Monday, July 21, 2014

Madam Chairman

From the news services, sorry I missed this on Friday
HP's Unearned Move to Make Meg Whitman Its Chairman
By Diane Brady July 18, 2014

In any other company, the decision to give your chief executive the title of chairman might simply be a matter of debate. But Hewlett-Packard (HPQ) isn’t an average company.
The once-revered tech giant holds a special place in the annals of boardroom antics. In recent years its directors have approved some truly terrible deals, including the $11.1 billion acquisition of Autonomy that turned out to be worth 80 percent less. The board fired popular CEO Mark Hurd, giving him tens of millions in severance, and then hired a replacement, Léo Apotheker, that most of them hadn’t met, only to fire him 11 months later. Add in the bickering, the public accusations, the embarrassing leaks, and the even more embarrassing spying scandal, and it’s easy to see why several governance experts once dubbed HP’s board the worst in U.S. history.
Luckily, under Chairman Ralph Whitworth, HP’s board seemed to have some measure of credibility with shareholders waiting to see if CEO Meg Whitman could fix the mess she inherited. Between the writedowns and 34,000 job cuts, it’s been a tough slog. But Whitman has made some progress, and the stock was starting to recover.
All the more reason to question why the board suddenly gave her the job of chairman this week. For one thing, it looks like a reward for a job well done–a verdict even Whitman herself might feel is a tad premature at this point. And HP is going against the growing trend among corporate boards to split the chairman and CEO roles in an effort to boost a board’s independence.
Whether an independent chairman actually improves a board’s performance is open to debate. Noel Tichy, a management consultant and professor at the University of Michigan’s Ross School of Business, isn’t a fan of splitting the roles. He thinks it undermines a leader’s effectiveness and can promote a dysfunctional dynamic where directors play the chairman off the CEO in the same way kids try to pit mom against dad. Still, Tichy agrees it’s too early to heap accolades on Whitman, who was plucked from the board to take over as CEO. At this point, he says, “they’re at base camp at the bottom of Mount Everest.”
All the more reason for HP’s board to aim for best-in-class governance instead of bucking the trend. Nell Minow of GMI Ratings describes HP as “a serial offender” with shareholders. “To unthinkingly give the same person the CEO and chairman role shows that they still don’t get it,” Minow says. “Given the many failures that this board has had, you have to wonder why they didn’t even explain this move.”
Will they give lead director Pat Russo more authority? Has Whitman been hampered by not running the board? Do directors realize they’re going against the advice of most governance experts in giving Whitman both jobs? For most other boards, such questions might suggest a lack of trust. For HP’s board, it’s more like standard operating procedure.
This board hasn’t yet earned the full trust of shareholders. To give Whitman the chairman role and say little beyond a bland corporate statement illustrates why. The issue isn’t whether Whitman has earned the right to be chairman. Shareholders should ask whether HP’s board has earned the right to make that deci

