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Fiorina Says HP May Get Out Of The PC Business 250

Mikelgan writes: "Interex (the global HP user's group) is reporting that HP CEO Carly Fiorina told USA Today that HP may get out of the PC business altogether if the merger with Compaq fails. Here's the story."
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Fiorina Says HP May Get Out Of The PC Business

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  • ...HP is considering dropping computers all together and start a bathing suit factory in portugal.

    HP, quo vadis? :-))) soup
  • by Bloodwine ( 223097 ) on Friday January 18, 2002 @08:34AM (#2861362)
    I thought the general consensus is that if the merger fails that she will booted out.

    While Compaq is trying to improve itself for the merger, it seems that HP's only game plan is the merger. Now that's some real corporate foresight!

    Bah... I want Carly Fiona to experience some pain for what she did to the HP calc division.
    • Compaq's Capellas is no saint either.

      BTW, perhaps this culling of the herd in the mainstream PC market will have a positive effect on PC quality. Dell is adjusting to lower margins, Gateway has been hemorrhaging for some time, IBM's Personal systems group is wandering in the forest, and all the consumer PC groups of the top-tier manufacturers are beholden to Microsoft.

      Hopefully a shake out in the PC sector will not affect the interesting non-PC tech these companies work on. Compaq's professional services still seem intact, though I'm dismayed of their ceding the high end server market to Intel. They're less of an interesting company since they sacked DEC. IBM seems largely unaffected by those pressures. HP's Printing tech seems to me hit and miss with various recent products, though such product floundering is understandable given how cheap the printer market has gotten. The demise of HP's calculator division is unfortunate. They also seem to be withdrawing from scientific computing and visualization markets. I suppose they will need a successful and well accepted rollout of Itanium products with an associated push towards Linux to resurrect themselves there.

      The feuding corporate factions in all these companies in these trying economic times don't help either.


      • Doesn't HP still have a pretty healthy medical products division that they haven't even mentioned?

        I'm not sure if they're still building dedicated hardware for hospitals or not, but I know I've seen quite a few systems in hospitals and doctor's offices with HP on them.
      • BTW, perhaps this culling of the herd in the mainstream PC market will have a positive effect on PC quality.

        That's very optimistic. What we've seen over the last few years is that once rock-solid vendors like HP and Compaq have been reduced to producing low quality mystery crap. The fact is that there's little or no market for a 'quality' PC so cost-cutting reigns supreme and people buy disposible hardware and are consigned to bitching about system crashes and machines that aren't fundementally faster for the user than they were 10 years ago.

        The nightmare situation is that you'll only have two PC choices in a couple years - Dell and a mystery meat white box. There's just no way a company with real engineering overhead can compete.

        BTW, the PC industry brought this upon themselves. They set up a pathetic situation where they were only selling Megahertz and nothing else of value. So it shouldn't be a suprise that Intel and AMD are the only ones (along with Microsoft) who make any real profit off a computer.

        The only real solution is to get back to the point where the market sees PCs as a real capital investment and not just a disposable bit of office suppply. That means 5-8 year purchasing cycles instead of 18-36 months. Maybe if they convince themselves that nobody really needs more than 2Ghz/512MB/a fast disk, this will come to pass, but I doubt it.
    • Also the general consensus is that the merger will fail. They don't have the support of the Packard foundation (10% of votes) or the Hewlett & Packard family members (another 8%). The Packard Humanities Institude (another 1.3%) is "exremely unlikely" to approve it.
    • How about the "agilent" mess - she should be gone for that alone
      • Like or hate Carly, you can't pin Agilent on her - it was done on Lew Platt's watch; see the story: net

        • Moderators: The parent post is an important comment. Here's a link to the article, instead of just a reference:

          Lew Platt began the decline [] of HP. After several years, he was replaced by Fiorina, who has also not been able to get HP under control.

          Hint to the HP board of directors: The new CEO of HP should be someone who has a technical understanding of HP's products. Management experience is not enough.

          "Technical understanding" means someone who knows the technology well enough to predict where it will be in several years.

          Also, someone who would actually be able to run HP would put a new HP product on his or her desk, before it was released, and try to install it. HP has sold printer products with buggy or insufficiently capable install software recently.
    • You could also make an arguement that Carly had a lot to do with Lucents current problems. She likes to finance the sales of goods in-house. when the dot-coms fell apart, Lucent ate those loses.

      She has shown me nothing to indicate she is a good manager, leader, or innovative thinker. Affirmative action at work.
  • That sounds rather disapointing. HP has finally started to make some decent PC's and now they want to leave. :-( I think they should stick to it and keep making the nice systems they have finally figured out. Of course... thats just my $.02
    • I agree ... at least to some extent. we've been able to get some decent PCs at respectable prices from HP lately. perhaps the desktops and laptops they're making might be blended with what Compaq is doing, though.
      • Everyone focuses on the PCs. Where the big gains are expected is in servers and services.
        • Bull, HP and Compaq have identical product lines.
          There is absolutely no way the combined company will have sales equal to both companies operating independently.
          • Compaq's desktops are FAR better than HP's. Even Compaq sff business line the EVO is superior to anything HP has offered in 2 years. Even HP printers have gone down hill. I recommended Lexmarks here at work because of price, support and print quality. HP's mid range line was nice but it has been a while since I worked on one.
            I agree with you on the sales issue though.
  • Compaq is ever strong on the PC Market and HP only can compute on the desktop market for corporations. Not the best market for PCs, on a time of economy crisis.

    A few weeks ago I sent to / a proposal of news post , rejected, guessing that this merge could not succeedd. It seems I was guessing right.

    Next time I buy a lottery ticket.
    • The problem is that both of them are weak compared to Dell's hold on the market. Not only are they already popular both in home and corporate use but they also continually get played as the best PC's of the year by the Magazine industry (Computer Shopper, PC Magazine, etc.).

      They are hoping that by combining forces they can at least cut some common fat (that would be workers to you and me) and try to compete with Dell.

