HP has announced so many “turnaround plans” in the last few years that employees and customers must be getting dizzy.
As well as the revolving door to the CEO’s office, we’ve seen HP declare itself a services business, a software business, a hardware business, not a PC business, and then a PC business again.
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There was much derision on social media about the supplier’s latest claim to be the “the world leader in cloud infrastructure” with $4bn of cloud revenue – which may come as a surprise to the likes of Amazon, Google, IBM and others. Just because you sell a bunch of servers that run in a cloud-type environment, doesn’t make you a cloud provider.
HP has form for taking the latest trend of the day and slapping it as a label on existing products. A few years ago, when green IT was the marketing vogue, the company claimed it had always been the greenest IT supplier in the world and had in fact been a green IT company since the 1960s.
Manhandling the latest buzzword onto your product range is a far cry from the days when HP’s slogan was “Invent”. Can anyone name the last, genuine invention or innovation that HP has brought to the market ahead of its rivals, without an acquisition?
People who deal with HP on a regular basis remark on the constant reorganisations, the changing faces among their contacts, and the general state of perpetual unrest. One former HP executive recently told me the strategy was all over the place, and that many employees felt that selling off the low-margin PC business would have been the best possible move.
HP has made a series of major acquisitions and somehow reduced the value of all of them – from Compaq, to EDS, and now Autonomy. The integration of those firms has left the company disorganised and unfocused, reliant on its sheer size and market presence to remain on the shortlists of IT leaders, bolstered by the profits from being the world’s biggest ink provider.
Current CEO Meg Whitman has at least chosen the route of brutal honesty in her latest turnaround plan, admitting it will take several years to achieve, and that revenue will decline in key areas of the business. Wall Street responded to such honesty by driving the share price down to its lowest point in 10 years.
In May this year I wrote the following, after HP announced 27,000 job cuts: “HP’s 2011 annual revenue was $127bn – but its current market value is less than $42bn. If all HP’s customers got together, they could buy the company three times over for what they spend with it in a year.”
Five months later, HP’s market value is now just $28bn. Just as well those HP customers ignored me – today they could buy the company four times over and still share a profit of $15bn.
Is a “multiyear turnaround” as described by Whitman even a possibility in the current economic climate, and with huge disruptive change going on through the cloud and consumerisation? Can any company have four years’ grace to be allowed to make what will have to be fundamental changes to its operations, culture and products?
If HP is to invent anything, it needs to invent a new future for itself.