HP is cover page article for Barron's this week.
some excerpts (also rumor by analyst on cnbc yesterday she is on her way out by year end)
Fiorina, who once declared that "mind share is market share," hasn't had much luck at rebuilding
either when it comes to high-computing systems. While HP earned a reputation as provider of
cutting-edge systems for businesses during the great migration from mainframes to minicomputers to
high-end PCs, in recent years the company has slipped dramatically. "HP has fallen far behind both of
its competitors, IBM and Sun, in market-related mind share," says Conigliaro. "You just don't see HP
that much when it comes to getting most of the strategic opportunities."
Case in point: HP continues to lag in data storage, which has been and will continue to be one of the
biggest Internet-driven growth areas in information technology. In fairness, HP originally suffered
from similar mistakes made by its enterprise foes IBM and Sun. As data storage became more
important to corporate computing needs, each of the three computer makers underestimated the
difficulty of developing reliable and simple storage products. And for the most part, each of the three
has stumbled in this area to a large degree, allowing storage giant EMC to grab market share during
much of the past decade.
But HP also made some questionable calls that continue to plague the company today. Recognizing its
weakness in storage, HP teamed with EMC in the mid-1990s to provide mostly EMC-branded storage
products to companies that used HP's Unix servers. The deal gave EMC entree to HP's coveted
installed users, but tended to favor EMC financially. EMC refused to allow HP to sell EMC storage
systems under the HP name, which may have been one of the most astute decisions made under
Executive Chairman Michael Ruettgers.
In May 1999, realizing that it needed to grab a higher percentage of the Unix storage spoils, which
EMC was not willing to part with now that HP's customers were impressed with EMC's brand and
performance, HP broke away from EMC to partner with Hitachi. The Japanese conglomerate let HP
put its brand on the box that housed Hitachi's storage hardware, and HP added a layer of software to
the system.
But by then, unfortunately for HP, its own Unix customers had grown fond of EMC and appreciated
the company's trademark round-the-clock service. EMC controls nearly 50% of the storage market in
the United States among users of HP Unix servers. Gartner Dataquest ranks Hewlett-Packard No. 3
in Unix-related storage, based on revenues, behind Sun and EMC.
It gets worse. Just last week, in what was one of the worst-kept secrets in Silicon Valley, Sun and
Hitachi announced an extensive and elaborate partnership to co-brand and distribute their storage and
software worldwide. This is bad news for EMC, but it's absolutely dreadful for HP.
HP's story in high-end computer servers isn't much rosier. It also starts with missteps during the
Lewis Platt era. (Platt took over as CEO in 1992 and assumed the chairman's role from co-founder
David Packard a year later.) During the mid-1990s, HP made a huge bet on an operating system for
Windows NT servers. As it turns out, Microsoft and Intel were late in delivering the system, and it
was slow to take off.
Then, just as HP began migrating away from Windows NT, Internet use exploded. Sun Microsystems
doubled-down its bet on servers, IBM became more aggressive in the segment, and HP was caught
flat-footed in the midst of transition. As a result, Sun and IBM became the dominant sellers of servers
during the Internet gold rush.
NOT SURE ABOUT BAD NEWS FOR EMC COMMENT emc still provides great service and software. sunw situation could end up like hp. This was a major change for sunw... They always bragged about their system being sun end to end... |