      If this merger fails, HP dumps computers, and Gateway stores continue to flounder then you will see one of two things happen. Dell will take full control of the PC market and be the next target of attack for the DOJ - or - people will start turning to the little local guys for their PC's.
      • But HP has a strong hold on printers and corporate markets. And Compaq with Digital has a big share of big corporate world. Don't believe that they would kill so much fat has you suggest, they are already very 'thin'. And the pain of put together so different cultures and ways of life could kill the merge, like a lot of other past projects.
  • by standards ( 461431 ) on Friday January 18, 2002 @08:42AM (#2861389)
    From my vantage point as an IT application manager, a merger between HP and Compaq sits well.

    I'm not really interested in either company these days. Compaq basically destroyed itself and the companies it purchased. HP is doing the same to itself.

    Their products aren't attractive to me (although both offer a couple cool products), and I have no reason to trust any service offerings offered by HP, Compaq, or a combination of both.

    I particularly have to laugh at their consumer line of PCs, with the clear colored plastic which is supposed to make them "cute" like an iMac. Not even close.

    So as far as I care, it's up to the shareholders. I guess the choice is to have one big sucky company, or two big sucky companies.
    • I couldn't have said it better!

      This move is more important to the people who own stock in the company. It will probably make people money with out even producing a computer!

      In recent months I haven't had any good experience with either brand of computer. I think HP should stick with printing because they do that very well. And Compaq needs to improve quality or else it might be facing financial difficulties.
    • We've had nothing but good experiences with HP servers and storage products, including the new HP-coinvented LTO tape products. HP service on their equipment has traditionally been really good. HP products feel like they were designed by someone and are well integrated. I know that the components are made by others (mainboards, RAID, etc) but they integrate well.
    • As far as I'm concerned, once HP killed their calculator division, they no longer had any worthwhile products.
  • Sounds good to me (Score:5, Insightful)

    by Anonymous Coward on Friday January 18, 2002 @08:49AM (#2861401)
    HP getting out of the business leaves very few PC makers left in the retail market. You'll be left with Compaq, Gateway (at their stores), Apple (in both Retail and their own stores), and Sony (in 'select' stores).

    Dell is still all mail order and with IBM and Toshiba beginning to transition what's left of their PC lineups over to web based orders as well, customers will walk into CompUSA, Sears, or Circuit City and will face themselves with two choices: Compaq or Apple?

    I think this is a good decision by HP. They make a killing off of printers and cartridges, as well as scanners and other peripherals. With margins in the PC market severely low (unless you're Apple), this could be a good move for them.
  • This seems to be yet another spin control move. This is not what she said or has been saying. I know, it's hard to believe that the press can misquote or be swayed by a spin meister but at least in this case it would seem to be true. From the inside this whole thing has been really wierd... and kinda fun.
    • Finances... (Score:3, Insightful)

      by markmoss ( 301064 )
      Would you, or anyone else, know how HP's PC division is doing financially?

      HP used to be a company that made good test equipment, sold it at the highest prices, and supported it very well (also at the highest price). Now that's been spun off to the bizarrely named Agilent, leaving HP with the low-margin PC's and printers. The trouble with making PC's is that the market is very price competitive -- you've got to cut prices to just above cost to sell anything. Maybe you can make it up in volume. Or maybe you let your expenses get a teeny bit too high, and you're losing money every time you make a sale.

      Just wondering how HP weathered that change, from a "don't just do things right, do them better at any cost" culture to low-margin commodity manufacturing?
      • Re:Finances... (Score:5, Insightful)

        by sphealey ( 2855 ) on Friday January 18, 2002 @09:41AM (#2861570)
        HP used to be a company that made good test equipment, sold it at the highest prices, and supported it very well (also at the highest price). Now that's been spun off to the bizarrely named Agilent, leaving HP with the low-margin PC's and printers. The trouble with making PC's is that the market is very price competitive -- you've got to cut prices to just above cost to sell anything. Maybe you can make it up in volume. Or maybe you let your expenses get a teeny bit too high, and you're losing money every time you make a sale.
        Indeed. The problem is that many good, solid companies were enticed/driven/seduced (take your pick) by the 1998-2000 period to believe that 100%/year sales growth was possible, that 150%/year stock price appreciation was sustainable and necessary, and that trees grew to the sky. As a result they made structural changes (e.g. "sell that boring old Test & Measurement Division - they only earn 45%) to maintain this rate of growth.

        Of course, it turned out that trees don't grow to the sky. Bet HP wishes they had some of those boring, "slow" growing divisions back. And Lucent, and many others. Oops.


        • If you're implying that HP would be in better shape now if they had kept the T&M divisions, I disagree. Agilent is in worse share than HP is right now.
          • Re:Finances... (Score:2, Informative)

            by ninjalex ( 60059 )
            I think Agilent is in the crapper because when the spinoff took place, their customer service SUCKED(I'm not aware that it has gotten better, new job, don't deal with them directly anymore). Right after they split they wanted to charge the company I worked for $100 to talk to tech support, this on a signal generator that was still under warranty. HP has been getting by on reputation for 10 years now. People had to wake up sooner or later.

    • I think it's just an isolated, strategic press piece. Note that this was in USA Today a/k/a "The Greatest Hits of the News!!!" and not e.g. WSJ, NYTimes, etc. This way, HP, Compaq and the media get to play both sides of the story.

      It's similar to the time when the media reported that the media was allegedly overreporting the terrorist attacks, or when the media reported that some stations were overplaying the Twin Towers footage. They'll find a story in anything. Genius was never so pathetic.

  • ...With or without Compaq. That business is so large and it moves so fast that there's no way a combined HP/COMPAQ merger could keep up with it and still make a reasonable profit.

    The real money is in support contracts for server software, and PC clients. IBM has already figured this out. It will be interesting to see if these folks can make a niche for themselves as IBM has.
  • Where will both of the customers go?
  • by InsaneCreator ( 209742 ) on Friday January 18, 2002 @09:01AM (#2861439)
    Would that also mean no more HP notebooks? That would be a real shame! I own a HP Omnibook 6000 and it's one hell of a notebook. You want one. Trust me. :)
    • Pleah. I have a Omnibook 4150 at work. Many's the time I've been tempted to use my ancient Dell instead. (And many's the time I've just walked out of office and used a lab machine instead of waiting around for it to do something. In fairness, some of this can be plained on various Windows, but the hardware itself has enough stupidness to tick me off)
  • Too bad about this, HP was making some pretty good PCs, well supported too- and affordable. They were good PCs for ma or whoever to own, heck I've even had one - just a little hard to upgrade very much.