Wednesday, July 9, 2014

3D Printing

Casting about for ‘news’ about HP that could help the momentum play that Whitman seeks so avidly, I found an item by Trevis Team, writing in Forbes’ Investing column on March 28, 2014 (my notes in red): 
HP CEO Meg Whitman at the shareholders meeting on March 20, announced that the company is planning to enter the 3D printer arena by the end of this fiscal year. (HP’s fiscal year ends October 31.) Although, 3D printing technology is over a decade old (actually more like twenty years, for HP’s original patents-CHH), it has recently caught the imagination of manufacturing industry, as some of the advancements in the field have reduced price of owning, and manufacturing with, a 3D printer. As a result, the 3D printing industry is expected to grow at a robust pace of over 30% per year in the coming years. At present, small companies such as 3D Systems (NASDAQ: DDD) and Stratasys operate in this industry.  However, with HP’s entry into this market, competition will surely heat up. While HP has not divulged much information on its product offering, in this article, we will size up the 3D printer market and analyze why HP is entering this market. Additionally, we will try to analyze how HP’s foray will impact the 3D printing industry. 
Sizing The 3D Printer Market
The global three-dimensional (3D) printing (also known as additive manufacturing, rapid prototyping or direct manufacturing) industry is widely considered a disruptive force to a number of manufacturing practices around the world, as it reduces the need to maintain and operate factories that have significant capital requirements.
According to Gartner, the combined end-user spending on 3D printers (3DPs) is estimated to be $412 million in 2013, a year-on-year growth of 43%.  Enterprise spending is estimated to total more than $325 million in 2013, while the consumer segment is estimated to reach nearly $87 million. Gartner also projects that 3DP spending will grow by 62% in 2014, reaching $669 million, with enterprise spending of $536 million and consumer spending of $133 million. Gartner estimates the number of units shipped to increase from 56,507 in 2013 to over 98,065 in 2014 (don’t you love the precision, if not the accuracy?  CHH). It also expects the units shipped to double in 2015.
Most of the growth in 3D printing spending is currently driven by one-off or small-run models for product design and industrial prototyping, jigs and fixtures used in manufacturing processes and mass customization of finished goods. However, as the 3D printing technology advances, both in hardware and software technology together with reduced materials cost and complexity of creating 3D printed items, its applications will expand to mass market areas such as architecture, defense, medical products and jewelry design. As a result, according to Wholers Associates (not exactly a household name for ‘futures’ guesses?), the sale of 3D printing products and services, which includes printers, ink and products, is expected to grow to over $10.8 billion by 2021. However, this number pales in comparison to the revenues of the global manufacturing industry, which runs in trillions of dollars. Considering the market size of the manufacturing industry, we believe that the addressable size for 3D printer industry and its products is very large.
Why Is HP Entering 3D Printer Market Now?
HP is a leader in the 2D printer market, with a 40% market share in 2013 according to IDC. The company believes that 3D printing is a natural progression of its 2D printer business, where it has a sizeable share. In its shareholders meeting held last week, HP announced that it has plans to enter the commercial 3D printing market by the end of this fiscal year. The main reason why HP is entering the 3D printer market now is because a host of core patents such as apparatus for producing parts by selective sintering have either expired or are expiring within a year (sort of supports the notion that this is oder than a decade, ehh?). As a result, HP won’t have to spend huge amount of time and money on developing new technology and processes for discovering how to model 3-D objects. Furthermore, the high cost of consumables in 3D printing has been a major barrier to innovation in the field. However, HP claims to have solved a number of technical problems such as low quality print output and long printing time that have hindered broader adoption of the high-tech manufacturing process.  (This is the first key sentence in the report).
HP’s Foray To Positively Impact 3D Printing Industry
HP’s foray in 3D printing will add some momentum to a fledgling industry that is dominated by smaller players and could help counter criticism that the technology is still too immature for widespread consumer adoption. Moreover, HP’s entry will bolster innovation in the industry as it has deep pockets (HP has nearly $16 billion in cash on its books), and can easily fund any R&D to improve future processes or ink (Plastic filament), which costs anywhere between $25 to $45 for a kilogram depending on the quality and manufacturer.
Additionally, HP can expedite the adoption process since it can mass produce 3D printers cheaply and market it through its well established distribution channel. HP has a relationship with several companies to whom it supplies its printer and PC. It can help these companies to manufacture some of their products as well. Such a move will create synergy not only for HP, but for its customers as well.
Although, the company did not disclose much about the product that might be introduced, it said that it will first target “enterprise” customers, which are comprised of businesses, government agencies and other organizations. While it is too early to speculate, we believe that most of the revenues from 3D printer will come from ink sale rather than sale of unit printers, primarily due to the fact that as adoption of 3D printing gains traction, manufacturers will require more ink (duh, pretty insightful?).

Monday, July 7, 2014

More about 'The Machine'

Just saw Bill Harrell's description for Digital Trends of HP's "Machine"     See it at:
http://www.digitaltrends.com/computing/what-is-the-machine-hps-new-super-computer/#!94DVM

Might be worth considering how this timeline compares with Birnbaum's Spectrum from the '80's.

We hired Joel in January 81, and by 83 he had some nice prototypes running at HP Labs.  By fall '84, Birnbaum and Doyle moved to Cupertino to revamp the computer group leadership, a group which had been resistant to RISC ideas (and to HP Labs in general).

In May 1985, Bill Worley among others outlined HP/PA (HP Precision Architecture) in the HP Journal.  In February 1986, HP had a major press conference release to announce the machines.  In a stern voice at the end of the press meeting, Packard dolefully pointed out that the machine was not ready, pissing off everyone else on the dias.

