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  1. #121  
    Quote Originally Posted by Wheel_nut View Post
    This thread seems to concentrate on condemning Leo as the Fred-the-shred who ruined HP. Let me present the case with some historical data:

    The company bearing the hp logo today is NOT the compant founded by Bill and Dave after the War. That company and its core business of Instrumentation and the highest quality and precision measuring and Electrical Reference devices was hived off as Agilent in the late Nineties.

    The Computer equipment developed by HP grew from the Instrumentation controllers and scientific application minicomputers necessary to support the innovative range of superb equipment developed by the Hewlett Packard company. These computers ranged from small microcontrollers running interpretive code to minicomputers running HP's instantiation of Unix labeled HP/UX.

    In the mid eighties, after IBM marketed the open architecture PC running MS-DOS, HP brought out its me-too PC clone and continued to compete as a small-time player in this field until the nineties.

    During this time, there was a massive consolidation taking place in the Computer industry and to cut a long story short, HP swallowed Compaq who were still choking on having swallowed Digital (DEC). At this time, IBM had just ditched the Personal Printer and PC market, having floated off Lexmark and sold the PC Divison to Lenovo.

    IBM's strategic reason for doing this was to correct its falling Gross Profit margins which had declined into the Teens from levels near 40% in the 70s. IBM having relied on organic growth ere then, now embarked on an acquisitive spree, growing its software portfolio and Services and Outsourcing offerings. IBM today is a 50%+ Gross Profit company.

    Having changed course several times and having sacked Carly Fiorina and Mark Hurd (albeit for different reasons), both of whom believed they were building a Computer Company with a services arm (having bought EDS), the HP Board was looking enviously across at IBM and hired Leo to accelerate the transition to a HIGH MARGIN Services Company.

    Having spent most of his time at SAP (which incedentally was formed by a group of renegade IBM'ers from the Sindelfingen Lab), Leo went about his job the only way he knew. Firstly, he had to separate the HIGH MARGIN High Pay division from the Low Margin business which was then paying the same Salary and Benefits as the High Margin Business. This was his imperative and MUST be Meg's imperative too if HP is to survive.

    Let's examine the PSG which is a ~10% Margin business, still paying over the odds to retain the talent that it acquired from Compaq and Digital. This has be firewalled from the Services business to allow separate employment terms to be applied from the Services Business which pays Banker-esque Salary and Bonuses. However, what MUST be retained is the HP Umbrella which allows both divisions to benefit from the purchasing and sales synergy.

    So, Where does the newly acquired Loss-making consumer product business fit into this picture? Apple survives in this marketplace by carefully engineering the marketplace, strip-teasing new functionality and style to sell its consumer products at >50% Gross Margin. The proof of this is blatantly obvious. Just compare the price of a Mac-anything with the price of a similarly spec'ed PC. It is twice the price.

    Whether Leo fudged the figures or not is moot. The proof of this is that Meg has NOT reversed his decision but rather has ensured a soft landing by throwing some loose change at it.

    Now you can question my credentials .... but if I presented these, I would have to charge you for it.
    I'm not really sure what you think you have proved here. You painted some historical picture as though it proves something aside from speculation, and then proclaim that the "evidence" you presented clearly shows something.

    It shows nothing.

    Your point was that HP was "envious" of IBM's transition into a "HIGH MARGIN" service business, yet Meg clearly reversed the decision to close down the PSG group. I am not sure what you have proven beyond reasonable doubt, except that IBM is out of personal computers and is now enterprise services company, which everyone knows because it is HISTORY.

    The entire point of this thread was to say that HP cut out simply too early, when it is clear that the mobile space is the fastest (or perhaps the only) growing segment of the personal AND enterprise segments of the market.

    It is an opinion.
    It is a pretty good one...

    And I won't begin to go about any rants about switching from a company that produces something to a "service" corporation, because it did a whole lot a crap to our economy. Sure, it was great when we moved lower paying manufacturing jobs (because it is cheaper to produce where there are less stringent regulations and you don't have to pay people as much) out of the country because everyone got higher paying service jobs...and the whole country became better off, that is, until companies started to figure out that it is not only cheaper to PRODUCE things out of the country but to provide SERVICES as well.
    C-Note and jessicatapley like this.
  2. #122  
    Quote Originally Posted by LizardWiz View Post
    I'm not really sure what you think you have proved here. You painted some historical picture as though it proves something aside from speculation, and then proclaim that the "evidence" you presented clearly shows something.