    Hope they still make notebooks though! I'm typing this on a Pavilion N5270 which I've always been very happy with!

    Compaq's not so bad but it sucks not having HP around anymore!
  • printers and scanners ?

    once one of the best R&D companies of the planet reduced to a mere peripheral manufacturer is not a god thing.

    this Fiorina chick is realy screwing the company. I was trying to sell my HP48G, but now I'll keep it for the sake of the good old times.
  • Printers? Scanners?

    Good luck Fiorina... I learned long ago that HP wasn't the only game in town providing these products. To my suprise, other products are better.

    I guess there are still millions of PC owners who only know Staples, Best Buy and Circuit City [etc] for their computing needs.

    Well, they always have their faulty CDRW products.
    • Yeah, I agree, except they're still unequaled for a plain old high-volume black and white laser printer. (Forget HP for color lasers though! Ick!)

      The rest of their printing and imaging division could vaporize tomorrow, and the world would be better off for it. They haven't made a solid, quality scanner since the days of the ScanJet 3 and 4 series, and all the HP inkjet printers use print head technology that's 3 generations old.
  • by Average ( 648 ) on Friday January 18, 2002 @09:13AM (#2861471)
    Did anyone else see the Red Herring 'Open Letter' (not yet online, got the dead tree yesterday), saying "Quit Carly Quit" in no uncertain terms?

    HP. HP had a powerful business. 'Scopes, testing equipment, laser printers, calculators. People paid for that brand name. Like IBM, no one ever got fired for buying a LaserJet.

    Guess what, those days are *GONE* and gone for good. I blame Fiorina, and a lot of other folks do to.
    • no one ever got fired for buying a LaserJet

      You are right, this is just no longer true. I am damn close to putting an absolute ban on certain HP printers in my environment. Our whole office runs on Terminal Server and Citrix Metaframe and the newer drivers for a whole bunch of HP printers (5L, 6L, 1100, 6P, 4100 etc) will bring down a Terminal Server in seconds. I understand that this kind of environment is not yet the norm (I belive it will be eventually) but HP refused to even acknowledge the issue. It was such a let down for me, I have always been a very loyal HP customer but this mess has really turned me off them, probably for good.

      Citrix has included a universal print driver in their latest upgrade, I'm trying it this week. Pretty sad that they have to step up and make this avilable.

  • by Rasvar ( 35511 ) on Friday January 18, 2002 @09:15AM (#2861476)
    they might as well kiss some of their largest customers goodbye. I know that my company is planning on purchasing about 100K new pc workstations over the next two years. They are also killing off MPE, which accounts for about 600 $250K and up systems that are going to be coming end of life in two years. I would suspect that without PC workstations, it would be better for us to package deal with IBM for workstations and AIX servers instead of only having HP her with HP-UX. I think HP would be wise to give Fiorina the boot. She has wrecked that company.
  • Can someone please explain to me what she gained by allowing that to print? I already know what she lost -- she lost all the companies considering moving to her PC product. HP life cycle for machine types is great, and they do a fine job of keeping an image alive across machine types. I just don't see why she would allow that to print if they are not 100% sure that HP PC's are done for.
  • Playing games? (Score:4, Insightful)

    by aralin ( 107264 ) on Friday January 18, 2002 @09:19AM (#2861488)
    The merger is her 'child' she will not let anything happen to it. She would go under with its failure anyway. So I think that these comments are made deliberately so it will seem as 'lesser evil' to do the merger and silence some opposing voices.
    • If she's playing games she better start to learn how to play because this is all the more incentive for Compaq to get out of this mess altogether and let the groom standing before the altar. Can you imagine what visions of market share the managers at Compaq must have right now? HP gone... All your bussiness are belong to us...

      Fiorina better think up something else fast because she's not helping the merger. Not helping at all.

      (asside: I think the two should never get married for a whole lot of reasons already given by enough other people.)
  • The Hewlett family(i do believe) was fighting against the merger. She is saying this to make the Hewlett family back down, and let the merger pass, or loose the PC market... it's her hail mary pass.
    • Well yes, both the Hewletts and the Packards have said that they will vote (15-18% of the stock) against the merger, leading to a really ah...interesting proxy fight. Better that the soaps. All news should be looked at as an attempt at spin by one side or another.
  • First, I agree 100% with Walter Hewlett that the merger with Compaq is a terrible idea. Compaq has too many problems on its own, and HP doesn't need the challenge of turning two companies (HP and CPQ) around at the same time.

    Moreover, consolidation in the desktop PC market is needed. With DELL whipping everyone's ass, one of either GTW, CPQ, or HP needs to say goodbye. Neither CPQ nor HP can really compete with the likes of DELL, and they both are bleeding cash on their PC sales. Plus, if one firm exits, that breathes new life into the sails of the others.

    HP should stick to what it does best: printers, servers, and services. Those businesses have recurring cash streams. PC's are the real problem. It's too bad they spun off the Agilent (?) division a few years ago to focus more on PC's. A is a good, strong company.

    Yes, Fiorina is out if the CPQ merger falls through. She's been totally distracted by the merger, and I doubt if she really has a handle on the existing businesses.

  • by alsta ( 9424 ) on Friday January 18, 2002 @09:30AM (#2861527)
    ...HP go out of business now.

    I mean what does HP do if it doesn't do PCs, because we all know that Fiorina wants to get rid of HP-UX and all of that GOOD stuff.

    Yes, that leaves flimsy INKJET PRINTERS! Cool. And digital cameras. Wait, they suck at those, so just printers.

    Carly has successfully driven this company into ruin. As she did with her previous ventures. Why doesn't she just file chapter 11 right now to be done with it.

    Face it, Carly has driven this company into ruin.

