The HP Dilemma

Are there any right answers for HP? Can it play in a world that isn't tied to its recent past - let alone its founders' vision for the company and the way it would operate?

Leo Apotheker, HP's CEO since September 2010, is the newest executive to try to figure out what the right answers are for the company - and yesterday's earnings call gave everyone an excellent idea of what he sees in HP's future.

He sees another version of IBM.

Product versus Service

Say HP to most people and they'll think printers. They might think PCs as well, but printers are inextricably bound with HP's brand and reputation.

And that's about all the past HP will keep as it moves into its future.

In direct contrast to Mr. Apotheker's two predecessors, Carly Fiorina - who acquired Compaq - and Mark Hurd - who acquired Palm, the company is now going to move very quickly away from hardware. Except those printers.

Forget the tablets and phones - even though they were just introduced. They're not working - so they're out. Now.

As for the PC's, he's looking at spinning off the company and as soon as HP can find a buyer, those will be gone, too.

What's taking their place? Services. The cloud. And the acquisition of Autonomy, one of the leading enterprise information management software companies.

Who'd've Guessed?

In many ways, what is most interesting is the surprise on the part of the markets and media regarding this move. In fact, it was predictable.

For all that Mr. Apotheker said he wanted to make HP as "cool as Apple," there was no way in his space that he could pull that off.

Besides which, Mr. Apotheker's previous position was as CEO of SAP, the German enterprise software giant. He's not primarily a hardware guy. he's a software and service guy. So, of course, he'd manage to his strengths.

It just worked out nicely that the economy was such that hardware purchases were moving on a downward trajectory. It made it easy for him to justify getting out - and going where he undoubtedly planned on going from the start.

The HP Way

The only real questions that are left are:

  1. In a market that has become saturated by players like IBM (services) and Amazon (the cloud), can HP find a niche for itself that it can own? and
  2. Can Mr. Apotheker, both within the company and in the eyes of the marketplace, revive the reputation of HP - a company that is seen to have lots its way? and, finally,
  3. Will he have enough time to accomplish his goals?

It's a tough go for CEOs - particularly when they're short-term oriented and are looked to for short-term results. Mr. Apotheker is at the helm of a company that has shown in its past that it can do wonders in innovation, marketshare, shareholder value and corporate culture.

But that was when it had a long-term vision and stuck to it.

Let's hope he's now pointing it not just in his preferred direction - but in the right direction.

[Note: This article was previously published on Technorati.]