The Next Steps for Meg Whitman and HP

By Jeff Goldman — September 28, 2011

HP last week announced that its board of directors had appointed Meg Whitman as president and chief executive, following Léo Apotheker’s dismissal from the position. In recent weeks, the company has also announced plans to discontinue operations for webOS devices, and has also stated that it’s considering spinning off its PC business.
 
Dan Shey, practice director at ABI Research, says the reasoning behind the board’s appointment of Whitman isn’t entirely clear. “She’s considered a great CEO and certainly a very smart woman and has had a lot of success, and certainly her brand will raise the awareness of HP … but if there’s something specific about her experience that HP can apply and use that will create a new business model for them, or create new lines of business for them, I just can’t see it,” he says.
 
Whitman’s likely first step as CEO, Shey says, will simply be to solidify her relationships with the company’s current customers, ensuring that they’re clear on the direction of the company. “Just based on all the change that’s happened lately, if I’m an HP customer, I’ve got to asking the question, ‘Where are these guys going, and is there something I need to be concerned about?’” he says.
 
Still, Phillip Redman, research vice president at Gartner Research, says HP is right not to waste any more time or money on webOS. “There’s a lot of competition that’s already way ahead of them, and they’re not going to have enough differentiation and capability there to make a big change in the marketplace … so I don’t think it really makes sense to go down this path any more,” he says.
 
The point is that a mobile operating system’s success is dependent on much more than just the the OS itself. “Maybe they have a solid OS and the hardware eventually can compete with what’s going on with iPad, but especially with the problems that they’ve been having and continue to have, who are the application developers that are going to take a gamble on this space – especially when you have two big growing platforms like iOS and Android today?” Redman asks.
 
As a result, Redman says, HP will inevitably become much less about hardware and much more about services, and ideally will find a better balance between its consumer and enterprise offerings. “They need to find a way to meld those two capabilities and to look at that holistically. … There’s too many disparate points within HP – they need to unify and get more end-to-end solutions in place,” he says.
 
And the stakes are certainly high. “There’s a lot of shareholder pressure on them,” Redman says. “They’re at a critical point in the company – they’ve had a lot of senior management turnover – and it’s really critical that they’re going to have to make some drastic changes. It’s going to have to happen, or things are only going to get worse.”
 
Andrew Borg, senior research analyst at the Aberdeen Group, says it’s problematic that Whitman’s strategy hasn’t yet been made clear. “Meg has come on board without a clearly expressed strategy or roadmap, at least not visible outside the organization at this point in time,” he says. “And that’s not a criticism – she may very well have one developed, or be working on one – but what plays out in the marketplace is that HP appears to be adrift without a strategy or a roadmap, at least not one that the market understands or agrees with.”
 
And webOS, Borg says, actually has a lot to offer the company. “The acquisition of webOS made a lot of good sense to me, and it seemed to fit within their larger strategy around cloud services – because webOS is really an ideal endpoint, probably more than any other mobile platform, to be easily and seamlessly integrated into both Web services and cloud services,” he says.
 
The poor reception that the HP TouchPad received upon launch, Borg says, really had very little to do with the operating system. “By the time it got to market, it was a Generation 1.0 product in a Generation 2.0 market,” he says. “That was not a knock on webOS – that was a knock on the hardware design. I think webOS is still very compelling and has some advantages over all the other systems in the market.  The great potential for webOS to be integrated into both Web services and cloud services was just never realized.”
 
Borg says that confusion, between hardware issues and operating system shortcomings, was a significant mistake on HP’s part. “My feeling was that they were shortsighted in looking at this as being a tablet war, when in fact it really is a cloud services and content delivery war, where they have much more to offer than just a piece of hardware,” he says.
 
While Apple and others are focusing on consumer devices that may migrate into the enterprise, Borg says HP could well have done the opposite. “Our belief is that HP could have been first in line there in the enterprise, or at least up near the top with an integrated offering around cloud services and the mobile endpoint,” he says.
 
And so Borg’s advice for Whitman is straightforward. “Look again at webOS,” he says. “It’s a potential goldmine asset that has never been realized, and one that is well-aligned potentially with HP’s business value and strategy.”
 
 

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