Now then, I don’t know about you, but I was rather blown away when the former President of HP told investors, including myself, on a conference call that they were going to sell their PC division, or perhaps shut it down. Yes, I know IBM decided to get out of the lap-top business with their “Think Pad” and sold the brand name to the Chinese company Lenovo, and yes, that seemed to work for them.
Still, for HP it’s a really bad idea. When my father was growing up they lived next door to the Packard’s home in Palo Alto, and the founders of HP were very solid individuals with a strong vision of what the company should become. If you doubt this, read “Built to Last” by Collins, a professor at Stanford Business School.
Okay so, anyone who owns an HP computer is very likely to become a brand loyalist over time, and thus, buy most of their products from HP, how do I know this? Well, I am one myself you see. I also own a number of their factoring invoice discounting computer peripherals, such as scanners, fax machines, copy machines, etc. Any time I go to buy a computer product, I always look for HP first. No, I’m not an Apple fan, because I think their products are overpriced, and I don’t identify with their brand name.
There was an interesting article in ComputerWorld on October 27, 2011 titled; “HP to keep PC division, rejects spin-off idea – Whitman rejects path set by former CEO Apotheker,” by Patrick Thibodeau. The article stated;
“Whitman categorically rejected a plan from invoice factoring companies and former CEO Leo Apotheker, to sell or spin-off the PC division. HP said it conducted a “data-driven evaluation” of the impact of cutting off its Personal Systems Group (PSG) and concluding it was just too important to its supply chain, procurement, and overall brand.”
Now then, Meg Whitman is absolutely correct on this, and I just can’t believe that HP would even consider getting rid of their PC line, so I am pleased to see Whitman taking the proper leadership role here to maintain the HP Brand. In preparing this article, I did little research and I have been clipping articles on this topic and reading all there is about it I would also recommend to you that if you are interested that you go back and read the same articles;
1. New York Times “Ouster of Hewlett-Packard CEO Expected – And Companies Value and Stock Price Have Plunged” by Quentin Hardy and Nick Wingfield, September 22, 2011.
2. Wall Street Journal “HP’s Customers Backing Off” by Ben Worthen, September 2, 2011.
3. WSJ “The Board Is HP’s Chief Problem” – September 22, 2011
4. WSJ “Crisis Unfolds at HP over CEO” by Ben Worthen and JoAnn S Lubin, September 22, 2011
5. WSJ “HP Defends Hasty Whitman Hire” by Ben Worthen, Justin Scheck, Joann S Lubin, September 23, 2011.
6. WSJ “Whitman Takes Charge – Newest HP CEO Tries to Reassure Staff; Promises to Evaluate PC Business,” by Ben Worthen, September 24, 2011.
Did you know one of the big questions in psychology is considered to be; “Will You Be There for Me?” In other words this is something that humans ask of other people in their personal relationships, families, and is a key decision factor when humans make a decision to support a brand name, or buy a product. If HP jumps out of the PC business after selling tens of millions of laptops and computers, along with hundreds of millions of computer peripheral devices, then basically what they’ve done is they’ve answered that question in the negative.
If they stop making these products they would have basically told the consumer that; “our company can’t be trusted, and that we are not going to be there for you in the future.” Now I realize that the former CEO of HP had come from SAP which is primarily an enterprise software company. And he reasoned that HP makes more money in the software business segment, than they do on the peripherals and PCs – sure, yes, I see that, and yes that makes sense, they make more money as a percentage of the sale of those items.
But why are we comparing apples and oranges? Before retirement I was in the car wash business, and the percentage of profit we made washing cars as a service business certainly wasn’t the same as we made if we sold products for cleaning cars. But for us to have either of those businesses, we needed both sides of the equation. If we all the suddenly stopped selling either the products or the services, we would be letting down our customers who have grown accustomed to our brand name.
It is absolutely amazing that the former CEO of HP didn’t realize to strength of “the HP legacy” or what their products mean to the most loyal brand followers, not to mention their loyal employee teams in the various divisions of HP. You see, to make that level of a mistake in business is really scary. Now that’s not to say that a company shouldn’t shake things up once in a while change the way they do things, surely they should, but leaving your customers high and dry is quite another thing indeed.