[conspire] HP Melt Down
Luke S. Crawford
lsc at prgmr.com
Tue Aug 23 13:00:27 PDT 2011
On Mon, Aug 22, 2011 at 08:50:02PM -0700, Rick Moen wrote:
> Quoting Ruben Safir (ruben at mrbrklyn.com):
> > I don't think that makes much business sense. Evidently Wall Street
> > agrees.
> Long term, the problem is that HP Personal System Group (PC division)
> had only a 6% operating profit in the quarter most recently reported,
> which makes it, relatively speaking, a drag on the rest of the company
> compared to parts of the firm pulling in a lot more profit on smaller
> capital investment. So, Apotheker apparently wants to go SAP -- or go
> IBM, as it were.
My understanding was that when IBM did this, rather than just shuttering
their less-profitable consumer-hardware divisions, they sold the brand
to the Chinese OEM that had been making the hardware for some time now.
I mean, I can understand why HP would want to be a consulting company;
Consulting, when you have a big name and the marketing muscle to back
it up is a license to print money. At one of the places I worked, we
hired a lot of bright kids fresh out of college. I mean, they were
bright, and better looking than average, but they were fresh out of
school. Zero experience. Within a year, the better looking kids of
the group were hired by one of the $BIGNAME consulting company, given a
few months of training, and sent out as consultants. Think of it; If
you have the name, you can hire entry-level people and you can rent
them out as expensive consultants. That's got to be pure profit.
I mean, don't get me wrong, I'd have hired these kids for entry level
positions. They were all pretty bright; had gotten good grades at
school, and most of them were okay at picking up new stuff. I mean,
they weren't geniuses, but geniuses never do what you tell them to do
anyhow. I'm just saying, they had less than one year of real-world
experience, and that year was in entry-level programming or SysAdmin
jobs. They were good kids, but taking advice from them would be plain
It seems hilarious that companies will pay money for advice
from people with no experience, but it happens. As far as I can tell,
this is more about being able to tell the higher ups "We hired $BIGNAME to
advise us, so it's not our fault that the pooch got screwed. We did our
due diligence. If $BIGNAME couldn't see this problem coming, nobody
could." If I'm right, that would explain why the experience level of the
consultants doesn't actually matter.
It still seems funny to me that they'd hire kids rather than old people;
You can get old people for cheap if you are willing to take someone who
has been unemployed for a while, or someone with an obsolete skillset,
and it seems to me that a person with gray hair is inherently more
professional looking than some kid, but maybe old people don't take
orders and follow arbitrary procedures as well as young people do? or
maybe the sort of old people who look distinguished rather than just
old are already expensive, even when they lack the relevant skillset?
I mean, I would say that an old person is more likely to strike out on
their own and try to go independent, but if I'm right about how this
works, that really doesn't matter at all. Independent consultants
serve a market that largely does not intersect with $BIGNAME consultants.
But I'm getting distracted. I understand why HP wants to put more effort
into the 'enterprise consulting' game and less into the consumer hardware
game. Anyone with enough of a name and the marketing muscle to do so would
be a fool not to. What I think is weird is that unlike IBM, rather than
selling off the consumer brands to Manufacturers trying to make the jump
from being an OEM to selling direct to consumers (which, I believe, is
vastly more profitable than just being an OEM) they seem to be just
shuttering their consumer brands.
It seems weird to me; 'cause I know they wouldn't get /that/ much from
selling the brands; their consumer laptop brand isn't nearly as valuable,
for example, as the ThinkPad name, but it's gotta be worth something. And
really, I think having the lines continue to be made, I think, is better
for the parent brand than just shuttering 'em, anyhow, so if selling them
to a good OEM is largely neutral after you consider all the costs of the
sale, I'd still go for it, if I were in charge of HP. Customers who
want to keep buying the brand for whatever reason can continue to do so,
and existing customers will feel like they have someone to call for support.
Luke S. Crawford
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