Of New CEOs, Apple and HP

May 28th, 2014

Apple CEO Tim Cook and HP CEO Meg Whitman have one thing in common. Both took their positions in the late summer of 2011. The similarities pretty much end there.

Cook had previous experience as interim CEO of Apple when Steve Jobs took several sick leaves. During that time, Apple achieved record sales and profits, and it was almost a given that he’d replace Jobs should the need arise.

Whitman was a member of HP’s board of directors when she was elevated to the top spot in the wake of the miserable performance of her predecessor, Leo Apotheker. It also seemed that HP had been plagued by a growing number of bad decisions since its heyday in the 1990s, and just hadn’t arrived at a viable strategy for coping with the 21st century. You almost felt that the company’s actions were in desperate response to the actions of the competition.

The previous year, HP bought Palm, the company that pioneered the Palm Pilot, but had fallen on hard times, particularly after the arrival of the iPhone and the iPad. It was a pretty cheap deal overall, with the acquisition valued at $1.2 billion. The first notable product arising from this deal, the TouchPad tablet, crashed and burned within weeks, and HP desperately tried to unload unsold inventory for a mere $99. Palm’s WebOS was later spun off as HP tried to undo this tragic mistake.

WebOS, however, isn’t quite dead. It powers LG’s “smart” TVs nowadays, and actually garnered some pretty favorable reviews when Palm was still around.

When Whitman took control of HP, she quickly moved to cancel the plans to spinoff the PC division. Today’s HP appears, at first glance, to be pretty much the same HP that Whitman inherited, but the head count is substantially less.

This month, Whitman announced plans to fire another 11,000 to 16,000 employees. That, on the heels of previous reductions, would mean that between 40,000 and 50,000 will have lost their jobs as of the end of the year. But HP is huge, and this represents a “mere” 15% of the global workforce.

It may well be that HP had grown fat as a senior citizen in the tech business, but Whitman’s long-term strategy is still not terribly clear. Don’t forget that HP essentially created Silicon Valley, and had been known for building best-of-breed gear. In the old days, when I wanted a first rate scanner, it was an HP. Ditto for a high-quality printer. Indeed, I have an HP all-in-one, the OfficeJet 8600 Pro Plus, which delivers good output on text and photos, and also uses less costly ink than most competitors. It’s also solid, reliable, and pretty fast as inkjet printers go.

But when it comes to new strategies to turn around the company, and help it grow despite the slowdown in PC and printer sales, it doesn’t seem as if Whitman has a clue. While she had previously helped build eBay into a large and successful company, her foray into the world of politics was stillborn. Her expensive and high-profile campaign for governor of California failed, despite spending over $144 million of her own money to defeat Jerry Brown in 2010.

What is HP’s next act?  A good question. Firing people might be good for a company’s bottom line if it doesn’t hurt efficiency and productivity. But what about a long-range plan?

With Tim Cook’s Apple, the story is quite different. Apple may not be quite the growth powerhouse it once was, and the stock price has only recently begun to climb back towards historic highs, but the company was in great shape when Cook took over. Yes, Steve Jobs was a hard act to follow, but Apple has barely missed a beat in upgrading the key and most profitable products. Despite complaints that the improvements were iterative rather than revolutionary, you cannot say that about the Mac Pro.

All right, it’s quite true that Apple has, so far at least, not fulfilled the promise of entering new markets, but that isn’t expected to begin to occur until next week’s WWDC, where new OS versions will be demonstrated, and perhaps there will be some surprises.

But the long-rumored iWatch and Apple TV refreshes probably won’t occur until fall, and thus the critics will remain skeptical. Apple’s financial maneuvers, such as share buybacks and the forthcoming stock split, have also gotten praise from Wall Street. Those moves do not appear to be gimmicks to divert attention from the supposed lack of revolutionary products.

Remember that, after Steve Jobs returned to the company in 1997, it took four years for the iPod and the release version of OS X to arrive. If you judge Cook by that standard, he still has some time to make good on his promises. While some have called for Cook’s head, because he’s not a product guy, Apple has a bench of creative people that is considered unparalleled in the industry, and there’s no indication the company is in any trouble at all. Sales and revenue are high, and the cash pile continues to grow.

Unless some unpredicted bad things happen, Cook should do well with Apple. Whitman? I’m still waiting for a viable strategy, and just doing the same old thing with fewer people is not a strategy. It’s just a way to cut expenses and hope the products, support and services won’t suffer. It’s not a turnaround strategy by any means beyond a desperate way to deal with the fact that PC sales will continue to erode.

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3 Responses to “Of New CEOs, Apple and HP”

  1. Monotonous Langor says:

    Watching HP descend into darkness is beyond sad, but what were they thinking when they installed Whitman as CEO? She, having created an online garage sale / auction business, did not qualify her to be CEO of what was once THE premier tech company. This is a failure of epic proportions.

    We bought an HP Deskwriter printer when we got our first Mac (an SE) back in ’89, and it was a workhorse, used it for years with nary a bobble. I bought an HP-15C back in the middle ’80s and still have it, and it works as well as it did back then, despite hard use in the field as surveyor. It is nearly indestructible.

    HP was once known for their great products. Now, they’re known for having a series of incompetent CEOs. Pitiful.

  2. Viswakarma says:

    While Apple’s DNA is evolving, and making Apple into a more intelligent creature, HP’s DNA is devolving and making HP into a dinosaur!

  3. dfs says:

    One has to keep in mind that operating a corp. like Apple or HP is kind of like docking the Queen Mary. You turn the wheel now, and a few miles down the line the ship begins to turn. A lot of what’s happening with Apple now probably still reflects what was put in the pipeline when Steve was still alive, and no doubt the same is true for HP.

    That being said, if I woke up and found myself running HP the first thing I’d do is copy what Steve did when he came back as Apple’s CEO, which would be to greatly simplify their product lineup. At one point Apple had such a baffling array of products, including essentially identifical products aimed at different names under different names, that even its own sales force couldn’t understand what was going on. And its assembly lines were so tied up in churning out all this stuff that if customer interest in a given model was more than expected, it had great difficulty in reacting to the unexpected demand. Steve quickly identified this as one of the key mistakes of his predecessors and put an end to it. For a long time this huge proliferation of products has been a hallmark of HP’s way of doing business, and I think it has done a great deal of damage. Meg Whitman could learn a lot just by observing the experience of an average customer walking into a Staples looking for ink cartridges for a particular HP printer.

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