Monday, September 27, 2010

HP: There are a sequel to the legendary Silicon Valley

Two weeks ago, was seen on television in China HP will celebrate its 20th anniversary song, warm and lively scene, unexpectedly announced its U.S. headquarters two days after the 1.45 million job cuts. At first glance unexpected, is expected.

Late last year Lenovo bought IBM's PC business, I am in the "Digital Age" published a column entitled "Lenovo and IBM, HP, Acer, win lose," said the impact of this acquisition by IBM but HP is not the greatest , not Lenovo, but the biggest benefit from Acer. In the PC has been reduced to cut-throat business, in addition to Dell making money first, second third of IBM, HP and carry in death.

1999, appointed Chief Executive Officer 鍗¤帀鑿插ゥ鐟?singular appeal Na, not only did not reduce the PC business, but contrarian overweight, in 2001, the acquisition of Compaq Computer, recklessly with Dell, HP laid decline in future seed.

And the same for U.S. companies to go direct to Dell, but compared to the HP distribution channel costs go higher, and Lenovo and Acer in Asia compared to HP's personnel costs are also high, does not create any large advantage, PC business has become the HP's burden.

Mission in February of this year in the way Carly was fired without warning, and in July announced a worldwide wave of layoffs, that HP's PC on the previous error correction expansion strategy, which although not coming for the association, but the Lenovo acquisition of IBM was forced to HP to action.

Hewlett-Packard and Dell to put them together, will be far clearer. Hewlett-Packard in 2004 a turnover of 79.9 billion U.S. dollars, higher than Dell's 49.2 billion U.S. dollars; HP's pre-tax profit was 4.4 billion U.S. dollars, also higher than Dell's 4.2 billion. However, if more profit, Hewlett-Packard 5.5%, Dell lost 8.5%, surprising Wall Street, HP's market value to 71.4 billion U.S. dollars, while Dell is the 100 billion U.S. dollars.

Why? Dell is a monopoly because the company PC, and make money, but HP is not the monopoly PC, in its six business groups, the fall turnover of PC is 24.6 billion U.S. dollars, profits of only 210 million U.S. dollars, profit margin is only 0.9%. This is the real gap between Dell and Hewlett-Packard, Dell sell PC's profit margin was 8.5%.

However, the open view, HP's printers and cartridges are star business - turnover of 24.2 billion U.S. dollars, profit 3.8 billion U.S. dollars, close to Dell, the whole company. Hewlett-Packard printers and cartridges account for 30% of total turnover, earnings accounted for 90%, if not because of this business, HP can only be considered second-rate company.

If the printer and cartridge set up independent companies for its profitability than Dell's point of view, the market value should be close to Dell will reach 100 billion U.S. dollars. But HP's current market value of only 71.4 billion U.S. dollars, which means that the other five combined market value of the business group is negative. Wall Street's strong demand over the past five years, Hewlett-Packard for the second division, is to resolve this conflict. HP's first division in 1999, the measuring instrument out of the establishment of an independent cause of Agilent (Agilent).

HP's problem is not only a split second, it is the biggest problem is the external environment changes, it changes the mentality of too slow, too heavy and the light performance.

October 1997, I was invited to San Francisco for Hewlett-Packard at the "development potential" activities, their main purpose is to HP's brand from the industrial electronics products into the consumer electronics products, and strive for greater market. That party was fun, band, champagne, lights, balloons and wearing a sexy female star over, but wait until the power turns HP's high-level speech, the atmosphere becomes obtrusive, the group of serious speech suit the elderly appearance, not at all would not people have fun, young, new imagination, and they have to pass that feeling to be responsible for the average consumer.

"Expanding possibilities" introduced the world indifferent miserably, but HP's decision is correct, it should be approached the average consumer, rather than in the past only and hospitals, research institutions and companies dealing with the then outstanding printer and the cartridge has made this point. Hewlett-Packard in 1999, independent from Agilent, and very attractive external Carly at the helm, to create a new image, from the strategic point of view is correct.

The problem came to power too early in the meet Hewlett-Packard Carly tradition later too arbitrary. I am in November 2000 to HP headquarters in Palo Alto, Silicon Valley, an interview, Carly found the first chair the board before the site deliberately to move back to the first meeting of the two founders of the Office of the desk to show respect ; then then the two founders of the venture in 1939 to buy back the garage, as a memorial, and re-set "Garage Code", the original spirit of re-packaging company, to give a new meaning: a win and a shining soul electronics (A winning e-Company with shining soul). As to what this means, I asked HP's vice president of several utilities, the answer is no consensus.

If Carly successful, these re-forms of action are not the problem, the problem is her series of policy decisions, including the acquisition of Compaq in order to fight against Dell, hot pursuit of IBM's e-business launch of e-service, and the king of EMC storage device divides its own push memory, each project is market challenges of the Mother of hard living her second child, and even later still, and Kodak digital camera joint venture last year, HP also introduced its own mobile phone, the strategy was out of focus.

According to Carly's idea, after the cameras and cell phones can be connected to the printer through a wireless transmission, direct printing, it is not wrong, and certainly more than to sell HP printers will be so, but why does it have their own cameras and cell phones? Sell-off Sony cameras win, win over Nokia phones sold it? This is another behind the boss's hard to challenge those errands.

Over the past 6 years, HP will fall into another's home to snatch children to get into, not as successful, but rather their own backyard fire. Canon and Epson printers and HP market share gap is narrowing, IBM also introduced printers, Dell printers are also faster listing.

HP is the first established company in Silicon Valley, has been a legend, but the market will not give it 6 years, if not transferred back right, replace the CEO and the layoff news, not only once.



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