In November 1986, the first machine shipped, not exactly a big hit, but at least 'on the street'

Between 1987 and 1989, the big news was that the new migration center was able to make the novel HP RISC architecture handle substitution into DEC and IBM bastions--not yet outperforming them, but at least able to offer an alternative, usually much cheaper and in places more reliable.

In Febrary 1991--yes, just ten years after starting--the Snakes project--the HP 700-- led by Denny Georg, was announced and delivered.  It was the first RISC machine with industry-leading performance.

Now, granted, things happen quicker these days, and designers and managers are smarter, right?

But, the HP plans for "the Machine" sound just a bit optimistic.  Hope they're right!

Wednesday, June 25, 2014

Another "BEST" list for HP

The Silicon Valley Business Journal yesterday ran a story entitled

Four Silicon Valley companies rank on best places for IT jobs (none of which are Google)


These are the kinds of lists that HP routinely used to be on, at or near the top, for forty years or so.  Hasn't been true in quite some time.  So, naturally, the title drew me in.  

It actually is a list compiled by the magazine ComputerWorld.  Here's the bullet lead: ComputerWorld just released its list of the 100 best places to work in IT for 2014, and only four Silicon Valley companies made the list: LinkedIn Corp., Informatica Corp., VMware Inc. and Hewlett Packard Co. — although South San Francisco's Genentechalso made the list.

The criteria?  salaries, bonuses, promotions, programs for recognizing excellence, flex-time policies, the number of women and minorities in IT, elder and child care, and reimbursement for education.

LinkedIn and Informatica made it for 'mid-sized' companies; HP and VMWare for 'large'.  Here's the HP story: 

VMware and Hewlett-Packard made the list among large companies, rating 26th and 28th, respectively, out of 55 companies with over 5,000 employees. VMware has flexible vacation time, on-site cafes and gyms, and the opportunity to work with customers.
HP looks like a good place for high pay. It scores for competitive pay and benefits, company-matched 401(k) plans, and stock purchase plans. It also offers on-site health clubs, concierge services and programs to promote healthy living and fun.
Quicken, by the way, is great at employee retention career development and benefits.
No Silicon Valley companies made the list of small employers.
The link, if you'd like to read the whole story: http://www.bizjournals.com/sanjose/news/2014/06/24/four-silicon-valley-companies-rank-on-best-places.html?ana=e_du_pub&s=article_du&ed=2014-06-24&u=p3hytg4uJDjp%20I5PDYTDxA08920494&t=1403699555&page=all 

Friday, June 13, 2014

The MACHINE

HP took the wraps off "the Machine" this week at Discover.  Julie Bort reports on it, with pix, in the Business Insider at http://www.businessinsider.com/hp-shows-off-new-kind-of-computer-2014-6

Martin Fink, head of HP Labs, with Meg Whitman's backing and blessing, revealed a WHOLE LOT MORE than ever before, about what all of this Memristor stuff of Stan Williams, HP's semi-famous Fellow.  See the story from 2008 at http://www.hpl.hp.com/news/2008/apr-jun/memristor.html

Peter Bright also covered the Discover announcements... see http://arstechnica.com/information-technology/2014/06/hp-plans-to-launch-memristor-silicon-photonic-computer-within-the-decade/   He did s nice job of positioning some past announcements (e.g. Moonshot and Apollo, covered in this blog a couple years ago), with bits and pieces of current introductions.

The whole 'system' is not due for completion until, say, 2017 at the earliest, or 2020 more likely, but hey, this is indeed good stuff--the kind of stuff HP used to be known for, changing the playing field.

Meg Whitman, for her part, did a great job of noting that if all the Data Centers (read Cisco Systems and Intel servers and Google and eBay and Amazon concentrated collections of 100,000's of 'blades' were counted for their energy consumption, they'd match the 5th largest nation in the world.  Egad.

At a time when Cisco blade servers have just 'arrived' to challenge the x86 vendors (Cisco has a surprising 20% of that market in less than 3 years since entry), a revolutionary energy play could indeed have true value for HP's fortunes.

What is it they say?  Stay Tuned?

