HP to Keep PC Division

My HP laptop has a locked BIOS that prevents you from replacing the wireless card. I sent them an email message describing the BIOS error message that was returned and asking for more information about what were valid wireless cards for the machine. I received a reply telling me to reinstall my wireless card drivers. Over the next few days, I tried to get someone who understood my issue, but was repeatedly told to reinstall drivers, to reseat the card, and a variety of other solutions that seemed to come from some wireless troubleshooting customer support script.

I called, and the person I talked to eventually told me to send the computer in, because "the depot would have a different unlocked BIOS that they could put on". When my computer arrived at the depot, I talked to:

- a technician who was sympathetic but very confused about why phone support told me to send my computer to the depot,

- two case managers who started out by telling me that they were "non-technical" who I had to explain what a BIOS was, and

- a rude senior case manager who yelled at me for wasting everyone's time and told me "if you bought a car with a Sony stereo, you wouldn't expect a Panasonic stereo to work in it". When I told him that he was being rude and I wanted to provide feedback to someone about it, he told me that there was nobody else I could talk to, as his superiors would not want to hear from me.

After a day of not hearing anything from the depot about when my computer would be returned, I called a HP executive support number I found on Consumerist or some other forum. The woman I talked to was exceedingly polite, but admitted she was non-technical, but then told me that my issue was "it was because HP wanted it that way" and even though it is in a user-accessible location, trying to install a different wireless card would void my warranty "just like installing Linux."

A week or so later, HP released a BIOS update to include more wireless cards on the internal whitelist, in order to support the version of the laptop in the Small Business store (same components, starting price was $300 higher).

IBM's ROIC is currently at 34.1% compared to HP's ROIC at 16.2%. After IBM sold off its PC division to Lenovo in 2005, IBM's ROIC grew from 17.75% in 2006 to 29.55% in 2010 with a 5 year average of 27.6%.In comparison HP's 5-year average ROIC is only 15.9%.

HP wanted to do the same thing IBM did 7 years ago. The big difference was that before selling off its PC division, IBM already had a strong software and services business (generating half of its revenue). they also bought PriceWaterHouseCoopers' consulting arm in 2002. HP's software and services business isn't nearly as strong, even after buying Autonomy so they got clobbered by analyst and the media.

That's like claiming if it spun off it's discount coupon business it would be worth the same as groupon.

Be that as it may, the differences between IBM and HP are stark in this instance. I-B-M: it stands for International Business Machines. Services to industry are their roots, and those roots run deep. Whether in the form of census punchcards in the 1890s, or ballistics calculations for the military, or the creation of the SABRE booking system, or the creation of relational databases... the list goes on and on and on, but the point is that IBM has never strayed from its roots. It is a business services company.

Upon hitting a rough patch in the early nineties, IBM took radical steps to revive its profits; one of these steps was the introduction and promotion of the business-oriented Thinkpad brand, which was a huge success and helped bring the firm back to health. But that did not make IBM into a PC company any more than the success of the XBox makes Microsoft a gaming company.

After nurturing the brand and working gradually over time with a Chinese supplier to offshore production, the last step (at that point almost a formality) was taken and the brand "Thinkpad" was transitioned to Lenovo ownership. IBM continues to be a company providing services to government and industry, as it has since its founding.

HP, on the other hand, is a company whose roots are in technical instrumentation and excellence in test equipment. Over time, this resulted in innovations such as the HP 9100A, the familiar tried-and-true HP calculator line, its superb printers, and so on... all outgrowths of HP's core roots in engineering and instrumentation.

The spinoff of Agilent was like HP cutting off its right arm. To add insult to injury, the company was forced to digest the Compaq acquisition at the same time. Still, the core mission of creating excellent electronic machines survived and HP is in a dominant position when it comes to providing reliable hardware in the form of computers, servers, printers from laserjets to industrial presses, networking, etc.

With that as a basis, the move into consulting services and enterprise software makes sense, but a move as unforgivably idiotic as removing the PC business would cut the very legs out from under the business, regardless of what some P/E number on a spreadsheet says. Why would an enterprise come to HP for consulting when it cannot provide a package of desktops, servers, and software? That is HP's mission as it is configured now, with Agilent gone its separate way. It makes sense to push aggressively into new territory, but not to destroy the foundation of the business at the same time.

Apotheker brought no innovative thinking to HP; he merely sought to remake the company in his image and transform it into the SAP that not even SAP would let him create. Whether or not that vision, taken in the abstract, is one worth pursuing is debatable to begin with-- but hacking HP into bits to force it to fit that vision is madness, and the plummeting stock price that you seem to measure value by reflected the market's view of this insanity.

Why is there any need to "bleed heavily"? The PC division is the foundation of the entire edifice. It may not be sexy and it may not fit your metrics-based notion of company value, but it holds up the business and it is number 1 in the world and profitable. That is a strength to leverage, not a "drag".

HP is finally in a position to do exactly what Meg Whitman said it needs to do today: focus on excellence. http://www.ft.com/cms/s/2/d6a4b220-00d8-11e1-930b-00144feabd...

Not to mention that there are currently no currently officially selling WebOS devices (except for a few straggling phones in the discount bin), nor plans for new ones.

And, when your competitors are Android, WP7, and iOS, getting over the vicious cycle of "no developers making apps which means no people are buying apps which means that no developers are making apps..." is just too much. Even Android was struggling with that and still is on the tablet side even with the Google juggernaut behind it.

Plus, even in printers and lower end devices and phones like that, WebOS is overkill. Samsung's Bada and Android are crowding that market too tightly, not to mention Symbian.

Maybe we'll see WebOS as an "instant boot" option on a few HP PC models for which it was already in development but that doesn't really count.

There's no future for WebOS. It's dead. When your competitors are Microsoft, Google, and Apple, and they already have entrenched hardware and software products in the same market that are innovative and being actively developed, and are directly competing against yours, and are having far more money pumped into them, and have thriving ecosystems, and haven't been officially been killed off, you may just be best off going home.

This was demonstrated both when the WebOS application layer received a 2X performance boost when ported to WebKit on iOS, and again when Android was ported to the TouchPad hardware and was found to be quite a lot faster than WebOS.

It's quite clear that it is a fundamentally flawed architecture without a future. It's too bad; there's some interesting stuff going on in the application layer, but the underlying OS is a complete turkey.

–John Gruber