Tag Archives: Mark Hurd

HP and the Challenge of Change

Hewlett Packard company history may not be interesting to some but often the past can predict the future. Briefly, HP was created by Bill Hewlett and Dave Packard in a one-car garage in Palo Alto California. Hewlett and Packard discussed forming a company in August 1937, which they started as a partnership on January 1, 1939. A flip of a coin decided the order of the name. The Hewlett-Packard Company incorporated in 1947 and became public with an offering in 1957.

From an initial capital investment of $538, their first product was a sound oscillator sold to Walt Disney Studios for use on the soundtrack of Fantasia. HP lab equipmentDuring World War II, HP designed and built radio, sonar, radar, nautical, and aviation devices. They grew into the largest producer of electronic testing and measurement equipment. Some of their early test instrument designs are still coveted for electronic circuit measurement and fault diagnosis. As technology evolved they became a major producer of calculators, laser and ink jet printers. They continued to dominate the market place in computers as well. By the end of the 1980s, no other computer company had a broader product offering than HP. HP’s Personal Systems Group (PSG) acquired their chief rival Compaq in 2001. The Compaq brand gave HP a low cost computer strategy that appealed to cost-conscious consumers. The decision to purchase Palm in 2010 and continue on the path of WebOS seemed to signal another strategic change in the handheld market, but the Apple I-Pad along with the smaller but very useful I-Phone was the real game changer.

As large of a company as HP is, when HP CEO Mark Hurd resigned in August of 2010 amongst an ethics scandal, the company altered a strategic course away from its Palm purchase and personal computing hardware when it announced the election of Léo Apotheker as Chief Executive Officer and President. Apotheker, previously served as CEO of SAP. The HP Board also elected Ray Lane, Managing Partner at Kleiner Perkins Caufield & Byers, as a new member of the Board and designated him as non-executive Chairman. These decisions changed the marketing direction of HP. Clearly Léo Apotheker came from a software background and Ray Lane formerly served as President and Chief Operating Officer of Oracle Corporation.

Larry Ellison, a close friend of Hurd and CEO of Oracle Corporation, sent an e-mail to the New York Times in August of 2010 saying “the HP Board just made the worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago. That decision nearly destroyed Apple and would have if Steve hadn’t come back and saved them. HP had a long list of failed CEOs until they hired Mark who has spent the last five years doing a brilliant job reviving HP to its former greatness”.

This is how an understanding of history demonstrates the course of future events. When HP announced today they are exiting from the personal computer business, based primarily on the changes in consumer interest, you have to look deeper. Another aside in how personal behavior can permanently alter even the largest of companies, a shareholder lawsuit was filed following Hurd’s departure. The suit seeks unspecified damages and changes to HP’s corporate governance. It claims HP lost “significant credibility” due to the controversy and a loss of $9 billion in market capitalization when shares began trading the Monday after Hurd’s resignation. They also argue his severance package could have been significantly smaller if HP’s board fired him for cause.

Just as the mass produced PC opened the doors and forever changed the computer industry over 35 years past, the Apple I-Pad I believe has opened new doors to using a computer envisioned by science fiction.

Those who remember or have seen the reruns of Star Trek in the 1960’s, saw the convenience of tablet computing. Strolling further down memory lane, you may recall several technology breakthroughs even though the present consumer versions make the Star Trek TV show stuff look clunky. Here are a few of those ideas which we see now in no particular order:

60's Star Trek tablet computer

    1 – Tablet computers
    2 – GPS location
    3 – Wireless earpiece
    4 – Handheld communicator AKA flip-phone
    5 – Touch screen dedicated displays for navigation control systems
    6 – Video conference communication
    7 – Body image and scanning such as CAT scans and ultrasonic’s

Motorola and others have made a tidy sum of money on the imagination of Gene Roddenberry and now Apple seems to be doing the same with the versatile and useful I-Pad. This along with companies such as Google with their Google Apps has altered the way we think about and use computing technology.

Hewlett Packard’s announcement has created a stock market ripple which is already shaky from continued International negative economic news. The change isn’t being received well considering the financial impact a possible sale of one of their key business divisions.

The real long term question will be how well HP can adapt to the changing market. IBM sold off its hardware PC business called Lenovo to China. Unisys, a company formed after the purchase of UNIVAC by Burroughs Corporation has adapted primarily by becoming an IT services company. Unisys was party to a major corruption investigation in the mid-to-late-1980s. As part of the settlement, all Unisys employees are required to receive annual ethics training. Unisys attracted negative computer community attention in 1994 when it announced it held a patent on the LZW data compression algorithm, used in the common GIF image file format. Digital Equipment Corporation, at one time the second largest computer manufacturer, failed to adapt to the changing market and was purchased by Compaq in the 90’s.

Will HP lick its own market place wounds and continue to be a major technology player? Time will tell.