Hacker News Reader

Comment by alexqgb | Hacker News Reader

On dumping the PC Business: "A beautiful absurdity...like McDonald's getting out of the hamburger business."

Zing.

No, it's like McDonalds getting out of the McFlurry business.

HP has a large enterprise hardware business with much bigger profit margins. This includes servers, storage, ethernet switches, etc. Everybody seems to forget this.

Given the onslaught of chinese PC manufacturers and the diminishing profit margins, this makes some sense (like it did for IBM, that also dropped their PC business but kept their server business).

I disagree. It's like McDonalds dropping hamburgers from the menu because they don't have the profit margins of soda. Except who would go to a McDonalds who only sells soda? Sometimes the unprofitable side of your business directly and/or indirectly fuels the other most profitable aspects of your biz. Dropping the most public facing division of HP will have unforeseen consequences over time.

We buy HP servers and laptops/desktops.

I agree with you. Many companies will want to have one relationship for servers and desktops just b/c it's much easier to manage.

However, besides Dell, where else can you get this?

So, while it might hurt them short term, long run, most American companies are going to get out of commodity PC's b/c of the low profit margin.

I don't know about you, but it's been a LONG time since I've seen anyone using an HP computer. If the general consumer wants a computer for their home, they typically buy from Dell. This is also true for a lot of companies. HP hasn't been a major player in the consumer PC market for a long time. I don't think leaving the consumer PC industry will matter much at all in terms of their "public facing division."

You do know that HP has the biggest market share in PC shipment today, right?

Ref:http://www.hardwarecentral.com/reviews/article.php/3927996/F...

No other competitor came close to HP, though, which shipped 18 million computers in the fourth quarter. It finished the year with almost 20 percent of all PC shipments globally.

I did not know that. Thanks for sharing. However, that comment comes right after this one:

"The corporate PC segment continues to outperform the consumer market as companies replace systems with newer, faster, more efficient computers," Wilkins said.

Since the article doesn't distinguish consumer vs corporate sales, I suspect that they are suggesting the most of HP's computer sales being from the corporate segment, which is not at all surprising. If that's the case, it supports what I said, "HP hasn't been a major player in the consumer PC market for a long time"

Related, and maybe I missed this, but is HP selling off all of their PC division, or just the consumer PC division? If it's everything, has anyone seen any explanation why the company that shipped the most PCs by a decent margin would be looking to leave the market?

I agree.

Many people who haven't dealt with HP in business are unaware of the large amount of enterprise software they provide. For example, HP is one of the largest healthcare software providers. Just go to their website and take a look.

Do you realize McDonalds makes almost NO margin on hamburgers? Their margin consists mainly of selling soda and fries.

HP did 'pivot' in the early days, first into making electronic calculators and then into PC's.

Though this latest 'pivot' into a services company smells a lot like what IBM has done, abandon its hardware manufacturing and go into software services and consulting. Some part of me hates that radical a change, especially since how many of these massive software consulting companies are actually needed?

"We're going to concentrate on our core compentency, software."

A couple of ex-housemates of mine (who worked at HP a while back) just laughed. It's like Oracle getting into video games, or Cisco deciding to crank up a steel mill. Software is /not/ one of HP's strengths.

I wonder who's selling short?

The second most annoying thing about HP printers to me for the past 6 years has been their horrible 600mb driver software packages. (The first simply being the price of ink).

You want the HP Universal Print Driver: http://h20271.www2.hp.com/SMB-AP/cache/380442-0-0-14-121.htm...

Thanks for the tip. But, hey, it's HP ... can't change the spots on that cat. Drill down two not-so-obvious links to the download page, and there are SEVEN choices of "universal" driver:

    Select your product
    » HP Universal Print Driver for Windows
    » HP Universal Print Driver for Windows - PCL 5
    » HP Universal Print Driver for Windows - PCL 6
    » HP Universal Print Driver for Windows - Postscript
    » HP Universal Print Driver for Windows 64-bit PCL 5
    » HP Universal Print Driver for Windows 64-bit PCL 6
    » HP Universal Print Driver for Windows 64-bit PS

[ http://h20000.www2.hp.com/bizsupport/TechSupport/ProductList... ]

Thankfully they forgave us the usual split in NA, EMEA, AP1, AP2, etc, geographic versions, with the only clue being in the cryptic codename in the link.

It's still better than seven separate installers per printer each of which is 10 times bigger :)

A polished turd is still a turd. The point is other printer mfrs get it right, so why can't HP?

