I'll leave it up to the business historians to write the epitaph for Carly Fiorina, the latest casualty in HP's battle to regain its glory. Fiorina had been a lightning rod since the Compaq acquisition was announced three and a half years ago. While many pundits are slamming her now, it will take time to put her six-year reign into proper perspective.
Still, I can't help but think that HP has lost its way. The IBM-Lenovo deal announced a few months back has brought the challenges of the mature PC business
into sharp focus. Cost is the only thing that matters. The era of innovation is long gone, as Dell's success clearly attests. IBM chose to compete in terms of innovation, so it made the prudent decision to sell to Lenovo.
HP, on the other hand, has one foot in the innovation camp and the other in the low-cost camp. And both are in the PC business. The company invests heavily in R&D; but at the same time, two out of five of its standard supply chains follow the no-touch and low-touch models, where outsourcing is the name of the game. (See Bolaji Ojo's October 2004 ESM cover story on www.my-esm.com.)
The question HP now must address in the post-Fiorina era is: Can it survive and thrive with a split personality? Or, as some suggest, should the company be broken up?
On the face of it, splitting HP into a few smaller, more-focused companies makes perfect sense. Let some be innovators and others cost controllers. Get each focused on a single mission, and all will be right with the world. That's what Wall Street wants.
But I'm not convinced.
I believe that, during the next decade, we'll see a movement back toward a more balanced model, where innovation and low cost are necessary to grow both the top and bottom lines. I'm not talking about PCs, but the next big thing-and a hybrid like HP is more likely to produce it than a specialist like Dell.
Bruce Rayner can be reached at email@example.com.