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.
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.
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.
It's of course not OK to lie and get caught. If the board wanted him badly I am sure they would have found other ways of keeping him around - fines etc and worst case hiding it or downplaying it. Things aren't that simplistic at corporate board level of a multi billion company.
Fact of the matter is that he was going to be shown the door - if not for lying then for job performance. He just wasn't doing the things the board wanted him to do. That never ends well.
I wonder what do you think Hurd was a good CEO? I understand that HPQ stocks were going up but the raise was based on eating the future.
Hurd made HP very toxic place to work (I know that first hand): and how the heck you can compete with Apple when your engineering force is demoralized?
Also what would be HP future under Hurd helm?
As of Larry's comment... Larry talks his book. He does not care what will happen to HP and he needed a guy to clean up Sun hardware division. So of course he will praise Hurd.
This is true also because Steve Jobs speaks about it in his Stanford speech, but it's a rare event that you cannot know in advance. No company fires the CEO to let him learn more and then come back to rescue the company.
Moreover Apple went on the verge of bankruptcy before Steve Jobs came back. So it was still a bad decision for the board to fire him.
> Sculley wrestled with low Macintosh sales and a need to bring some order to the creative chaos Jobs had unleashed. Sculley found that he couldn’t rein in Jobs—and decided he had to go.
"And getting out of the consumer space, at a time when there are several paradigm shifts going on, means missing huge opportunities."
For HP, at this time, I'm not sure I agree. Why? It's as simple as Apple is in that market as well and nothing HP (or anyone really) has done has stopped or caught up with their momentum.
In fact I think it's smart for them to transition to the enterprise world entirely. We don't hear about it often on HackerNews or Techcrunch, but that market is massive and HP has been acquiring companies within it for years. They likely make more money in the enterprise market (security specifically) than in the PC business. Hell, they just bought a company called Autonomy for 10 billion dollars. What do they do? Enterprise search and information management.
I would agree with your assessment. But it's not just Apple that's making life difficult for HP.
Simply put (and this has been happening for four or five years now) Assus Acer and Lenovo are eating HP's lunch on the low end and Apple is eating their lunch on the high end. All the while they are playing second fiddle to Dell ( and to an increasing extent to Assus) in between.
Additionally HP would need to play serious catch up to Apple, HTC, and in the international market Lenovo (maybe even Motorola although I don't know how that is going to work post acquisition) in mobil. And as Dell has learned, playing catch up in mobil requires throwing a lot of money down the drain without a guarantee for positive returns. (This last part about Dell is just my perception. For all I know Dell's margins on mobil have been stellar, but I don't think that's the case)
I understand the market's reaction to HP's pivote, although I think a lot of it is panic and hedging bets and some bad timing on HP's part, but that is what markets are suppose to do. I don't so much understand the tech industry's reaction to the move.
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.
The TouchPad is a real disaster. 10% sell rate even after promotions? This is like ET for the Atari 2600. Best Buy was ready to just send back 245,000 out of the 270,000 it ordered because it couldn't sell them. At least HP agreed to give them away at liability cost instead of dumping them in a landfill.
Notice HP did not pull the Pre and Veer phones from the shelves or put them on fire sale.
HP's reasons for keeping the webOS lights on are probably threefold. 1) Phones are still for sale. 2) HP has a liability to show some support for webOS devices it sold or risk a class action lawsuit. 3) HP could still sell the Palm assets to someone and the company is lot more valuable if it comes with employees.
I have real trouble understanding that. I don’t know how tablets are presented in the US but in my local German electronics retailer they are all right next to each other. The TouchPad even had more promotional material around it, it should have sticked out. (Ignoring the iPad which is right next to the other tablets but on an extra table with all the other Apple stuff.)