If my newish hp printer is anything to go on, their core competency is requiring me to agree to the printer's terms of service. Seems to happen every single time I want to do anything with the printer.

I've had good hp printers (laserjet3, original deskwriter), and one decent one (hp555), but this one is pretty crappy. The software isn't very good, the wifi on it sucks, the ink cartridges are always low. What's more, it came from the apple store, with a new macbook. It works better with my ubuntu boxes.

Meh. They're not focusing on software as in printer drivers. They're focusing on software as in enterprise architecture and professional services. There, 600 MB is the basic client demo you put together in half a day.

You're clicking on the wrong link. They offer the bare driver on the same page...just a few lines below.

> "We're going to concentrate on our core competency, software."

And we're going to do it by dropping the premiere retail project that contains software we wrote ourselves.

HP focusing on software is like Google focusing on social.

Uh oh.

Meaning that it's a means to an end?

It's worth remembering that Microsoft did exactly what you've described. They decided that the video game market was where the money was, and pursued it with aplomb.

It's worth noting though, that they didn't dump their profitable business in their pursuit of a new market. On the other hand, they also had a huge pile of money to throw at building the xbox.

Microsoft had slowly moved their way into the video game business. The PC had become a popular gaming platform by 1995, and Microsoft made a commitment to building a first-class video game platform/SDK, DirectX.

Microsoft eventually decided to basically build a PC dedicated to gaming (XBox) that would leverage the legion of game developers already building on PCs. They also would be able to compete against Sony and Playstation because their platform was arguably easier to develop for and more well-known.

Microsoft was slowly moving onto consoles even before the Xbox. The Dreamcast ran Windows CE, and Microsoft approached SEGA at one point about building a Dreamcast 2, IIRC.

That wasn't "pivoting," that was growing. It kept all of its established divisions while creating a new calculator and PC division.

Well not pivot in the current use where the entire company changes all of its direction, but 'pivot' in the sense that the new division becomes the company's primary focus.

Calculators became their primary focus because they became profitable.

HP was a huge company back then. They made a lot more than consumer products and they didn't focus on any one thing. They made everything from oscilloscopes to calculators, primarily for scientists and engineers. It isn't like they laid off oscilloscope designers to hire people for the calculator division.

The pivot worked out quite well for IBM. It happened when there was significant question as to whether their PC business would ever be an industry leader; they'd just laid off more than 100,000 people because of overall weakness in their business and the economy in general.

The hamburger analogy is disingenuous. Hamburgers weren't invented in our generation and they don't radically change every 18 months.

Actually, I think the hamburger analogy works something like this:

McDonald's doesn't make much money on the burgers themselves. The profit is in the fries and sodas. The point being that it would be absurd for McDonalds to decide to kill off the burger, because it "wasn't profitable". The burger drives those other sales.

Computers might not be profitable for HP, but supposedly they drive other, more profitable sales. (I'm not sure what those other products are, though!)

Computers might not be profitable for HP, but supposedly they drive other, more profitable sales. (I'm not sure what those other products are, though!)

Printers and ink, baby.

Example tie-in: Kid going off to college? Tuition is expensive, buy a low-cost HP laptop and we'll toss in a discount on an HP inkjet printer! You don't want to deal with library printing and waiting in lines, you'll want a printer in your room!

HP have recently won a large service contract with a large Oil-and-Gas business in Canada. We've been contracted by the business, some for more than 7 years, doing software consultancy and maintenance. We have yet to see how HP will manage the transition, but we have so far little confidence the same level of service would be maintained. Not to mention that their development center is not in North America.

So ? Not being in North America makes it worse by default ?

Never. The nature of the consultancy (at least with the current setup) is high-touch, but treated as rather mechanical in nature. Having a working team that rarely interacts with the client might not be the best setup.

You should try to be close to your clients.

> especially since how many of these massive software consulting companies are actually needed?

more than you think since software touches every industry everywhere and somebody needs to implement all of that.

I went and met with an old pharmaceutical company client of mine recently. 10 years ago they were 500 people in the head office with a mix of departments. they had a tiny 2-3 person IT department that was in a far corner. when I visited recently, half the building was IT with consultants from big firms, a homegrown department, etc.

http://money.howstuffworks.com/mcdonalds2.htm. http://seekingalpha.com/article/73533-mcdonalds-is-a-real-es.... You could arguably say that McDonald's is in the real estate business.

An amusing quip, but the comparison only serves to beg the question. McDonald’s is ostensibly in the hamburger business, but the engine room of the company is real estate. See http://money.howstuffworks.com/mcdonalds2.htm.

Reply on news.ycombinator.com