(Via WSJ) Michael Malone writes ,despite Hewlett-Packard's positive quarterly earnings, the weak profit margins should be seen as a warning that radical changes must be made if HP isn't to die, a slow Silicon Valley death. Among the changes that Mr.Malone is suggesting include:
- Buy Agilent Corp - Agilent has calm competence, easy toughness, the HP Way. When Agilent was ripped out of Hewlett-Packard, something in HP died. It needs to be revived. Agilent’s line of business is a promising one - The future lies in integration, in the immersion of the digital world into the natural: smart houses, sensor networks, thinking machines, biological computers. The best way to establish a beachhead in that new world would be to buy the world's largest test and measurement company. Cultural integration with HP is not an issue - agilient management also knows how to get the company through the hard times ahead. They know how to innovate - that being the one thing that has always saved HP.
- HP is a bloated mess. Even HPers know that serious cost-cutting and lay-offs are inevitable. HP's real problems are philosophical, not financial. Merely tightening up the PC and printer groups may buy some short-term profits, but they won't restore HP to enduring health, much less its old greatness.
- Hobby projects turn out to be world-beaters: LEDs, desktops, scientific and business calculators, minicomputers, printers .If HP can't keep those projects in-house, then, it should give the teams some money, send them off, and buy their businesses back when they have something great to show.
- Compaq LOB and remnants of DEC should go. Tandem and some good HP veterans may stay put. For 60 years, HP was synonymous with the highest quality, service and integrity. These days, when people think of HP what comes to mind is a corporate soap opera, forgettable PCs, and flimsy plastic printers. Restoring HP's sterling product reputation is top priority.HP should get out of low-end PCs and printers. HP, like every other Silicon Valley company besides Apple and eBay, is lousy at consumer products and services. So it should dump the toys, repurpose the Enterprise Group, and return to selling to professionals and large enterprises.
Mr.Malone is spot on.The HP Way combines simple objectives, enlightened business practices, trust in employees to make the right choices, and ruthless self-appraisal. It creates an adaptive, innovative and ferociously competitive company that jettisons product lines but not people. And HP should go back and practice these.