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Chaos soon followed HP announcements

by Scott Bicheno on 22 August 2011, 15:21

Tags: Hewlett Packard (NYSE:HPQ)

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The least bad option?

In this time of 24 hour news and a rampant blogosphere it seems companies don't feel they can go about major corporate changes without details leaking into the public domain. So the current trend is for companies to get all the bad news out in the open as quickly as possible when a major decision has been made, then clear up the mess afterwards.

Nokia CEO Stephen Elop preferred the use of controlled leaks to prepare the ground for his big WP7 announcement, while Cisco CEO published his own internal memo to the troops, in which he announced things needed to change, before conceding that many of Cisco's consumer-facing efforts were a flop.

HP CEO Leo Apotheker's admission that "The tablet effect is real and sales of the TouchPad are not meeting our expectations" was a bit reminiscent of Cisco's recent admissions in its lamentations on the difficulty of competing in the consumer device market. While neither of them have said as much, it's all Apple's fault.

The tablet effect refers to the decline in PC (especially cheaper notebook) sales due to consumers and businesses considering tablets instead. Furthermore Apple has brought a tablet to market that, so far, the combined might of all other tech companies has failed to match.

And let's not forget, the modern smartphone market was catalysed by Apple, and has forced many dominant tech incumbents to overcome their hubris, arrogance and denial to face up to this grim truth. Nokia and Microsoft are united in their desire to face up to this, while Cisco could see the writing on the wall so clearly it abandoned its successful Flip video business.

So HP is just the latest in a long line of mighty tech companies humbled by Apple shifting the computing device goalposts while they watched impotently on. A TechCrunch headline last week summed it all up quite nicely - "HP To Apple: You Win."

But HP has conceded defeat to Apple in the consumer device market just months after it launched its TouchPad tablet, and while it remains the world's biggest PC vendor by volume. As a consequence a degree of chaos and uncertainty has ensued.

In the US, HP embarked on an immediate fire-sale of TouchPads, dropping the price of the cheaper version to below $100. This prompted a stampede of bargain-hunters, proving that there's no such thing as a bad product, just bad prices. Understandably, those few who were tempted to pay full whack for a TouchPad are not happy, and HP is trying to compensate them by paying the difference.

There are all kinds of confusing messages coming out as HP attempts to bring some order to the chaos of its own making. To try and keep some vestigial value in anticipation of a webOS sale HP is now saying how it will continue to invest in the platform.

Meanwhile, as prominent competitors carp from the sidelines, HP is also fighting back on the PC front, insisting it's a great, world-leading business. Nobody's questioning that, but if it's so great why try to get rid of it? Maybe HP took a look at Acer and thought ‘There, but for the grace of God, go I.'

The rest of the tablet and PC market is also feeling the repercussions. ViewSonic couldn't resist having a pop, while HP's capitulation is sowing further doubts about the overall strength of the PC market. Even the normally neutral Reuters has got the knives out for Apotheker.

It's easy to criticize HP for announcing its desire to move away from the consumer market without many definitive answers about how it will do so, but we should be careful about denouncing such frankness. If news of these moves has leaked out - as it surely would, in time - surely the effect on HP and its share price would have been similar.

As Apple-watcher John Gruber blogged, the move towards enterprise can hardly be viewed as surprising after the appointment of SAP-veteran Apotheker. But when a company as large, old and powerful as HP concedes defeat so absolutely, it leads everyone to wonder who's next.


HEXUS Forums :: 2 Comments

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As you say it just shows the price was wrong, granted the iPad sells a ton even at at high (although not relative to other tablets) RRP though.

If HP had even reduced these to say £150 for the 16GB instead of £89 I reckon there would still be a rush for them, I'd have still been tempted for that sort of price. Maybe this will change the market in some way (although I doubt it)

As it stands I'm on the hunt for one right now, HP if you're reading this please let me buy your product!
went in a comet yesterday in shrewsbury, they have stock of both 16gig and 32 gig…