[conspire] HP Melt Down

Adrien Lamothe alamozzz at yahoo.com
Tue Aug 23 13:58:36 PDT 2011


>>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

The way those types of engagements work, is that $BIGNAME consulting company has senior level consultants who manage the engagement and they also sometimes have industry notables make cameo appearances on their behalf to help cement the engagement. The bright kids from school get a nice starting salary of say $65-$80k and all expenses paid when working remotely at a client site. $BIGNAME consulting company bills those kids out at $250+ per hour, to perform the programming and grunt work. The senior consultants are billed to the client at anywhere from $400-$700 per hour. The $BIGNAME partner supervising the engagement can expect to earn around $2 million per year, but only if he can sell, sell, sell the client BILLABLE HOURS. I put BILLABLE HOURS in caps because that is the holy grail of consulting companies. I have lots of experience dealing with $BIGNAME consulting companies, usually as a member of a smaller consulting company working on the same
 project as $BIGNAME. I have to say high end consulting is in many cases quite corrupt; they mostly care only about pumping more bodies into the engagement to increase the amount of BILLABLE HOURS. If you ever have a chance to read a book called "Consulting Demons: Inside the Unscrupulous World of Global Corporate Consulting" by Lewis Pinault, you should - it is quite an eye opener, though it covers even higher end consulting than what we're talking about. Some of my most satisfying moments have come after outperforming or cleaning up the mess made by one of the $BIGNAME consulting companies. If you like, I can tell a story about one of them, but will have to hide the names to protect the guilty. Incidentally, I have a theory that one reason so many corporations started outsourcing and bringing in H1-B tech workers, is that they tired of the $BIGNAME consulting firm business model. Companies like Pivotal Labs are doing so well because they actually
 deliver working software and don't try ramming 300 developers into an assignment.

>>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. 

I think the reason they are simply shuttering the brands is due to the horrendous economy and the fact the market is saturated. There simply isn't any good option for them right now and in the foreseeable future.

>>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.  

I agree with this, if it can be integrated into an overall coherent business strategy. In any business, some products or services are sold at break-even or at a slight loss, if the product or service is necessary to maintaining a "one-stop shop" for the customer. A camera store that doesn't sell cameras wouldn't last long, yet in the camera business retail outlets make very little and in some cases lose money on the sale of each camera body. They make their money on sales of lenses and accessories (and sometimes not even on lenses.) Automobile dealers usually make only $1,000-$3,000 on the sale of a new car - they make their money on parts and service (warranty work is paid to them by the manufacturer.)
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