Monday, May 12, 2014

A true privilege

In the past eight months, I have had the unique privilege of working again with HP (even getting paid, which at this point in time is a pretty good metric).

The groups have included some Leadership Training seminars, some Leadership Team meetings, and some workshops co-sponsored with Stanford (and even one with Harvard, can you imagine?).

All told, a cross-section of several hundred senior folk from every major group of HP...

The points to make are several:

1. I was uniformly impressed by the MOOD and the OPTIMISM.  The outlook is a cautious, sober, clear-viewed appreciation of how difficult this modern world is--in terms of competition, dynamic product and services definition--but a belief that HP once again can be equal to that challenge.

THIS IS A VERY DIFFERENT and very POSITIVE MOOD and VIEW than the 2002-2012 samples

2. The attitude about, and evident support for, INNOVATION is DRAMATICALLY HIGHER.  This is the sine que non of future success.  Again, there was a perspective that this is IMP:RTANT, nay KEY, for HP to prevail, an attitude that was curiously absent for way too long.

3. The third thing to report is just the QUIET CONFIDENCE that HP is once again acting in a way that makes them PROUD to be part of it, instead of APOLOGETIC.

None of these solve issues like "How is your LapTop selling" or "Why did you miss the mobile phone biz and what are you going to do now?" but those issues were impossible to deal with in a constructive way with the mood and feeling that too long dogged this company.

So, I AM INSPIRED about the perceptions I report here.  Let's hope it translates.

update on "Old acquisitions"

A sharp-eyed reader, actually a true historian, Jon Johnston who founded the HP Computer Museum in Australia (a VERY NEAT SITE), kindly sent a note this weekend, saying my January 7, 2014 post about past HP acquisitions was a bit in error, leaving out Boonton Electronics in 1959.

Ah, why don't I read my own book?  pp. 117-119 of THE HP PHENOMENON chronicle part of the story here, but this includes a bit of 'new info'.  Incidentally, the book is now in second printing, and in the 'new digital age' Stanford says it will stay in print indefinitely, albeit missing the colorful jacket

Actually, there were three acquisitions for HP in 1959, all of them omitted from my blog post.

The first of the three was PAECO, which stood for Palo Alto Electronic Components Operation.  This was a partially-owned company started by Dave and Bill and several members of the Executive team prior to HP becoming a public company.  Thus, in effect, it was a way to get some ownership to others before they could have stock in HP.  PAECO built power transformers, kind of a commodity even then as part of a power supply, and a few other hard-to-find components (e.g. tight-spec wire wound resistors for voltmeters).  Some 30% of PAECO sales were to HP.

The second was DYMEC, formed as a separate company that bought HP equipment and assembled it into systems.  Again, partially owned by Dave and Bill and several exec committee members.  Both PAECO and DYMEC pulled execs from HP as their top mgmt.  DYMEC's logo was HP inverted.  The two shared a building at the 395 Page Mill site.  As you walked from Building 7B to 7C, the logo in the floor read "HP" -- waling the other way it read "DY"  (this used a stylish H and Y).

The third was Boonton Eledronics, in Boonton, NJ.  They built radio frequency signal generators and a few other RF equipments.  I did not tell the story in the book about Barney Oliver being a long-time consultant and part owner for Boonton, where he actually held a couple of patents on sweep linearity compensation for an X-Y display system they built (that didn't sell very well).

Thus in sharp contrast to the Moseley and the Sanborn acquisitions i referenced in the January 7 blog post, these were all somewhat different since they had HP ownership connections (entanglements?).

Four other sidebars on the Boonton acquisition
1. Bob Loughlin Sr. sold Boonton to HP, and served thereafter for many years on the Princeton group that sponsored Albert Einstein and John Nash
2. Bob Loughlin Jr. was the first transfer from an acquired company into a key role for the parent HP
3. Barney's X-Y Display predated mine by nearly a decade, though I still claim the HP 1300A was 'the first commercially successful X-Y Display for computer readouts'.  His knowledge of this arena led to a very critical project review once for me, that was truly unnerving.  Thus, the satisfaction of becoming barney's replacement for the development side of his job when he retired was wonderful
4. Years later, like thirty years later, Dialogic began its operation in the old Boonton facility.  I joined Dialogic as VP R&D five years later, but they had moved by then to a new place three miles away.