HP in difficulties

In the light of previous observations about the smartphone market, I’m not surprised that Hewlett Packard (HP) dropped the phone and tablet computing products that it had inherited from Palm over the summer.  It’s a pity, because Palm always had excellent products, but they didn’t have any presence in the market for phones

However there were a few related happenings which I didn’t expect:

  • For a very short time HP’s about to be discontinued products were flying off the shelves, though at ridiculously cheap prices – the lesson being that you can sell almost anything if it’s cheap enough and you can put a SIM card into it
  • Blackberry, which looked like a business that does understand Smartphone, has seen its fortunes decline.  It’s tempting to blame this on its seamless, but rapid, move from providing business tools to selling the teenagers’ favourite, but in fact the older, more business-focused, products seem to be the ones that are not selling well
  • HP’s chief executive, Leo Apotheker, looks to be in a precarious position after less than a year in the job.

Before HP, Leo Apotheker was at SAP, a business that became incredibly successful through supplying back-office systems to many organisations, including the one that I work for, but which has never sought to create glossy consumer products or desirable virtual spaces.  In this context, his intention to move HP away from sector such as supply of PCs makes some sense, but I fear that he might have fallen into the trap of defining a business by what it doesn’t do, and not by what it does.

Moreover, SAP and Apple’s phone business have more in common than might at first be apparent.  Both have created a business model around a standard, widely used and recognisable, product, which allows for many other businesses, oftne small ones, to come in and offer related products and services.  For SAP these are consultants and participants in the developer network; for Apple they are the suppliers of apps and accessories.


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