    It shows nothing............
    Perhaps I could have put it more succinctly in the words of that highly acclaimed Philosopher Yogi Berra ....."If you don't know where you're going, chances are you will end up somewhere else. "
  3. #123  
    Quote Originally Posted by Wheel_nut View Post
    Perhaps I could have put it more succinctly in the words of that highly acclaimed Philosopher Yogi Berra ....."If you don't know where you're going, chances are you will end up somewhere else. "
    OK. I still don't get it. Please state what exactly you are trying to say because I don't get your point.

    If you are suggesting that they are attempting to emulate IBM, which consequently is a Computer Company with a Services arm, that may be the case except that they are keeping the PSG group and not solely sticking with servers.

    The talk of Apple is just confusing, the PSG group which they are retaining can not survive without the Apple model of 50% profit margin? If so, why would they choose to keep it?

    The part about all salaries being equal is just silly, as even in the services division, there is a huge disparity in salaries as well. This is the case in all companies. However, the services division and the PSG are separate divisions anyway, so this just doesn't really make sense.

    And for the record, Leo was the one who killed the stock price...
  4. #124  
    Quote Originally Posted by LizardWiz View Post
    OK. I still don't get it. Please state what exactly you are trying to say because I don't get your point.

    If you are suggesting that they are attempting to emulate IBM, which consequently is a Computer Company with a Services arm, that may be the case except that they are keeping the PSG group and not solely sticking with servers.

    The talk of Apple is just confusing, the PSG group which they are retaining can not survive without the Apple model of 50% profit margin? If so, why would they choose to keep it?

    The part about all salaries being equal is just silly, as even in the services division, there is a huge disparity in salaries as well. This is the case in all companies. However, the services division and the PSG are separate divisions anyway, so this just doesn't really make sense.

    And for the record, Leo was the one who killed the stock price...
    I didn't read the whole post he originally made, but from the quote my guess would be the point he is attempting to make is.

    HP had no direction, so they ended up somewhere other than webOS success. For me personally I do blame this highly on Leo for his personal desire to recreate SAP.

    All the mentions of HP trying to become Intel, Leo wanted to run SAP again. 4 CEO's in a 2 year period resulted in HP lacking a true direction.
    I love physical keyboards... but there is two devices that would make me consider a slab, one is something running a full version of Open webOS. The other is an iPhone!!!! HA HA just kidding (about the iPhone that is)...
  5. #125  
    Quote Originally Posted by LizardWiz View Post
    OK. I still don't get it. Please state what exactly you are trying to say because I don't get your point.
    Let me try this last time without taxing my typing skills ....

    This may seem trite, but no business ever became a leader by emulating another business.

    Under Steve , Apple followed nobody. Sculley tried to use his me-too skills acquired at Pepsico and nearly ruined Apple.

    When Lou Gerstner took the helm at IBM, he could have set up a Services Business in the Ross Perot EDS mould. He didn't! instead of going after the bulk outsourcing end of the Services Pyramid, he went for the Strategic Consultancy led services model which over time drags the lesser value bulk services, hardware and maintenance revenue with it

    Michael Dell realised that consumer shelf space was at a premium ans so he built his business on a direct selling model .......

    My Point 1 is that today's HP company is not Bill and Dave's innovative company. That innovative entrepreneurship went with Agilent which is now wandering in the desert and will be for 40 years (if you get the analogy). This HP company grew out of the me-too PC business and preditory take-overs of companies (Compaq/ Digital) which were already suffering declining Margins.

    Starting with Carly, HP have been trying to find the right leadership to move it up the food chain into the high-margin business areas. Without talking down to anbody, to sell 1 piece of hardware, you have to build one piece of hardware. To sell a piece of software, you simply sell a Licence and let the customer go fetch from your website. Services is in between BUT, it drags a whole lot of High Margin Software (and low margin Hardware) with it. My point 2 is that HP have not had a consistent strategic direction over the past decade. They quite deliberately hired Leo to take the business in the direction he prescribed but then choked with his first attempt at implementation.

    Point 3: In this competitive world, you cannot run a non-homogenous business with single status employment policies. Even within the Services Businesses, the top end of the Pyramid turns left on entering an Aircraft and stay at the Fairmont, whereas the techies, mechanics and coders fly in the back ot take the Bus and doss down in Travelodges. The first thing that Meg did was to approve a Salary hike across the board. .... now read my previous paragraph on the separation of the PSG from the Consultancy and Services and see if it makes sense. I would add that IBM has moved many of their UK staff to Hungary, Slovakia and Romania at locally comparable salaries and Benefits. Yes, Horrible but true!


    ........ I think I have covered the rest of your post except :
    And for the record, Leo was the one who killed the stock price...
    You are wrong! It wasn't Leo that killed the stock price. It was the Stock Price that killed Leo!
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