Ignoring the iPad, I don’t understand how the TouchPad could be less successful than all the other tablets. Android can’t be the reason, that’s not how the tablets are presented. They are the Samsung tablet, the Motorola tablet, the Asus tablet, the HP tablet. It’s not even obvious that the Motorola and the Samsung tablet run the same OS, at least if you are a casual shopper, trying out tablets. To me, Android and webOS didn’t feel different enough to make one the clear winner, at least if you have limited time and are just playing around with it. The price certainly can’t be the reason, they all cost about the same.
Android tablets seem to at least be a little successful, why is the TouchPad not at all successful?
What killed the TouchPad more than anything was lack of differentiation. If they had been $400 from the start, they could have been "the iPad, but cheaper". They could have started with a 7-8" model. They could have targeted specific niche markets or verticals en masse, preloading them with use-case specific apps and selling thousands of units at a time to big orgs.
As it is, the webOS is a brilliant OS which HP completely squandered. I hope it somehow lives on via skunkworks or homebrew; I plan on keeping my $99 unit, as the browser and e-book functions will keep it useful for years to come.
(Side note: it's also occurred to me that webOS is perfect for large-scale touch computing, of the "big-screen drafting table" variety. Why they haven't pursued this instead of touchable iMac knockoffs is beyond me.)
Actually, there are better places than trying to differentiate on price.
Printing with the iPad is a prickly issue today. If HP were to even launch one printer that worked with the TouchPad, it would have been an opening salvo that Apple will have to scramble to catch up.
Secondly, cameras represent the last bastion of consumer goods that hasn't been computerized the way a music player has been computerized. HP could have licensed WebOS to camera manufacturers and build up a defense against further penetration from Apple. Nikon, Canon etc should be concerned that they have nothing if Apple decided to eat their lunch.
Huh? HP launched more than two dozen printers (or updated them) that work with the iPad. HP is, in fact, the only brand that has printers which work with the iPad. The TouchPad works more or less with the same printers, it doesn’t do any better than the iPad in that respect.
It doesn’t seem like the availability of printers makes a huge difference.
The camera idea is interesting. They also failed to attempt an iPod Touch competitor (though component prices could make that a non-starter). And there are at least two other arenas that remain insufficiently computerized: the living room, and the kitchen.
Put simply, HP had a tremendous opportunity, and they squandered it through lack of vision.
Looking at the quality of the HP TouchPad ads reminds me of the hilarous movie The Producers, where the show has to be a flop or it will financially destroy the movie makers. HP hired comedians to make fun of potential customers, like looking photos of buck-toothed relatives. Then there was the VP demonstrating the Touchpad without the camera getting a clear shot of how to operate it. Finally, shutting the show when it has barely started.
Printing is not the killer feature you think it is – especially for a device like a tablet (consumption oriented and in many cases a great replacement for paper).
It can! But only to specific HP printers (just like the TouchPad). Printing is one of those things that’s nice to have but ultimately not a (lone) deciding factor.
Currently all implementations suck if you don’t have one of the few supported HP printers†. Maybe a more encompassing solution would have helped the TouchPad (for example the ability to use any printer in the network) but I doubt that for such a feature alone TouchPads would have sold that much better.
Apple already had a feature implemented (in one of their betas) that allowed you to use printers connected to your Macs but they ditched it for some reason. Maybe technical reasons? Maybe politics? (Could they have a deal with HP?)
Having one (or even a few) HP printers that support the TouchPad – as you suggested – is demonstrably not good enough. The TouchPad flopped regardless.
—
† Android is a different story but as far as I can see not a very pleasant one.
Guys, it's called AirPrint and Apple advertises it quite visibly. It's one of the major features of iOS 4. You can see an extensive tout for it on Apple's website here
All of the printers that support AirPrint are made by HP. AirPrint is really just an adapter on top of HP's proprietary ePrint. I believe ePrint even lets you send documents to the printer over email from a computer or any other device.
Normally Cloud Print for Android (or any other device) works by running a print server which is bundled with the Chrome web browser on a Windows PC connected to a normal printer. Instead with ePrint the network print server exists on the printer itself so you can send documents to it directly.
