Monthly Archives: September 2011

HP – I’m wasted and I can’t find my way home

This past week with all the on goings at HP made me think of the great song from Blind Faith – Can’t Find my Way Home – and the great lyric “I’m wasted and I can’t find my way home.” After a rough 11 months under the guidance of former SAP CEO, Leo Apotheker, HP decided to jettison him and are going to replace him with former eBay CEO Meg Whitman. Okay, so let me get this straight, you allowed Leo to take HP down the path of challenging the likes of IBM and SAP with regards to corporate applications and services – even allowing Leo to announce that HP was jettisoning their PC and Palm products. This fell in line with Leo’s background from SAP where software and services were the path to greater revenue. Leo, with the backing of the board, seemed to be embarking on a transformation of HP that mimicked what IBM had done by jettisoning their PC division to China. Did Leo and the board come to the conclusion that profits were no longer to be made in competing in the capital intensive and margin challenged space of PCs? Did the rise of the iPad, iPhone and MacBooks cause Leo and the board to move away from the space and reconsider the Palm OS for tablets?

There appears to have been some element of this, otherwise why would they have made such statements about the PC and Palm? The desire to move away appears to be the correct on, the way in which they executed is another story (why not look for potential suitors behind the scene rather than come out and make a bold statement of your intentions?). Of course now all this comes into question because of the removal of Leo from power…and now you insert a B2C CEO in Whitman? With stints at eBay, Disney and P&G she does not come across as a veteran of the package applications or B2B high tech world. There is no doubt that she is an incredibly capable and intelligent leader, she was the one that took eBay from being a pez dispenser ecommerce network to the giant it is today (going from $4m to $8b). But was a very different world from where HP is today. I am sure there are lessons to be taken from what she did at eBay, but I am not sure she is the best equipped to take over HP in its current state. HP needs someone with deep knowledge of the B2B tech space, someone with the vision and gravitas to pull HP out of the morass it currently finds itself embroiled in.

Whitman has a tremendous mountain to climb and with the likes of IBM, SAP, Oracle, Microsoft, Lenovo, Panasonic, Apple…and the list goes one….all gunning for HP, it will be a tough course to navigate. HP needs to ensure that she has the ability to enact a strategy and see it through, give it more than 11 months! Her first big decision, what to do with the PC and Palm side of the house. Which course of action will be an indication of what she is thinking – keep going down the Leo route of services and software or go back to a mix of hardware and software? Both paths are fraught with risk and opportunity, my sense is she will opt for the latter, closer to her B2C background.

Time will tell.

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Friday Funnies – Facebook’s “friends”

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The Government is fighting the last war – why it is blocking TMobile/ATT merger for the wrong reasons

The long drawn out saga that is T-Mobile being acquired by AT&T got caught in an unexpected snag this past week when the US Department of  Justice (DOJ) filed a lawsuit to block the move. The DOJ pointed to competitive and fear of lack of choice for consumers as its primary concerns. But are these legitimate or are they fighting the last war? What do I mean by this?

There is a famous saying that often times nations and their generals fight the last war when it comes to preparing for the next war. The French and British in 1940 were prepared for trench warfare, another version of the First World War, only to be caught behind a fortification that was never used by the Blitzkrieg unleashed by German panzers. NATO and the United States is sometimes seen as fighting the Cold War today – B2 Bombers, Seawolf Submarines or the Crusader self propelled howitzer. To me this is similar to the DOJ focusing on what communication companies fought the last war over – cellular coverage. Similar to fighting over who controls the POTS lines (plain old telephone service). When voice was carried primarily by twisted pair cooper lines, it did matter who was able to bring that service to you. What happened? Cable got into the game as did satellite, now you could get your communications via other means. Oh and cell phones. There is not the same level of concern today about who controls the land line communications, because it has been wrestled away from telephone companies.

The same is going to happen with cellular. Maybe not tomorrow, but it is coming. For that reason I think the DOJ is mistaken to focus on trying to maintain T-Mobile as a disruptor – forcing the likes of Verizon, AT&T and Sprint to stay competitive. Yes the likes of T-Mobile play a role, but so do companies like Metro PCS. The real players that force the cell companies to innovate are the Googles, Apples even the Microsofts of the world. Pushing through the ability to build “super wifi” and the like. As this technology becomes more pervasive what will happen to all those cell towers? The load will be lessened on the providers’ networks but their control of our communication spend might also be lightened. Consumers will be able to potentially choose other means to access the web, send messages or gasp…talk on the phone via a wifi network. Skype anyone? Consumers are already moving away from pure voice and leveraging IM and SMS as a preferred method of communication.

The DOJ is fighting the last war. Competition and innovation will not be accelerated because there are 4 main cellular players, but because Google voice, Skype and Super Wifi to name a few, are technologies and players that are working on new ways to allow consumers to communicate with one another. Look at the iPad 2 – it has a camera and with a simple Wifi connection you can easily Skype with anyone in the world, so much for needing to be on the AT&T network.

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