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HP Computers going to extinction is not a surprise

Besides poor quality and reliability computer products, HP customer service is as bad as Nokia and Logitech.

Therefore, HP PC going to extinction is not a big surprise to me. This is how Western companies facing stiff competition, they run away instead of improving their business processes and practices.

HP used to be a people oriented company like Motorola in 80s and 90s with a very successful business model.

When they grew up bigger to a giant, they addicted to complacent and arrogant bad habits. A HP salesman told my friend who worked for a MNC in Penang, “You either buy HP products at my term or you get lost!”.

He remembered this astonishing story forever. 🙂

Which company in the wind-up waiting list?

My best bet is Nokia, while Taiwanese sucker, Logitech who exploited low cost cheap labor in China may survive a bit longer.

I have never used Apple products, I do not know their after sales customer service level. But I believe they are much better off in customer service than HP by judging from the very good response to their products in the market.

HP to spin off Personal Computers, exit Tablets

Verne G. Kopytoff, The New York Times, August 19, 2011, San Fransisco
Hewlett-Packard said on Thursday that it was considering spinning off its personal computer (PC) business into a separate company and was in talks to acquire Autonomy, a business software maker.

Those would be the biggest moves yet by Leo Apotheker, HP’s chief executive, to refocus the company on business services and products. Mr. Apothecker has been trying to ramp up the company’s growth, which has been slow.

HP also said it would kill off its TouchPad tablet, which was just introduced in June and was meant to compete with the iPad from Apple, and stop making mobile phones that use the webOS operating system, which HP picked up when it bought Palm.

Autonomy, which is British, released a statement to the London Stock Exchange on Thursday afternoon confirming that it was in talks with HP about “a possible offer for the company.”

Splitting off the PC unit would eliminate the drag of that low-margin business on HP as it tries to move more toward providing corporate customers with services and cloud computing — a term used to describe delivering products and services online. Earlier this year, Mr. Apotheker outlined a plan to grow HP’s tiny business software unit and expand into the cloud. That strategy challenges IBM and Oracle, two giants in the market.

The spinoff of the PC unit would also reverse HP’s $25 billion acquisition of Compaq Computer, the PC maker, in 2002. For years, HP has said the consolidation of the PC companies gave it the scale to cut costs and secure favorable prices on parts, and also gave it clout with corporations which were also seeking servers, storage and other data products for the enterprise.

In a preliminary earnings report on Thursday, HP showed that it was continuing to struggle with slow growth. It reported preliminary net income in the quarter ended July 31 of 93 cents a share, versus 75 cents in the year-ago quarter.

The company said revenue inched up nearly 2 percent, to $31.2 billion from $30.7 billion.

The adjusted income of $1.10 was slightly above the expectations of Wall Street analysts. They had expected $1.09 a share and revenue of $31.19 billion, according to a survey of analysts by Thomson Reuters.

HP’s outlook for the fourth quarter was well below expectations. Revenue is expected to be $32.1 billion to $32.5 billion, short of the forecast from analysts of slightly more than $34 billion. Adjusted income is expected to be $1.12 to $1.16, again below the $1.31 predicted by analysts.

The company’s stock was down more than 6 percent in afternoon trading at$29.43.

Autonomy could command a price tag of nearly $10 billion, according to people briefed on the matter. That would be HP’s third-largest acquisition ever, after Compaq and Electronic Data Systems. It would also represent a rich premium for Autonomy, which has a market value of about $6 billion. The company already trades at a much higher multiple than other software companies on the London Stock Exchange, Capital IQ data show.

For the 12 months ended June 30, Autonomy had revenue of $969 million, according to Thomson Reuters data.

News of the deal was reported earlier by Bloomberg News.

Mr. Apotheker, who joined HP last year, is trying to revitalize the company after a series of disappointing quarters. Sales in a number of core businesses are weak because of internal missteps, shifts in the market and a slumping economy.

HP’s computer business is struggling from an industrywide softness in demand, in part because of a shift in customer appetite for tablets. In June, the company introduced its TouchPad tablet in hope of taking market share from the iPad, but sales of TouchPads were slow, and HP had to cut its price 20 percent.

Wall Street has been concerned about HP’s growth ever since Mr. Apotheker joined the company, and the weakening economy has added to the uncertainty. A series of disappointing quarters and forecasts had sent the company’s shares down nearly 22 percent since the start of the year.

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Ghani Komtar says:

ever heard of Hong Hai ? They are a major China company where Mat sallehs turn to.

Michael Dell’s now has to rely on channels to sell his once profitable over the net approach.

If you think DELL brand is synonymous with quality; I suggest you make a visit to its Bukit Minyak (Penang mainland) to see its assembly operations.

nkkhoo says:

Hong Hai is Foxconn parent company.

I have never said Dell PC quality is great, Dell beats others with excellent after sales services.

A bizman in KL only bought Dell computers for his company for a simple reason, Dell technician comes to his office to repair his broken computers within 24 hours. For bizman, time is money.

Logitech cannot even answer online inquiry, see the big difference.

kupusamy says:

Many American brands are actually fully manufactured in China at low cost to sell at low price. PC is no longer a high tech item with little profit margin. Buy the cheapest branded one (ask for a free bluetooth mouse to avoid any ‘inconvenience’) and do not expect high customer service as a shelf life of a PC is about 2 years before it is rendered obsolete by new processor and OS.

nkkhoo says:

Low margin is not excuse for rendering poor customer service if any company wants to survive in today’s cut throat competition.

Dell customer service is a top notch and its PC price is comparable with others.

Mike Dell was jerking at HP in his tweets. 🙂

kupusamy says:

HP suffered because it outsourced fully to FoxCon in China, and lost its HP Way of respecting & treating employees and customers fairly.

nkkhoo says:

Foxconn is not a major outsourcing company for HP, it’s another Taiwanese companies.

Apple products all outsourced to Foxconn and others, but Apple doing fine with this model.

Outsource is not the root cause for HP declining competitiveness, it’s their own management issue.

After Bob Garwin passed away, Motorola also losing its respect for people culture. Motorola sold its mobile unit to Google.

Motorola is still making money from software service business, but it lasts for how long when Hui Wei and other Asian companies are catching up is still a question mark.

Sanil says:

When you outsourced your business, the partner would not care for your brand but just to make money off you. You also lose loyal employees (and dilute your company culture) when you retrench them.

HP was played out by then CEO Carly who collaborated with Compaq’s Capello to make off with easy money when the two companies merged as the largest computer producer.

nkkhoo says:

All major PC brands are outsourced to China and Taiwan companies. Outsourced companies supposed not to reveal who are their customers.

The difference is some companies treat their customers well like Dell and Asus.

Try to deal with HP, Acer, Philips, Logitech, Linksys, etc. as a small consumer, they will treat you like shit.

Ghani Komtar says:

Pensonic can hire you as consultant to improve after sales service 🙂

nkkhoo says:

I’m a minor shareholder for Pensonic and losing >10K money for holding my shares.

Bad customer service usually is a tale-tell sign the company is losing money. Bad customer service and lose money is another chicken and egg paradox.

Both Nokia and Logitech are losing money.