    "HP Invent"
    • HP also makes electronic measurement equipment like Oscilloscopes and the like. We had a logic analyzer from them at my school and that thing was great! It even had a printer! Sure as heck saved BUNCHES of time when measuring hundreds of waveforms at different voltages and the like. No clue if they have anything like that now, or if they do, but I haven't heard of any division except calculators and mebbe HP-UX being toyed with (so far as Carly killing them...).
      • Once again, she got rid of those too. All parts of Agilent.

        She should just skip the killing off piece by piece and shut the whole business down.

        The HP Board has got to get rid of her now.
        • As someone who works at HP, this Agilent spinoff was brefore Carly, on Lew Platt's time. As much as you don't like Carly, you can't blaim THAT one on her... Although I can think of about 20 other things you CAN blaim on her... She drives me nuts as well watching this company go into the ground and turn out shoddy products. Anyone who remembers the HP calcs, the laserjets, the old testing equiptment, and the lovely HP9000, HP-UX, etc. remembers what HP used to be. Something with quality. Now, times have changed. The majority of the products are cheap and shoddy, the support has gone down hill, etc.

          If Carly does get forecefully resigned (canned), I pray that the next CEO will drive this company ti what it used to be, and really make a push towards designing quality products that sell for more money, and stop competing with the bargain products.

          • The problem with getting back into the Big Iron playfield is that it takes cash. This is something Carly has made sure is scarce at HP. So HP HAS to compete with bargain products to gain cash to play ball again. But the competition is too hard, so HP will fail with its current business model. Sorry to say, but I doubt HP will ever be what it was.

            I remember my father's HP LaserJet II. Sturdy as a battle tank. It worked for 10 years and still works. Just is a bit slow compared to other concurrent printers. So he bought a new one. An HP 2000. That was the worst printer I have ever seen. It was fragile plastic and all of that stuff. It worked for a year, then needed a new fuser. I mean, come on... The LJII needed a new toner cartridge now and then, but that was that. This thing was replaced with a new unit that acted just as poorly. Meaning that either my father went through a total of three 2000 printers (he had two replaced) and all of them were defective, or they were just plain poor quality. He then bought a Lexmark Optra T612 and it works as a charm! No problems whatsoever.
  • Name? (Score:1, Offtopic)

    by johnburton ( 21870 )
    Any other everquest players thing of someone else whenever they read the name "Fiorina"?

    Just me then...
  • PCs are simply too easy to build. Anyone can do it. The real issue becomes PRICE, and the big companies are caught between having the power to leverage incredible prices out of vendors, and being to big to move the product out the door before the price loses its luster.

    It is a matter of time before there are no pre-built PCs at the mid-level on up- that they are all built-to-order and sold at the price of the components at that exact moment. I'm not going to make any quotes, but there is (obviously) an incredible level of depreciation per week for a PC sitting on a store shelf. Is anyone making money these days selling pre-built PCs? I know HP also sells built-to-order boxes...but who would pay their relatively high price?

    As a bit of an aside: and this says as much about Sam's Club (I hate that store, they could do Springer auditions there... but I had to go there for work purchases occasionally) but I'd see these HPs that were at least a year old on the shelves... with their year old price tag (still at a premium). What an undignified way to sell PCs!

    Both companies seem to have made serious blunders at its lower level consumer lines that would certainly make me think twice about their server/networking products.

    Imagine a world with nothing but white box builders.... OK, that will never happen.... imagine a world where everyone just builds their own PC.... no, that will never happen either- not that it couldn't.
    • by King_TJ ( 85913 ) on Friday January 18, 2002 @10:49AM (#2861950) Journal
      Actually, I think you bring up an interesting point. The industry got driven away from "generic clone" PCs due to the big vendors getting unbeatable pricing on quantity assembly.

      Now, they're suffering from the very strategy that originally let them take over the market.

      I wouldn't mind at all if all these big players decided mass-marketed PCs were worthless and got back out of the business. Then, the little guys could get back in and build hand-assembled PCs again. The mass-marketed "name brand" PC has really turned it into a commodity purchase, just like an appliance or box of office supplies. I don't think that turned out to be such a good thing for anyone who really likes computers.

      It served the (quite useful) purpose of putting PCs in the hands of "average Joes" and offices everywhere. Now, this has been accomplished to the point of market saturation, and it's time to go back to hand-assembled custom PCs, made to order, for the people who care enough to have better quality computers.
      • What even IS a "name brand" PC ?

        What does HP or Dell ADD to create the "value" behind the name?

        I only buy white box PCs where I hand pick the specific MoBo (with the chipset I need), graphics card, every last part... including the brand of floppy drive (like it makes a difference). The point is I am making the choice, and I know I won't be stuck with a VIA chipset that doesn't play well with my audiocard in my DAW. I can purchase it prebuilt for cheaper than I can buy all the parts individually (for some odd reason). It ends up being a better PC than a "branded" one- I know I haven't cut corners on the motherboard (God only knows what you get in a branded PC), I'm not PAYING for preinstalled software that I'll never use (and it truly is NOT free), and I actually receive an OEM CD of the OS- something you cannot find with a branded PC... and with Windows, you really don't want a "recovery CD" that will wipe the HD.

        What does that leave us? TECH SUPPORT! So branded PCs supply their own support. In a business environment, I doubt most companies go to outside support like Dell or HP. Tech support for home PCs usually consists of, "insert recovery CD and start fresh" (from what people tell me... adding "there has to be a better way...I mean, my modem just won't dial...." )

        And speaking of tech support, the BIG push into the sub-$1000 market where margins are lowest invited the least computer savvy into the forray, and that customer base must certainly be the most expensive segment to support. I envision that the point where they need tech support the most, where the learning curve is the steepest and 99% of their problems are "user error" they are faced with a rude awakening that poisons them from ever being a repeat customer with that company. Troll any windows support newsgroup and you quickly see how restless the natives are.

        If anyone knows anything about PCs, they never need tech support... yet many branded makers can charge an extra $100 or so for "deluxe support," making me wonder how much money is already imbedded in the price of a new PC for support... whether it is used or not.

