After former HP CEO Mark Hurd left the company, and the PC maker was forced to find a replacement, its future was very much in doubt. There was widespread speculation that HP couldn’t find a person to run the company in the same effective manner as Hurd. And although there were some folks at HP that some shareholders thought could lead the firm into the next decade, the board eventually chose someone outside the company, Leo Apotheker.
The decision to appoint Apotheker as CEO was a surprising one. He didn’t seem like an ideal candidate for a company that was heavily invested in hardware. Apotheker has little experience in that market. And yet, he is in charge at HP. And in August, he made the decision to drastically overhaul the company’s operations by discontinuing the HP TouchPad, essentially dropping WebOS, and asking the board to consider spinning off the PC business. These were surprising moves, and for many industry onlookers, it looked like it could run HP into the ground. Here’s a look at how Apotheker is doing more harm than good at HP.
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The Death of the PC Business
What Leo Apotheker was thinking by looking to spin off his company’s PC business is anyone’s guess. HP is the world’s top PC company, easily overshadowing all others in the marketplace. The fact that Apotheker would rather ditch the PC business than try and solve its troubles is telling—and could eventually hurt his company.
Why Not Rebuild?
The interesting thing about HP is that although it’s in trouble, it doesn’t necessarily need to drastically change its business. The company has enough cash on hand to be able to fix its mistakes and do a better job of investing in its products. But Apotheker wants to destroy the core aspects of its business. What an odd move.
The TouchPad Is Just Starting to Catch On
HP’s decision to discontinue its TouchPad tablet at launch wasn’t necessarily a bad move. After all, the device was failing. But now that the TouchPad has taken off, due mainly to its starting price of $99, wouldn’t it make sense for Apotheker to rethink his strategy? Yep. But he hasn’t. His company has simply said that it will offer up another round of TouchPads and that will be that.
WebOS Had Some Promise
When HP acquired Palm to get WebOS, it was a good idea. The operating system had some promise, Palm understood the mobile market to some extent, and the company seemed prepared for the future. But now that Apotheker has all but killed WebOS, it looks like HP wasted its $1.2 billion and squandered any opportunity it might have had to turn things around. It was a poor decision on Apotheker’s part, and he needs to be held accountable for that.
The Fundamentals Are Still Off
When Apotheker joined HP, he said that he could fix some of the problems at the company. But now months after he joined HP, the fundamentals that drive his firm’s business are still off. The company’s management doesn’t seem to be focused, some of its operations are too bloated, and its leader appears lost. Apotheker is trying to put a band-aid on something that needs much more help.
He Seems Unprepared
When HP announced that Apotheker would be leading the company, there was some concern that he wouldn’t be prepared to run a firm that had so many different core competencies. After all, he wasn’t a hardware-focused person. And with this latest move, it seems that all those fears were well-founded. Apotheker wasn’t prepared to take over all of HP’s many divisions, and he has cut it down size to make it easier. But that’s not good for his company over the long-term.
He Has Lost Sight of the Apple Model
With WebOS and Palm devices, Apotheker had the unique opportunity to be more like Apple. His company could offer both hardware and software. And if he wanted to be more like Google, he could license WebOS to other vendors. Instead, HP has lost all sight of the value of its hardware-and-software combination. And now the company will suffer because of it.
He’s Giving Dell the PC Market Back
Why Apotheker would even consider giving Dell back the PC market is anyone’s guess. By spinning off its PC business, HP is effectively saying that it has no reason to believe that it will be able to compete as effectively as it has in the past in the computer space. Worst of all, it’s leaving the market open to Dell. The smart move would have been to hunker down and find a way to revive the ailing PC business. But Apotheker didn’t do that, and now, the future of its hardware operation is decidedly in doubt.
There’s No Guarantee On the New Focus
Like it or not, HP has been somewhat successful over the years offering computers, software, solutions, and other products to both consumers and enterprise users. But now with its new focus, Apotheker is treading into unknown territory. The move might prove to be a good one, but it seems that it’s more likely to be a tragic decision. As discussed, HP had a viable business model that needed some tweaking. Now, there’s no telling what its future will look like.
The Supporting Cast Isn’t Ready For the Move
After Leo Apotheker joined HP, many of the company’s top management, including some executives and product managers, stuck with the firm. However, they came to HP for much different reasons than Apotheker had in mind. And their core competencies don’t necessarily fall in line with what Apotheker has planned. If the incumbents don’t fully understand how to implement Apotheker’s strategy, how can they be expected to perform all the duties of their jobs?
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