In the early 1980s, when the PC emerged and computer hardware began its long transition toward commodity status, there were three great US computer technology companies: IBM, Digital and Hewlett-Packard. While we all know now that the power of microprocessor-based systems changed computing forever, to appreciate the challenges that HP currently faces, it's worth revisiting how each of those companies responded to the changes that roiled the industry.
Over the past 20 years, IBM has essentially moved up the technology stack, exiting numerous hardware businesses, including printers, commodity semiconductors and, most recently, laptop PCs. It has used its immense mainframe base to develop a powerful services and software position.
In contrast, Digital had neither the services position of IBM nor the ability to compete in the cost-driven PC business, and thus it never really had anywhere safe to go. When it both underestimated and misplayed the growing Unix server business, its fate was sealed. Who would have thought that it would soon be acquired by a PC company (Compaq) and then vanish into HP, a rival it dwarfed in the once-proud minicomputer industry?
In comparison, HP has been a bastion of stability.
Thus, while IBM has succeeded in services, and Digital could have succeeded in the mid-range (as Sun Microsystems eventually did), HP has always been primarily a device company.
While HP can still consider moves such as buying Sun or Novell to expand its enterprise position, it can't just move up the stack the way IBM did, and it can't afford to misplay its core business the way Digital did.
So if I were HP's new CEO, Mark Hurd, I would be asking questions such as these: is Dell, with its clunky, unimaginative boxes and declining service levels, really so good that we can't compete? Why is so much design and product innovation happening down the road at Apple Computer and so little at HP? How come, after all these years, not a single major PC vendor has really tried to advance the Linux PC concept? Why aren't we much stronger in the image editing and management business?
Only by reinvigorating its core product technology focus can the company rediscover its dynamism and avoid the painful breakup it's currently headed toward.
David Moschella is the global research director at the Leading Edge Forum