        Add the fact that many bozo retailers such as Best Buy will simply replace an entire PC for the tiniest problem (often operator error from anecdotes co-workers have told me). The sheer number of "refurbished" PCs at Dell tells exactly how quick Dell is to keep customers happy... and their own policies are a bit warped. A co-worker was "told by tech support" she needed a new hard drive on her new Dell PC, that she should "send it back"- the entire PC. A fifth grader can replace a HD... she ended up with a new, different PC at Dell's expense. It is like getting a new car because you have gum stuck to the floormat! They must simply bleed money trying to provide support to everyday customers.

        Finally, I think waaay back, "IBM clones" had a bad reputation for assorted compatibility issues... and ordinary people equated a white box PC with meaning "generic" or a cheap "knock-off." There is nothing generic about a white box. I am actually guaranteed MORE compatibility than buying a branded PC- every single part in the white box is "brand name" if I build it that way.

        I agree that the tide will turn as the market is saturated with PCs, and people realize they don't need a new monitor, etc... every time they upgrade (the branded companies really push package deals to consumers), people realize tech support is a joke (and rely on friends and the informal network of tech support that naturally develops... "I'll just call my nephew"), and people realize they receive more for their money elsewhere.
    • by JatTDB ( 29747 ) on Friday January 18, 2002 @11:19AM (#2862164)
      One of the things that Dell's success has been largely atrributed to is that they realize this point, and keep very little inventory on-hand. They avoid getting bitten too bad when the price of a given component drops overnight.
  • by WIAKywbfatw ( 307557 ) on Friday January 18, 2002 @09:41AM (#2861573) Journal
    If Hewlett Packard were to pull out of the PC (note, big if) it would be the end of some of the best desktop and server products in the industry.

    From their consumer, soho, business and workstation PCs (such as the Brio, Vectra and Kayak ranges) all the way up to their server offerings, HP have consistently produced top-notch products.

    Well designed, reliable machines with excellent utilities (is there a management suite out there that's better than TopTools?) backed up by a professional and knowledgeable support structure have made HP PCs a dream to work with - as both a end user and a system administrator.

    Sure, the printing business may be the company's major cash cow but it's its systems that really impress me.

    I've been fortunate to have reviewed PCs from dozens of manufacturers, and I can honestly say that if I bought a PC (I tend to build my own) there would only be two companies I'd buy from. HP is one of them.

    But let's be realistic here. HP has a massive installed user base, including many blue chip corporates. It's not going to abandon making PCs and those customers (many of whom will have support contracts that guarantee the availability of their preferred desktop and servers for years to come) any more than it's going to abandon its print business.

    From the sounds of it, this is classic boardroom spin ("if X doesn't happen then we'll be forced to do Y") aimed squarely at getting Fiorina the votes she desperately needs to push through the HP/Compaq merger on which she seems to have mortgaged her career.

    Quite frankly, if this comment was a serious statement of HP's intent then it would have been made to a more respected media outlet, such as the Wall Street Journal or a Ziff Davis title, or via a major press conference, rather than the less-than-heavyweight USA Today.
    • Quite frankly, if this comment was a serious statement of HP's intent then it would have been made to a more respected media outlet, such as the Wall Street Journal or a Ziff Davis title, or via a major press conference, rather than the less-than-heavyweight USA Today.

      While I agree completely, I must express dismay at your decision to use the terms "respected media outlet" and "Ziff Davis" so closely together. Thank god you didn't mention The Register as well.......

  • once Compaq gave up the alpha to HP and HP in turn sold the IP/whatever else to *ntel.

    Ironically enough I saw a blurb on the register (IIRC) and a few other sites that said if the "Q" merges with HP (rumor at the time) they would kill off the Alpha to the god of x86 (ok, I'm paraphrasing).

    Guess what? Came true 2 or 3 months later.

    Ok, I'm wierd for "missing" a processor architecture, but at least it gave us the EV6 bus for the Athlon before "Being Offered up".

  • by Spencerian ( 465343 ) on Friday January 18, 2002 @09:44AM (#2861586) Homepage Journal
    As of this post, CNET News is running a 13 part article on "visionary" people in the IT industry. Fiorina is listed on this, as is Steve Ballmer of Microsoft and a handful of other forgetables.

    Yet Steve Jobs, who critics and pundits agree has great vision and has molded and changed the PC community dramatically despite the fact his computer does not make actual PCs, isn't listed?

    And Carly has been with HP for about 2 years and hasn't really made any significant impact there beyond driving their stock price down.

    HP makes decent printer hardware (except that POS OfficeJet series, which I own) and its PC hardware (which I worked on for 2 years) is adequate, albeit unremarkable. Perhaps Fiorina's departure could kill two birds with one stone--HP's PC business (so they can concentrate on what they do best--printers) and Compaq (whose PCs are among the rattiest things to maintain in the market).

    • no impact ?!? (Score:2, Interesting)

      by Juju ( 1688 )
      Believe me, the bitch had an impact. Not a good one though!

      Ask people who work there and you will see what I mean. Many people left because of the changes she brought... HP used to be a good company to work for, things change!

      HP not doing well in the PC business is no news. It was already the center discussion of company meetings 4 years ago. HP at that time was saying that it could not keep in business if it was not in the top 3 (go figure why!) and it was already fourth at that time, and still slipping down.
      It was making fun of Dell for being nothing more than a Pizza delivery company, and were discussing ways of getting back up where they belonged.

      The only department making big profits was the printer division and the PC repair one (not a good sign huh!)

      Anyway, I for one am not going to thread any tears for HP. The HP way, has become the HP no way!
      • HP, unfortunately, is just another company that used to make great products and squandered its good name producing consumer level trash. Such is life.
        • Amen!

          But note that it was also a good company to work for, not just a good company to buy from. But then, there were a lot more of those two years ago!
  • HP started doing something completely different and lastest this long because the founders built a great company through years of hard work. Now CF has managed to take a great company and severely weaken it. That is a real shame and tragedy.

