IndiaTechOnline Opinion: By Anand Parthasarathy
Global Infotech leader, Hewlett Packard has had yet another change of leadership: CEO Leo Apotheker is out -- less than a year into his term – and recent addition to the Board of directors that decided to let him go – Meg Whitman former CEO for 10 years till 2008, of online e-commerce giant e-Bay and unsuccessful candidate for the governorship of the state of California -- has been selected to replace him. In addition to her experience in a large enterprise like e-Bay, Ms Whitman is probably skilled in selling soap, flowers, footwear, toys and movies, having served earlier with ( respectively) Proctor & Gamble, FTD, Stride Rite, Hasbro and Disney. I list these prior appointments in a very positive sense You would think: ‘All this rich experience in consumer products means HP might be returning to its roots as a maker of printers, PCs and other mass-use IT products'. And you would be wrong.
It is the enterprise end of HP -- the business of IT services ; software& solutions -- that is wagging the dog so to speak and CEOs are judged for what they do or don’t do, to make enterprise solutions central to HP’s game plan.
Yet when you consider HP’s total revenues, imaging& printing ( 19%) and personal systems ( 33%) still account for a large chunk of revenue, compared to enterprise software ( 3%) and infrastructure ( 15%). These numbers are from Zinnov Management Consulting’s Director Glen Serrao who adds: “HP currently needs a consolidation expert,rather than a growth expert, who can optimize the large and complex operations of HP for profitability. One suspects that the role of Whitman may not be to run HP the way it is today. The goal could be to break the organization into multiple units or to streamline the operations through downsizing”. HP’s board has has drawn the ire of Silicon Valley Venture capitalist C and former HP director) Tom Perkins who is quoted by the New York Times: “It has got to be the worst board in the history of business.” Even harsher is the comment of Robert Kay this week at Forbes.com: “HP had become a pariah in the industry, and no self-respecting former CEO or big division head was willing to touch the top job with a 10-foot server rack.”
Jens Butler and John Madden, Ovum Services Analysts comment: “HP’s services business has struggled for years with flat to single-digit quarterly revenue growth, the result of a drawn-out and arduous integration of its EDS acquisition, and a strategy that has failed to meet market and customer expectations. Even as HP endures another leadership change the company insists that services, particularly its outsourcing and global delivery capabilities, will play a critical part in HP’s future”.
The Silicon Valley voice, San Jose Mercury News reminds that HP remains “one of the world's biggest suppliers of server computers and other tech gear for corporate data centres, as well as computer printers and technology services. But analysts note that each of those businesses is under pressure from new trends. Profit margins are shrinking in the server business. Printing growth has slowed. And the advent of cloud computing and other new technologies has led to shrinking demand for traditional outsourcing of computer maintenance and other functions that are a big part of HP's $35 billion services business.”
Given the reality that printing and imaging coupled with the personal computer business still stack up to nearly half of HP’s business, one cannot quite see the logic of throwing the PC baby out with the bathwater – as the company suggested in the last days of the Apotheker dispensation. Will Meg play along? ( HP’s short lived tablet PC was being offered at throw away prices of $ 99 a go in the US, a fourth of its price).
Well; we in India may not figure all that hugely, in the radar of HP’s new boss – a lady whose reputation says she takes no prisoners or suffers no fools. But here is our few paisa’s worth of wisdom ( or not): Lady, look within HP for the heroes and for the corporate gyan (wisdom, that is!) that will help you in the arduous task you have taken up.
Some have been there for decades – like Vyomesh Joshi, executive vice president in charge of printing and imaging, who has forgotten more about HP’s businesss than most in the Board will ever learn: He has been with the company since 1980; when he started as an engineer. He has helped double your profits in his neck of the business from $19 billion to $26 billion and -- not that it may matter to you – he is steeped in what was once called the HP Way, a model for doing business that combined dollars and sense with a clean work ethic. It worked very well for William Hewlett and David Packard – and maybe, it might just be an idea whose time has come – again. Ask Vyomesh, you have nothing to lose. September 26 2011