Last Monday, Hewlett-Packard announced it was moving out of the computing business. What used to be the thing of tomorrow has become the riff-raff of yesterday. They have decided to drop what was thought to be their main business as they were the leading manufacturer, especially after “saving” Compac from near death almost a decade ago (my how time flies) and IBM dropping out of the computer business. They didn’t even give their new tablet product a chance to breathe. The margins just didn’t pan out and with personal computing changing in the way it has with mobile phones and tablets gaining and prices of PCs (both desktops and laptops) dropping – unless you have a little apple do-hickey that lights up on your computer – I guess it just didn’t make sense to continue.
Keep in mind that HP will continue making printers and selling the ink that fills it at high margin. SO, they’re not totally on skid row even when floundering to specify what they will now become. The odd thing is that they are stating that they are moving into the software business after the acquisition of the British development firm, Autonomy. If only they had not waited too long and now seem so as to not just look to be floating a Hail Mary.
Michael Hiltzik wrote anice piece in the LA Times yesterday about how companies are effectively overcome by the newer companies. And, even if HP was started in 1939, it was still all about computers – and it’s really bizarre to see computers being the grandfathers in the room. Hiltzik gives examples of other companies that met similar fates by not changing or changing too late.
The reality is that things are changing so fast that even the newest of companies will fall behind and perhaps go away if they don’t stay ahead of the game. Unfortunately, the days of 5 or 10 year plans seems to have gone out the window in the late ’90s when it became all about the stock price today. That feeling is pervading everything. Educations is cut because of the budget woes today and the fact that nobody looked seriously enough at the future to consider how things can be made better in the future. Kids will not be as prepared for the business world as they should be. Politicians say they are all about the future, but it’s just too entrenched in our society to do for today. To spend for today. To celebrate for today. If businesses are just about today, we’re in real trouble tomorrow…
You can really see something special when a company or entity celebrates today, but has an eye toward the future. When a company can keep a percentage of its budget for R&D or real growth, that is something that benefits them and everyone else around them.
Its going to take a lot of change to shift the momentum from trying to keep status quo for too long to smartly digging in for tomorrow. HP had management woes that make it sort of easy to see what went wrong, but what about others?
Hiltzik highlights the fact that of the twelve companies that made up the Dow Jones industrial average index, only one, GE, is still around. He focuses on the detail that Facebook and Google are at the top of the heap now, but will they be there in a century? Only if they don’t get caught up in themselves and develop smartly.
Surely, other companies will come along to battle at the top and some companies will fall – that’s the nature of capitalism. The hope is just that those companies don’t turn into “grandpa” and easily succumb to the next whippersnapper.