    Then again, it could be part of the normal cycle and HP may survive this one and boot her out. I hope HP does not get rid of their PC division or their printer division. I love HP printers and have never had problems with them. I've had plenty of other printers that plain old suck and didn't work right. After getting a HP printer, I never looked back.

    Who really knows what CF is talking about. It could be real or just political maneuvering. In either case, sounds like Ego is in play. I hope she retires, or works in some other field.

    • Nope, when she has destroyed HP enough look for her to show up in some cushy VP job at Microsoft.

      This seems to be a viable option for many "leaders" in the IT industry. One wonders sometimes if the fix is in way before people like Fiorina start destroying the companies they supposedly run.
  • She implied that HP needs Compaq in order to save its printing and imaging business, according to the Jan. 14 article.

    This is understandable. Xerox just dumped it's SOHO (small office/home office) printing unit last year. The reason: you can't make money on the printers, just the supplies.

    If the market is saturated now for inkjets, then they are losing money if they are still manufacturing the printers. HP's have a really high quality, unless you are playing basketball with it. So people don't replace printers unless they want higher resolution (digital cameras). Now that resolutions are picture quality, the only optimization is speed. Who cares if the new model prints at 8PPM instead of 6PPM, it's not like you sit there staring at the printer while it works. You surf the web, play solitaire, or do your bills.

  • Hp already spun off their test instrument divison into another company, if they get rid of printers and computers what's left? Why don' they just go chapter 11 and call it a day?

    This scenario has played out too many times before. Heathkit stated making computers and was bought by Zenith, Heath/Zenith computer division was sold to Bull, good by Heathkit.

    Before that MITS stated making computers, Pertech bought the Altair part of the company, good-by MITS.
  • by Anonymous Coward
    Where I work we lease all of our desktop computers - about 300 of 'em on 36 month terms. For a number of lease cycles we dealt with HP. The artwork on the motherboards was pristine, the cases were a snap to take apart and reassemble, and the machines worked well.

    The best part was the HP service. Whenever we had a problem the HP field engineers knew how to fix it right, the first time. We were pretty happy campers.

    Then HP had the bright idea to outsource all their service to Vanstar. The gorillas that they sent to fix our machines were barely A+ trained. I watched one day as one guy - who had brought the incorrect power supply with him - literally tried to hammer the new one in place, bending the crap out of the motherboard in the process.

    After enduring this abuse for six months or so, with HP turning a deaf ear to our complaints, we voted with our feet. The next leases went to Dell. They don't have a nationwide field service organization either, but they're much more responsive than HP is these days.

    'stoo bad, really. I did like those HP cans, and I did like the HP service folks. But HP doesn't stand behind the product anymore. When HP outsources the printer maintenance business it'll be interesting. Maybe we'll look back to IBM again.

  • by SubtleNuance ( 184325 ) on Friday January 18, 2002 @10:12AM (#2861707) Journal
    For the Record
    Posted January 16, 2002
    The following memo was written to Embedded and Personal Systems (EPS)
    employees from EPS President Iain Morris to set the record straight
    regarding recent press reports on the future of Hewlett-Packard's PC

    Dear All,
    I would like to wish each of you a happy and productive 2002.
    I'm writing to you to set the record straight regarding recent press reports
    on the future of our PC business. You may have seen an article this Monday
    in USA Today which claims that Carly "warned that, should it [the merger]
    fail, HP's vaunted printer and imaging businesses would be damaged and HP
    might have to shut down its personal computer division."
    This is not the first time the press has zeroed in on the notion that we
    should exit the PC business. Rather than suggesting we exit PCs, Carly was
    explaining the importance of the merger -- in the context of a range of
    strategic alternatives -- as a way to fix our PC business. She was also
    responding to Walter Hewlett's assertion that PCs are a challenging business
    (yet he fails to offer any thoughts on how to improve it).
    According to the full transcript of the interview, what Carly said was: "It
    [the merger] allows us to fix our PC business. We can't get out of our PC
    business. If I didn't care about laying off people, I could just shut it
    down. But if I shut it down, I'd have to lay off a lot more than 15,000
    people across two companies over several years. So, we have to fix our PC
    business. And fixing our PC business requires volume and distribution
    To further clarify her remarks, the 15,000 figure has been included in our
    filings with the U.S. Securities and Exchange Commission. It refers to the
    estimated number of employee reductions of the combined HP and Compaq
    workforce, which will total about 15,000 people. It does not specifically
    refer to the PC business. The reductions are expected to occur during the
    first two years after the merger closes and will be achieved through a
    combination of targeted job reductions and attrition.
    It is important for you to know that HP remains committed to the PC
    business. By merging with Compaq, we believe the cost-savings from the
    anticipated synergies and economies of scale will lower the cost structure
    of our combined PC business and have a positive impact on margins. We will
    also be able to leverage the significant progress Compaq has made developing
    its direct distribution capabilities to create a more flexible distribution
    model for the combined company and help us address this important industry
    By combining HP's strength in the consumer PC business and Compaq's strength
    in the commercial PC business, we will create a more balanced industry
    leader. We also intend to create sustainable value in our PC and other
    personal systems businesses by innovating across emerging categories and
    delivering a new generation of connected access and embedded devices.
    The merger also will provide important benefits to HP's imaging and printing
    franchise (also mentioned in the USA Today article). By improving operating
    margins in our other business segments, we expect to increase our investment
    in core IPS research and development and new IPS initiatives such as digital
    imaging and digital publishing - investments that are crucial to maintaining
    our leadership in the IPS business. According to Carly: "Imaging and
    Printing is not a cash cow. It is a growth engine that has to be invested in
    if we're to capture the real growth opportunities in Imaging and Printing
    going forward."
    Our vision is to become a premier provider of the end-to-end solutions our
    customers now demand. That requires us to be a leader in imaging and
    printing and computing and services. It requires us to be a leader in both
    the enterprise and the consumer space. PCs remain an important part of the
    end-to-end solutions we provide.
    In closing, let me thank all of you again for staying focused on the
    business at hand, and for continuing to help HP emerge an even stronger
    competitor when the economy rebounds. Here's to delighting our customers,
    delivering results and beating the competition.
    Thank you,
  • Isn't it funny that it took this whole Compaq plot to make people recognize that Carly is a nitwit? It was seen as a coup when HP lured her away from Lucent because at the time the Rich McGinn management team she was a part of was seen as a big success.

