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Thursday, August 18, 2011

HP lays a rotten egg

Today's announcement that HP is exiting the tablet and smartphone business -- and potentially divesting their PC business too -- is startling to some but not others. Many of us thought HP made a big mistake when it acquired PC manufacturer Compaq in 2002. The harsh truth is, PCs are of little interest these days to consumers, while competitors like Dell and Lenovo have kicked HP's butt in the corporate PC market. The new HP CEO is facing reality.

HP is, or was, a revered name among electrical engineers. To a large extent HP made Silicon Valley and the venture capital industry. But in most respects the true "soul" of HP lives on only in Agilent, the test equipment company that HP divested in 1999. I don't know what the distinguishing characteristics of HP are now.

It is a time of great turmoil among companies who make information appliances -- PCs, tablets, and smartphones. Google, which faces enormous legal challenges to its tremendous success with the Android platform, is acquiring Motorola Mobility in a rather awkward transaction. Google is run by smart people who know utterly nothing about the hardware business. I predict that Google's management have crossed the line into hubris and that Google will screw this up completely. Meanwhile Samsung and all other licensees of Android will be understandably mistrustful of Google. Failure to buy Nortel's patent portfolio was first perceived to be a major setback for Google -- but in retrospect, I wonder if they had intended to buy Motorola (and its larger portfolio) all along and were merely bidding up the price for Nortel's patents in order to inflict pain on competitors.

Microsoft, desperate for attention in the smartphone space, seduced a failing Nokia into being their captive channel for Windows Phone 7. "Good luck with that", as the saying goes. RIM is headed down the tubes and shows no signs of improvement.

Meanwhile Apple continues to chart its own course, apparently untouched by current events aside from some patent litigation. Apple remains highly dependent on the brilliant but insufferable and medically challenged Steve Jobs. Just as General Electric has not been the same company after the equally brilliant and insufferable Jack Welch retired, one questions whether Apple will falter when Jobs eventually leaves the CEO's office.