Dear Meg: you've got your work cut out for you
Congratulations, Meg Whitman, you’ve just been named CEO of HP, the world’s largest technology company, a leader in the personal computing, business computing, printers, and enterprise software sectors. Tonight, let the Dom Pérignon flow, because tomorrow the real work begins.
You’re inheriting a company that has gone through what amounts to severe cranial trauma over the past year. You know the history – Mark Hurd is forced out for maybe not having sex with a PR contractor he might have had way overpaid, relative unknown Leo Apotheker is brought in as the new CEO, and proceeds to lobotomize HP. You have an advantage over Apotheker: you have years of executive experience from eBay – in the consumer space at that – and had front row seats in the HP boardroom to watch Apotheker blitzkrieg through the company his was hired to run.
HP is a mess right now, thanks to your predecessor’s actions and the board’s inaction (yes, we know, you were part of that board). Your first actions are going to sound something like what we hear from the candidates for the Republican presidential nomination right now: “I will undo what I perceive to be my predecessor’s mistakes.” (irony alert: Whitman was the Republican nominee for the California governorship in 2010).
First things first: stop the split. HP does not need to be divided into hardware and software companies. There’s no need to spin-off the Personal Systems Group into its own entity. In fact, it’s a boneheaded move to get rid of a part of your company valued at $20 billion (half of HP) with earnings over $2 billion annually.
Second: Resurrect and double-down on webOS. Mark Hurd, potential creep though he may be, got it right when it came to HP’s consumer hardware future: integrated mobility is where it’s at. That’s why HP paid $1.2 billion for Palm last summer. Microsoft is obviously making a big play at the mobile space with Windows 8 and Windows Phone, but you can see the success that Apple’s has had with their own integrated model. The integrated model lets you do things faster and better than you can with the licensing model. Of course, there’s still a future for HP with Microsoft (see the $20 billion PSG above), but webOS can be a major player if you’re willing to put the effort and muscle into it that is necessary.
That starts by undoing HP’s shutdown of webOS device operations. We’ve heard bits about the new devices that were under development when the cancellation order came down, and it’s time to kick that development back into high gear. Hire back the laid off engineers, reintegrate the software and hardware arms of webOS, and get this train rolling full steam ahead. There’s a rapidly expanding tablet market out there and there’s only going to be a limited amount of time to break in before Apple completely cements their dominance. Of course, there are smartphones to consider too. And the software. Doubling down means pulling out all the stops and making sure webOS has all the money and support it needs to get the job done.
Third: Cancel the Autonomy acquisition. If it’s not too late, pull the plug on Apotheker’s $10 billion purchase of UK-based software firm Autonomy. It’s a massive amount of money to be spending on a company that offers very little to even HP’s enterprise offerings, especially considering that that massive amount of money amounts to nearly 1/4 of HP’s present valuation. It’s not money HP can afford to spend, and even though the cancellation penalty is going to hurt, it’ll hurt less than writing that $10 billion check for something you know you don’t need.
That’s it for now, but do know that we’ve got an eye on you. Compared to Leo Apotheker, you’re a rock star. Do us proud. Really, we can’t take much more drama.