I am not sure that there is an HP way, I think that is part of the problem, Syco.

blarman
blarman

My father worked for HP for 22 years before getting axed by Carly. I worked as a contractor there for 7 years. The HP Way is dead, and not so inconsequentially is HP's culture of putting out the best, hiring the best, paying the best, and being the best. Now they are a glorified consumer electronics company. If HP were to be resurrected, it would be to start by firing the entire Board. Next they would have to fire most of the VP's and hire people for those spots that supported things HP used to do like: employee purchase program, employee dividends and quarterly profit sharing (in the old days this meant even line production employees and janitors), and company-sponsored picnics. Make HP a company your employees love to work for and are willing to work hard for. Last but certainly not least, they need to return to the days of robust R&D - of developing the newest materials, processes and technologies that could be incorporated into new products.

SpiritualMadMan
SpiritualMadMan

Guess what they did last night? They pushed a script to enforce Smart Card Log-Ins, *even* on Developer Accounts. Locking untold numbers out of their developer accounts. (Developers have two accounts a locked down account via Smart Card and a slightly less locked down developer account.) No warning. Just run patches and let the chips fall where they may. At least Intel Corp tested patches before deploying them! No HP Hardware and HP Services have the same game plan the Customefr doesn't matter! DOOMED!

maj37
maj37

There is no margin perhaps in PC hardware, but other less commodity hardware has good margins. Do you think Apple only makes 3% on iPads, and iPhones? Do you think HP, IBM, and Oracle only make 3% on their large servers and IBM on it's Mainframes? Do you think EMC only makes 3% on it big storage arrays? The big problem HP had this time was they brought in a CEO that only knew about software and services because that is all SAP sells, and that CEO didn't want to bother to learn about other areas of the business. HP has a lot of still good hardware, for now.

mdwalls
mdwalls

"Large corporations like this seldom collapse completely." Where's DEC?

maj37
maj37

He didn't say it never happens he said it "seldom happens". In addition like Baldrick9 said DEC didn't collapse completely it got weakened and was bought by Compaq.

ScarF
ScarF

HP as it is today, is going down.

Baldrick9
Baldrick9

It's inside Compaq, which is inside HP.

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