When it came down to it, Carly Fiorina couldn't transform Hewlett-Packard into a computer titan to rival IBM or its other major competitors.
That failure coupled with problems with other key company technology -- namely growing HP's storage and server business -- cost her her job this week as HP's board dismissed Fiorina. At the helm since 1999, Fiorina over the years tried to revamp "the HP way" and reshape the company with the controversial merger with Compaq, all in the face of mounting criticism.
In the end, Fiorina was pushed out as a micromanaging leader who couldn't execute on HP's strategy quickly enough, experts say. While the board stressed that in ousting Fiorina they were not questioning the company's strategy, rather the ability to execute on that strategy, analysts and observers renewed calls for HP to reorganize.
"The question now becomes will HP spin off Print, Imaging, PCs and services or some combination as a separate company," analysts at Ptak, Noel & Associates wrote in a research note last week. "We think some sort of spinoff is almost inevitable. Aggregating several struggling companies has not led to sustainable market-share leadership -- so the big challenge will be to decide what to do with PCs."
Steven Milunovich, a vice president at Merrill Lynch & Co, agreed, writing in his research note that the "long-term probability of a breakup of the company is rising."
Klara Jelinkova, manager of operational integration and support at the University of Wisconsin in Madison, says rumors about the company being split don't concern her. "Splitting HP up at least fiscally may not be such a bad thing if it allows HP to develop technology to meet user needs," she says.
Jelinkova doesn't use HP server equipment, but she says she put a lot of faith in the company's Adaptive Enterprise technology and uses OpenView management software.
Lately, pricing, lack of product development and requirements to buy related software to support current products have caused her to consider changing products, she says. She recently asked HP about a more modern Java interface for HP's OpenView Operations software to monitor Unix machines and was told there were no plans for upgrades.
"The fact that this was a self-limiting strategy did not seem to be a concern of the design team," she says.
At that point, Jelinkova says she became concerned the company wouldn't support its product directions with actual tools to help her staff achieve a more dynamic management infrastructure.
"For us the biggest impact (from a change in CEO) would be if HP would make their Adaptive Enterprise solutions more competitive in terms of price, feature sets and ease of implementation," she says.
Jim Michael, IS manager for the city of Chesterfield, Mo., says he has been satisfied with HP and its products. He says he was surprised by the news, but plans to stick with HP, regardless.
"Our decision to stay with HP over the years had nothing to do with who was at the helm, and it won't unless the (new CEO) takes the company in the completely wrong direction," he says. "I think HP's future is sound, as long as it doesn't start ditching core products like Ethernet switches and ProLiant servers."
The Procter & Gamble Co., which entered into a 10-year, US$3 billion IT services contract with HP in 2003, also says it is business as usual as far as HP is concerned. Lisa Popyk, a spokesperson with the Cincinnati company, says HP contacted P&G executives early on Wednesday to give them the news and respond to any questions.
"We are not at all concerned about this," she says. "We know companies go through changes from time to time in terms of leadership and personnel... Their service to us at all levels has been exemplary, and we have no concerns whatsoever that that is not going to continue."
Others were more critical. A former Compaq customer, who wished to remain anonymous, says that since HP acquired Compaq, he has had issues with product and quality. The technology architect in Texas says he has replaced Compaq servers with Dells, based primarily on price and features.
"I remember paying US$30,000 for a medium-sized departmental server (from Compaq). I can get that from Dell now forUS $4,000. And the Dell servers integrate so well into my environment," he says.