HP Phenomenon

tumultuous

2011-09-28T09:55:00.000-07:00

Well, THAT was a fine flurry of events. Along with many others, I weighed in on an opinion piece, when asked (in advance) "what do you think?" The problem is that soundbites are what the TV guys and the journalists are after, not the 'full story'.

Why did Leo get bounced? Well, lots of back story here. When did it start? Some might say the day he was named, given that two-thirds of the Board deigned to meet him in advance to interview him. That story was among the more incredulous to me; two-thirds of the Board at the largest high-tech company on the globe didn't "have time or energy" to interview the one standing candidate after they'd gotten rid of the thug on trumped up charges? Huh? These folk were getting $325,000 for six meetings a year; couldn't they 'throw in' one extra hour and at least meet Leo?

What did Leo do that was so bad? Well, killed the stock price by 50%, say all the WallStreeters and p'o'd shareholders. Not exactly, if you go correlate dates and stock price. Hurd in April got HP stock to $54, it fell 15% to $45 when 3rd quarter results were 'pre-announced' and another 15% to $38 when his departure happened, along with all of the foodfight for the next five weeks or so. Did he have hanky-panky, if so why should it matter, how consensual was it, did he really do more than we've all learned so far (answer -- of course), and so on...

Leo's 'regime' if we may call it that, starts at the $38 level, and ended at $24 or so, down another 37%. So the Board, if you will, abetted a total fall of 55%, but Leo did not do all of that by himself.

No one can defend the atrocious PR moves of the 3rd quarter announcements -- at least no one that I've met. Theories about sabotaged leaks abound, and after the shameful way that the Board handled Leo's dismissal, it is easier to believe them.

More fundamentally, Leo was a victim, in my view, of the vast difference between today's American press and the European business press on the one hand, and the gulf between the American business press now vs. when the Cookie Guy took over IBM nearly twenty years ago. Each faced a situation where the structural changes of the industry and the alignment of investments were at odds. At IBM, the wheels had already come off the wagon; at HP, they were about to do so.

It had to take courage to go to the street, ala David Packard's symbolic statements of the past, to say "we're going to take the heat, and change the strategy, and fix this over some time". Packard, though, owned the place; Leo did not. And this Board has no patience or ability to take the heat, or even, it might seem, understanding of the issues out there. How else could they sign off on dumping PCs?

When IBM dumped PCs on Lenovo, they were fourth in a field of three, losing money, share, and image. HP is the biggest kahuna on the planet, making almost the highest margins (next to Apple), with share = Dell plus Apple put together, in the biggest single product area by dollars on the globe. Bigger even than the Dreamliner.

But the key is the Enterprise play. Which is what the TouchPad was designed to do, NOT to be an Apple i-Pad killer. So who made the dumb decision to go to Best Buy. Does Best Buy sell the PCs and servers for infrastructure at the Fortune 1000? NO...
Someone has been seriously duped on this 'multi-pronged' and flawed strategy. And that isn't addressed or fixed with this CEO change.

So, time will tell. But it is not sanguine. I can only hope that the 'new team' gets it right, somehow, sometime soon. But when (and if) they do, it will look a lot more like Leo's strategy than Hurd's, and a lot more like Carly's than Platt's. And there will be room for a book called "What happened to Camelot?"

HP bashing continues

2011-09-16T07:12:00.000-07:00

One of my longtime friends, an HP 'oldtimer', wrote me last week: "Seriously, isn’t it true that there’s a VERY high level of unhappiness among HP supervisors (at least) since Leo was anointed to “save” the company, by getting rid of all that pesky hardware that none of the Board members used or understood? Grrrrrr"

And I surprised myself when I penned him the following:

No, it is not true across the board. The PC group is pissed, true. And frankly, they had it coming. Apple is 15x better these days. They (HP PCG) have gotten so arrogant and haughty, I found it nauseating. Even some of my best friends... sigh

The Services group is thrilled, frankly, even though Ann Livermore was 'one of the true blue HPers", she was stuck and they'd been screwed bad by Hurd. They love (or at least much prefer) Leo and Ray, partially because they understand relationship selling, and because they restored the salary cuts.

Peripherals (i.e. Printing since HP punted Discs and Terminals a long time ago) hasn't liked anything out of Palo Alto since Hackborn set it up thirty years ago. This spans five CEO's: Young, Platt, Carly, Hurd, and now Leo. Nothing has changed, except that they are no longer growing, and their spot in the sun is about over.

