Perspective: Fiorina's fuzzy vision

The chair shuffler is gone.

When history looks back on the tenure of Carly Fiorina as the CEO of Hewlett-Packard, the conclusion will likely be that she was a charismatic personality who tried to compensate for the lack of a consistent vision through a lot of acquisitions and management changes.

Corporate reorganization has been the dominant constant in the past five and a half years at HP. First came the attempted buyout of PriceWaterhouseCoopers for $18 billion in 2000, in an attempt to better compete with IBM. High-end consulting services--that was the thing that would boost HP's profits. IBM later grabbed the company for about a third of the price.

Then came the Compaq Computer acquisition of 2001 to 2002. The deal would allow HP to gain heft and better compete with Dell. It would also let HP compete in the lower end of the services market, which HP execs said was actually more attractive than the high-end market they attempted to enter only a year before.

Even at the start of the long acquisition process, HP couldn't resolve the contradictions. Months before the merger was announced, HP executives said buying a PC maker wasn't a good idea. When the Compaq deal was unveiled, HP said Compaq really wasn't a PC maker, though half of the company's revenue came from PC servers and desktops.

Months before the merger was announced, HP executives said buying a PC maker wasn't a good idea. When the Compaq deal was unveiled, HP said Compaq really wasn't a PC maker.

When HP passed Dell in PCs because of the merger, HP trumpeted that it had brought competitiveness back to the marketplace. When Dell surpassed HP and the gap grew, HP claimed that it wasn't really interested in being No. 1 in PCs, anyway. The margins were too low.

Along the way, a painful pattern began to emerge. HP would have a terrible quarter, missing earnings because of a shortfall in one division or another. Fiorina would then vow that heads would roll. Some executives--voluntarily and involuntarily--such asHoward Elias, Mary McDowell and Jeff Clarke, would then depart while the company reorganized into new divisions.

Two to three quarters of recovering revenues and profits would return. HP executives and some analysts would declare that the turnaround had begun.

Then a dismal quarter would follow. Layoffs and reorganizations would be announced while a new way to gain higher margins (industrial printing, patent licensing, enterprise servers, a good No. 2 to IBM, a good number No. 2 to Dell), would be announced. It was like hearing the reading of the same MBA class project over and over.

There was a cultural dimension to Fiorina's often rocky tenure as well. To paraphrase Rudyard Kipling, she showed how East Coast was East Coast and West Coast was West Coast, and never the twain shall meet.

Fiorina came from Lucent Technologies, the AT&T spinoff. Not only was AT&T a giant, but it was the last bastion

Biography
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas. He has worked as an attorney, travel writer and sidewalk hawker for a time share resort, among other occupations.

More Perspectives

[jay lueckel]

interesting article on fiona

it seems to me that hp has let their printers slip - epson has
captured the high ground on the digital photography scene for
home (amateur or entry professional). i've got my second (both
under $100 - and they outperform the hps i've got. the r200 is
great - prints beautifully, resists water, has separate color print
cartridges - these are all things consumers want. what
happened to hp in this area?

maybe she missed the entertainment aspect of the pc - she
should have read mcluhan -

they put out new models all the time judging from the bestbuy
and circuit city circulars in my sunday paper, but i dont think
they are moving while epson and even canon are.

jay lueckel
[e-mail]

[landlines]

Model Proliferation: A sign of mismanagement

Under Carly's reign, there has been an unprecedented explosion of printer models introduced by HP. It is amazing to discover how few people at HP can actually explain the difference between two or even three, four or five members of the same product family.

This is a sign that Product Management has almost completely broken down at HP. Model proliferation costs the company tens of millions in extra costs and huge resource redundancies in each product line.

The next HP CEO can have a major financial impact by simply fixing this one problem. Doing away with model proliferation may even buy time for HP to come up with a new, coherent corporate theme (or to re-adopt the old Hewlett-Packard one).

[Stating]

re: Model Proliferation: A sign of mismanagement

Boy, you are right about this one. Carly must have though that selling technology was like selling cars.

Something else you will notice is that HP effectively drops support for a given model after about a year. They don't rev the drivers anymore. If there's a bug, that too bad.

There's also way too many models of laptops and IPAQs. And what are they doing with the pricing of the IPAQs? They are much more expensive than Dell Axims but I don't see any reason why.

Keith
www.techcando.com

[raylopez]

Model Proliferation is legally good

I once heard there is an advantage to having lots of models from a lawyer: there's something called the (let me Google this first) Robinson-Patman Act (RPA) that basically says you cannot sell something for different prices (like one price for the consumer and one for Walmart) unless you are selling different models. So some OEM sell slightly different (but essentially the same) models to avoid the RPA. In fact, I read once where a tire company (being sued in FL right now) has a model that is "for Walmart only" and has minor differences in tread, etc from the 'retail' model. Don't know if this applies to HP however, since they seem to sell directly to stores.

Sidebar reference is in error

FYI: The sidebar references HP as the dysfunctional organization
- in reality, it is correctly identified as Lucent Technologies in
the body - that Fiorina came from....