Obviously, the HP TouchPad works with ePrint natively out of the box. So all of these mobile operating systems are designed to work with the same line of printers which are all made by HP.
Technically, Android can work with more printers assuming you want to rely on a Windows box to act as your print server.
> 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.
I am with you on the patent reason, but I think they are going to sell them. They probably figure they are worth more than a WebOS-based device would be to the PC division.
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.
I keep hearing this but then think I saved 30% by building my own PC so it doesn't ring true. Also I would expect HP to get parts at least 10-20% cheaper than a consumer increasing this margin. And the time assembling is not that much to warrant additional costs. Maybe because I have a high end rig there are some margins here... but in this context it feels like there are decent margins there to me.
There's also branding, marketing, advertising, floor space, sales staff, call center and after-sales support, as well as management time that your supplier didn't have to pay for (or not as much for).
Falcon-nw sells high end PC's with vary healthy margins, however they don't sell a lot of PC's. Alieanware (now part of dell) sells mid range to high end PC's with ok margins. Dell a lot of sells low to mid range PC's with crap margins, but they make good margins on their support contracts.
Wouldn't that require them to come up with a valuation for the WebOS business? And right now, wouldn't that valuation look very bad for HP? The spot price for the WebOS business is much lower than what HP paid for it. Why not delay and diffuse the reckoning?
From the quotes that were gathered from HP's PR, it sounds like they weren't at all confident in the TouchPad's ability to turn profits in the coming years. Assuming they didn't withhold a bunch of evidence that led them to that opinion, they'd surely have had a tough time finding a buyer. It also doesn't inspire a lot of confidence if you're trying to spin off a product division after giving it only 49 days on the market.
INAA, but in many cases you do better to shutter something and write it down than to sell it for a pittance.
Let’s say it’s bleeding money. Keeping the lights on while you find a buyer costs money, and buyers are no fools: If you can’t find two buyers to bid against each other, the one buyer you find has you over a barrel: Every day they delay in negotiations with you costs you money, so you are under tremendous pressure to conclude a deal at their price with their terms.
I have no idea what’s going on with HP, but its not unreasonable to close something quickly if you don’t have a buyer or buyers already lined up to do a deal. I suspect that if HP had received feelers from a possible buyer, they would already have tried to sell Palm. Closing it means that they either don’t have any serious buyers or have already tried to sell and discovered that it’s cheaper to close it and keep the patents.
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.
> 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".
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
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.
I'm actually curious to see now if we had this same discussion when Dell started to pull back on their consumer division. It's still there, but their business offerings seem to either have been given more attention, or for whatever market reasons have dwarfed Dell consumer.
Palm was "saved" by HP, and WebOS, but where Palm was already too little too late, I think the HP aquisition didn't speed it up yet. Palm couldn't compete, and HP with their already dead Windows Mobile line of PDAs just added to the mess...
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."
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.
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.
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.
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.
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.
"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.
Granted he may know little about Autonomy (although I'll argue he knows a bit about the software business), but he's pretty much right on the money when it comes to what Autonomy sounds like (in the sense that it is also an enterprise-oriented business), is he not?
yup... Autonomy is a huge name in the enterprise biz. This blogger got it completely wrong when he said they are an SAP rival. Autonomy is Oracle's biggest threat now and will likely start making inroads on its biz.
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.
Text classification and analysis isn't a small field. Plus this is a public company that's been in the FTSE for years (i.e. one of the top 100 companies in the UK)
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.
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.
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 :-/
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.)
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.
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.
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.
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.
Don't know why you are being downvoted - I'm mystified as to why people think there would be much overlap between what SAP does and what Autonomy does.
They are both enterprise software companies. It looks like Autonomy focuses on data analysis while SAP focuses on business development. Regardless, Autonomy is much much much more like SAP than it is like a consumer electronics company. The point is a good one.
For the purpose of the comparison (to show that Autonomy is far from the consumer market and close to the enterprise market) I would say they're close enough. Enterprise search and knowledge management applications are no less far from the consumer space than SAP.
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.