    Since then it was discovered that a lot of Lucent's "success" was based on juggled books and bad debt. But by the time all that was discovered, Lucent was spiraling down in flames. They kicked McGinn out with that most golden of golden parachutes, but Carly was long gone to HP by that time.

    You can bet that Carly has learned her old Lucent management lessons well, and in between Power Point presentations about how gutting the company of technical expertise is going to save billions and inspirational talks about how the merger is good and the old HP is bad, she's carefully packing that parachute.

  • No money. (Score:4, Insightful)

    by IGnatius T Foobar ( 4328 ) on Friday January 18, 2002 @10:32AM (#2861843) Homepage Journal
    The problem with the PC business is that nobody makes any real money from PC's except for Intel and Microsoft. It's a perfect picture of the problem with commodity vs. non-commodity equipment. People consider PC's to be commodity hardware, but that's not the case. A PC is built mostly with commodity hardware -- everything except the CPU and the operating system. Uncoincidentally, the makers of those two components are the only ones able to set their price points high enough to make any real money. (One has some decent competition, and therefore can't set their prices too high... the other has a monopoly and can set their prices outrageously high.)

    This is why the fall of the MS monopoly is inevitable. Once the market realizes that the OS can be commoditized as well, Microsoft will be lucky to keep any of the low end at all. Why sell a $500 computer containing a $100 operating system, when you can sell a $400 computer with a free one?
    • Good point about the component profits.

      Why sell a $500 computer containing a $100 operating system, when you can sell a $400 computer with a free one?

      Because in the real world, nothing comes for free.

      You make a fundemental mistake. The support costs of a system far outweigh the operating system costs. If you reduce the MS OEM rate from $50 to $0 for Linux, but you double your support costs, you are now losing money!

      The PC business is brutal to the margins, and if these guys could save money with Linux, they'd be all over it. The fact is they can't.

      In fact one could argue that as long as Linux is a Unix-like expert user system, it will never be competitive with Windows in terms of support costs, except in large scale installations. That leaves MS in the catbird seat.
  • HP was the last half-way decent retail computer a consumer could buy. No, I'm not talking about Dell, because a lot of less technically experienced people don't feel comfortable ordering their computer over the phone/internet.

    I sell computers at Circuit City. It's a pretty good way to pay my way through school. If you walk into any retail store (Circuit City, Best Buy, CompUSA, etc.), you'll see four major desktop brands: HP, Sony, Compaq, and E-Machines. Most stores will usually have one or two more laptop brands (usually Toshiba and possibly Fujitsu). For desktops, HP is the only one of those brands listed that's even halfway decent. Compaq's Presarios are heavily integrated, cut-$2-off-this-win-modem-price pieces of crap. A lot of semi-savvy customers refuse to buy Compaq because of their previous experiences with them (it didn't help that their Presario line used to use proprietary RAM upgrades, either). E-Machines are shoddily assembled completely integrated computers with one thought in mind: Price. Which works well for folks who need a $400 or $500 computer package, but it won't do much for them. Sony's build quality is at least decent, but their occasional use of proprietary equipment, and their (usually) higher price relative to similarly equipped Desktops usually precludes them from the running. And don't get me started on the fact that they phased out last year's models (SDRAM-based P4 units) in mid-November and haven't supplied their retail partners with 845 chipset-based units yet.

    That leaves good ol' reliable HP. Their PCs always use industry standard equipment, and the build quality on their desktops is very nice. Yeah, they charge a little bit too much for their monitors, but their inkjets are the best in the business (yeah, we techs sneer at inkjets, but you'd be surprised how much most folks like them).

    Well, here's to hoping that this doesn't happen. Pavillion PCs will be sorely missed at my store.
    • First of all, HP is far from being free of the proprietary noose. I've dealt with a number of people who bought HP Pavillions, only to have all sorts of compatibility problems when they tried to add an upgraded video board and disable on-board video. In fact, some models barely allow *any* expansion cards at all. You have to take what you get with the computer, and that's about it.

      IMO, any PC that can't be easily expanded with upgrade cards is defective and worthless. The PC as "endlessly upgradable and reconfigurable white box" is one of the main reasons we still deal with so many PC architecture headaches today (IRQ conflicts, I/O addresses, DMA channels). If you're going to skip the compatibility with 3rd. party hardware, why even use the Intel platform anymore? Otherwise, you have all the bad without any of the good.
  • I've got to admit. I don't really like HP PCs but I do like their printers; especially their laserjet and color laserjet lines.

    Now Fiorina says she NEEDS Compaq to save its printer business??? HUH? Who else really competes with HP for mid-volume laser printing? I can see wanting to lose that low-margin HP inkjet business (gee, an apollo printer for $49.00 is hurting our margins? I can't imagine why?)

    The bottom line is that HP needs to get rid of Fiorina and put an Engineer-CEO in her place. Intel ran into similar problems about 2 years ago when marketing and business people started directing the company instead of engineers. Non-engineers will always have a hard time running a technology company because they don't have the technical ability to concentrate on innovative, high-quality products.

    HP board of directors take my advice. Dump Fiorina and sell that stupid aircraft she bought with your money, and put an Engineer in charge of that company.

  • this story [] yesterday on CBS Market Watch states that HP is looking to close a plant in France, outsource their PC manufacturing and all of this is independent of the CPQ merger.

    the story above may be a move to put pressure on approving the merger.

  • Ironic... (Score:4, Funny)

    by toupsie ( 88295 ) on Friday January 18, 2002 @10:44AM (#2861918) Homepage
    Steve Jobs introduces the new iMac and a short time later, the head of HP, Carly Fiorina declares that they might get out of the PC industry. Coincidence? I think not!
  • by saintlupus ( 227599 ) on Friday January 18, 2002 @11:28AM (#2862237) Homepage
    Darn, and I so enjoyed slashing the living shit out of my hands on the insides of those old Vectras. Too bad we can't preserve that experience for the next generation, eh? Physical pain coupled with a poorly performing computer; now there's a corporate legacy.

