When Russell Brand got that tap to be the HP TouchPad spokesperson, I was concerned. When HP cut the price of the TouchPad by $100, I was worried, but I thought it might have been a bold move to grab market share. When Best Buy said it wanted to return its current inventory of TouchPads, I knew something was terribly wrong. But even if the death of the TouchPad could have been predicted, I didn't see this coming. HP, the number one manufacturer of PCs worldwide, is quitting the PC business. In fact, it doesn't seem like it wants to build ANYTHING anymore.
When HP bought Palm, it knew the risks. The company was floundering, but for a small firm with a promising platform, some loyal users, and a host of nice patents, the $1.2 billion price was right. If you were going to be a player in the PC market, you needed to have a mobile and tablet position. Buy the company, retrench, and launch new and improved products. Makes total sense.
After all, the technology is pretty damn good. PCMag gave webOS a Technical Excellence award in 2009. Palm Pre has consistently tested well, if not great. And even the HP TouchPad, although no iPad killer, was as good as most of the Android tablets on the market. Everyone knew there was potential there. The question was how to seize it.
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The TouchPad launched on July 1. HP killed it on August 18. This tablet lived for 49 days. That is a record that makes the Microsoft Kin look like a success. I have had flus that lasted longer than that. Make no mistake, HP's high-tech abortion of the TouchPad and webOS platform will go down as one of the greatest wastes of time, technical resources, and customer good will ever.
But wait, it gets worse.
HP helped found Silicon Valley. Who were those archetypal geeks playing around in a garage, building cool stuff the world didn't know it needed? You probably think their names were Steve and Woz. Copycats. Bill Hewlett and Dave Packard were doing it back in 1938! They started off building an audio oscillator and ended up building the world's largest technology company with 300,000 employees and the distinction of being the world's largest PC manufacturer.
They did it by building a corporate culture that was described as The HP Way. It encouraged honesty, teamwork, and innovation. More than anything it was about building stuff.
HP has been the number one PC vendor for the last four years, its market share peaking at 19.3 percent in 2009. The company just announced sales of $31.2 billion in the second quarter of 2011, about a third of which were generated by its Personal Systems Group (PSG). Margins on PCs are tight, but that is a pretty big pile of cash to work with, right? Evidently not big enough.
No, HP doesn't want to build stuff anymore. It wants to provide "services." Where does it want to focus its attention? It is going to buy Autonomy, the U.K.'s second largest software company, a firm that develops database search software. Higher margin on stuff that you don't have to manufacture, ship, and sell, I guess.
There is a great precedent for this. IBM followed this same path just a few years ago. It bought PWC Consulting in 2002 and sold its PC division to Lenovo in 2005. Now IBM is a consulting and services company and Lenovo is stewarding the venerable ThinkPad brand. This works out well for both companies; both are making more money and that is what their corporate leaders are paid to do. Even so, it seems to me we are losing something significant here.
There is something wrong with the PC business when the market leader just walks away from the business. There is something wrong about promising to invest in a platform and then pulling the plug on your flagship product after just 29 days on the market.
There is also something wrong when one of the world's biggest builders of great things is content to merely provide service.
Source:http://www.pcmag.com/article2/0,2817,2391388,00.asp?kc=PCRSS05039TX1K0000760
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