Does HP know where it’s going?

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Customers are starting to desert the computer giant HP after its shock announcement that it was going to quit the PC business, as well as stop production of its TouchPad tablet. According The Wall Street Journal, HP’s dithering is already causing customers to look elsewhere. The paper cites engineering company Fluor, which generally spends $25 million a year on new hardware and software. Ray Barnard, Fluor’s chief information officer said, “It appears that they’re lost right now.”  He was planning to buy high-end design computers and a fleet of tablets from HP, but has put plans on hold.

So, last month’s announcement by HP seems to have been a shot in the foot, with customers perceiving confusion about its plans and abrupt announcements. Apple appeared to be a major reason for HP’s re-appraisal of its position in the market with sales of the iPad already trouncing HP in the tablet wars. HP’s entry level TouchPad was initially pitched at $499 and was an unmitigated disaster. Then the price was slashed by 80% to $99, at which point they flew off the shelves!

In apparent reaction, Dell has launched a charm offensive with a letter from Greg Davis (vice president and general manager of Dell’s global commercial channels) on Thursday to its solution providers emphasising the company’s commitment to being a stable partner. The letter which does not mention HP by name, comes amid ongoing speculation and confusion regarding the world’s biggest PC manufacturer. Davis must have been rubbing his hands with glee when the news emerged, but managed to maintain a calm and level air in his letter which told partners that Dell “now more than ever”  was committed to its partners.

Davis also emphasised that “there is no confusion in our business”, and again that Dell remains committed to the PC business and to its partners in the wake of HP’s decision to consider alternatives for its PC business. “Clearly HP is the biggest competitor we have” he said and that “there’s no confusion at Dell.”

A week or so after unveiling plans to get out of the PC business, HP tried to clear up the confusion by saying it is more likely to spin the PC division into a separate company instead of selling it to another desktop maker. However, HP also said it is still considering selling that business, or even keeping it as part of HP - still following? The company has desperately tried to counter this level of industry worry and concern with this very positive message: “Our preferred course to harness our vision of the future is to build a separate, more agile company. It’s time to think like a startup again. It’s time to be nimble and revolutionary. It’s time again for world-changing innovation.” Have the execs at HP been watching the Apple 1984 commercial for the Mac?

It all leaves me shaking my head over a classic example of bad PR and marketing messaging.


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09th Sep 2011 11:33

I read that HP are also refunding all those people that bought TouchPad and then saw the fire sale wash away the money they spent.

The confusion isn’t perhaps an issue for consumers but I’d be seriously concerned if I was in investor in HP. Its like Ford saying, “you know what, we know all about cars, have been making them since forever and we are right up there as a global leader but hey, we don’t know what we wanna do next.”

Your right about bad PR. It has an element of Gerald Ratner saying his own products were crap and he wouldn’t buy them. He may have been true but still?

Perhaps with the £7bn purchase of Autonomy their plan is to ditch the hardware and lead the way and become a proper cloud network provider?  But you have to say that Google buying Motorola seems the smarter choice (to dominate the hardware and software). Dithering is good for no one though.

Alan Thompson

CCDR is a Liverpool based Debt Recovery specialist dealing with commercial debt recovery for local, national and international small, medium and large businesses.

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