  • My search didn't show any previous links to it, so here is the Fiorinian Rhapsody ( [].

    Like the Queen? Will like this one. 8-)

  • by nowt ( 230214 )
    To see what HP is today versus the mid-80's.

    Corvallis, now this.. hopefully their new push toward linux on their products will survive all this mess.

  • Advice to Carly... (Score:5, Insightful)

    by n6mod ( 17734 ) on Friday January 18, 2002 @12:24PM (#2862644) Homepage
    I've been thinking of putting this in a letter to Carly for some time now. Of course, more people will read it here (a few) than if I send it to her (zero), so here goes:

    Ms. Fiorina,

    As a Silicon Valley native, I have been very concerned with what has happened to a local institution under your control. Over the past few years, we have seen Hewlett-Packard shrivel from a industry giant in several sectors to a PC and server vendor that is struggling to be considered tier-one.

    As such, I offer the following advice:

    1. Give calculators to Agilent.
    You and Mr. Morris made a lot of enemies by announcing the dissolution of ACO. However, handing the reins to Agilent seems like a simple solution. It seems that the vast majority of HP calculator customers are likely to be Agilent customers anyway. Even though you and Mr. Morris have destroyed ACO, HP calculators have survived gaps in R&D efforts before. Perhaps Mr. Barnholt's team will be able to rehire some of the talent in Australia, and failing that I'm sure that he can recruit some excellent embedded system developers, both from inside and outside of HP and Agilent.

    2. Give the Hewlett-Packard name to Agilent.
    I'm sure that Mr. Barnholt would be delighted to bring the prestige of the Hewlett-Packard name back to the Test and Measurement business. Furthermore, this move would neatly solve many of your current problems. The copies of The HP Way sent to you by your employees and observers must surely be piling up by now, getting rid of the HP name will likely get the Hewlett and Packard heirs off your back, since their forefathers' legacy would be Mr. Barnholt's to protect.

    These two moves would leave you free to pursue your aspirations to build a printer and server powerhouse, and might even keep you in the PC business, despite your recent comments.

    You would, however, need a name for this new company. Might I suggest Compaq?
  • Printers! Not PCs! (Score:4, Insightful)

    by Amazing Quantum Man ( 458715 ) on Friday January 18, 2002 @12:45PM (#2862813) Homepage
    Speaking for myself only...

    Who cares about HP's PC business? What Carly & Co. should be shot for is letting the crown jewels go to hell in a handbasket. I'm talking about the PRINTER business.

    HP printers used to have the reputation of being built like tanks, and quite rightly (I personally saw a LJII that fell off a 4 foot table in the Northridge quake. After it was picked up and the toner reseated, it worked just fine.).

    Nowadays, they're cheap flimsy plastic crap.
  • HPs computer just stink. Have you opened any of those? It's scary! However HP makes the BEST printer, great scanners, ok cd burners, and more. They should stick to what they're good at.
  • And if Fiona doesn't get to play her way, she's going to take her ball and go home.

    HP needs Compaq to stay in the printer business? Compaq isn't in the printer business. They resell somebody's fax/printer/scanner combo, and they offer one Compaq-branded inkjet printer, which they probably don't make. Mostly they resell HP, Lexmark, and Xerox printers.

  • There's some irony in the fact that Carly will be a keynote speaker at the next Linux World expo while she's killing off MPE/ix - HP's OS for the 3000. If there ever was a reluctant poster child for open source, HP is it.

    HP has lost interest in MPE/iX and so the existing users have asked that HP release the source to them so that they can continue to support it. HP is hemming and hawing which sounds an awful like "No."

    Instead, HP prattles on about "earning your continued trust..." while the larger HP3000 customers wonder how they'll recoup the enormous migration expense that HP has foisted on them.

    If HP was serious about wanting to retain their customer's trust, HP would hand over the source and be done with it. It's one thing to say "we can't make money any more on the 3000, here's the source to the software you've been using" and quite another to say "We can't make money any more on the 3000. We're not going to let you have the source because we want you to buy this other solution instead."

    Carly's tenure is in jeopardy not so much because of the Compaq merger but because of the enormous damage that's happened to the HP brand during her watch. The failed Price Waterhouse merger, closing the calculator division, throwing away PA-Risc (an amazing CPU!), screwing the HP3000 users, and now the Compaq mess look like more than 3 strikes to me.
  • Quite frankly, I equate HP to the same quality you expect from Packard Bell. I hate those tiny cases!
  • Why oh why must technology companies be run into the ground like this? Carly is just a bad manager and bad leader but her failures ride on the coat tails of Lew Platt's failures. I don't give a shit that Carly is a woman CEO, for all the hubbub made over that it doesn't really matter in one way or the other. What does matter is how shitty of a CEO she is. She knows her antics would have gotten her tossed out of her position so she made the entire company's upper management sign an agreement never to disagree with anything she proposed. If they didn't want to sign this agreement they were shitca...offered early retirement with a fat check for maintaining their integrity.

    Any crap about HP getting out of the PC business is just boardroom antic crap to light a fire under board members. If they don't agree to vote on [proposal] the company will have to drop [product or service]. That is entry level business class crap. The problem is Fiorina sees the Compaq merger as her brainchild and as the future path HP must take. Compaq and HP if merged would form the biggest retail PC maker in the industry. Theoretically they could leverage their systems anywhere. Between them they have inlets to all of the major retail outlets in the country. Theoretically.

    The reality of it is the merger would only make one big company to lose money. Maybe she ought to really go through with getting out of the PC business. The market is saturated as it is, people who want PCs have them and aren't going to buy new ones as long as what they have does what they want. People want to get on the internet and type stuff up and play the occasional game. PCs are so fucking overpowered that a two year old PC is still way above what even current software needs to run properly. It would be pretty hard for you to find any consumer program that didn't run just fine on a three year old 500MHz P3 with a TNT2 video card.

I've finally learned what "upward compatible" means. It means we get to keep all our old mistakes. -- Dennie van Tassel