The Enterprise game -- which ALL BY ITSELF just surpassed IBM HW & SW for the first time (this is IBM HARDWARE AND SOFTWARE, which is all that IBM used to be) -- is beyond thrilled. This is the group that bought Autonomy (which I think was a stupid purchase because they bought the wrong company, not the wrong segment. Attensity's technology works; Autonomy's has been 'sold' to big corporate clients, but is really second-rate stuff by comparison. All the local 'smart companies' use Attensity now).

IBM is befuddled, despite the glowing East Coast press, the ads, and the stock price. You don't see this in the Wall St Journal, they still cannot believe that IBM is as weak as it is -- a problem they've had for thirty years. Ditto the Harvard Biz Review, the New York Times, and that asinine analyst reprinted in the San Jose Merc today, Toni Sacconaghi at Sanford Bernstein. The idiocy of these 'presumed analysts' escapes me how they get printed

This dumb bastard Sacconaghi issued an UNDERPERFORM, and then defends it, saying at the end the following: "I expect the stock to be at $37 within a year, so therefore it is a stock to avoid -- it takes a lot of patience". Is this guy for real? 61% gain in one year -- that's a LOT OF PATIENCE? These idiots are essentially day traders masquerading as investment advisors.

So, my friend, I'd say HOLD or even BUY. If they successfully spin out PC's (which they should, and will), that $40 Billion business alone will likely support a $10/15 per share price. If they do that, I would modify my longtime position to think that HP should also do the same with Printing. That would be another $12/18 per share -- how many $25 billion companies besides Intel, Microsoft and Google have greater than 50% market share and greater than 10% net profit? Those two pieces alone are worth more than the whole company is valued at today, mostly by panicked uninformed stockholders who've been pissed that the Board sacked wundurkind Hurd (the guy who systematically took R&D apart and virtually single-handedly killed HP morale and ethics) and now that Leo is having to rebuild the place, they're blaming HIM. Get real!

The company that would be left would be bigger than PCs and Printing. It'd be a $60billion juggernaut, growing twice as fast as IBM, aimed squarely at the "new cloud world" with more relevant underlying technology than IBM or Oracle or Cisco have today, and the only other contender is SAP, which they'll perhaps buy with the proceeds from the two sales. The new company would be worth $50/80 per share if given equivalent valuation to IBM's exalted price.

No one recalls that John Wooden had seventeen losing seasons at UCLA before his first team went to the quarterfinals. The next fourteen years built the legend.

No one recalls that Steve Jobs managed to cut Apple revenues in half in his first seven years back after they sacked Amelio and the other "suits". Nor that when he finally got growth back into Apple, it took three more years to get profitability turned around. It took four years to get the i-Pod "successful". And it wasn't until the i-Phone II that the sales were sustainable, let alone exciting. No question that Jobs deserves the accolades he gets. No question that it took him longer than John Wooden to 'get it right'

The clown in NY, self-reputed hedge fund genius David Einhorn, who in a May speech wanted to bag Steve Ballmer for 'bad management' at Microsoft since the shareprice hasn't risen in a decade, shows similar lack of understanding even though he can put dates on a stock price chart. He must have bought at the peak, and he clearly hasn't read the same equivalent numbers for Intel or Cisco or he'd be after all CEOs of high-tech companies that had bubble-priced stocks in 2000. Ballmer's run has been extraordinary, reprofiling the company so that it is NOT Windows-dependent, growing twice as fast as Intel, Dell, HP PCs, Cisco, and five times as fast as IBM, while merely tripling profits. Not a bad ten years for what is now a $75 billion dollar company at 20% net profits. Einhorn is a total idiot. But sadly, it is folk like him that shareholders have to listen to.

Most investors, I am convinced, don't have much if any sense of history. So, my friend, this can work to your advantage. HP is way stronger than the market is saying today. Enjoy...

Cisco paved the way for a long hot summer

2011-09-12T16:19:00.000-07:00

The weather hasn't been all that warm in the Bay area this spring and summer, but the business press has been hot, Hot, HOT. Especially with the stories 'behind the stories'. Cisco downsizing, HP/Oracle suing and countersuing, Apple/Google suing and countersuing, Oracle and Google suing and countersuing, HP announcing with great fanfare and then withdrawing in even bigger fanfare, Jobs resigning and Carol Bartz detonating. Big stuff. Too much to digest?

Like, for instance, Cisco's 'blockbuster announcement' in mid-April about a possible 're-alignment', shifting from twenty-two "primary initiatives" back to "our main business". And then describing that this 'might' result in laying off 6,500 jobs. The business press treated it like a bombshell, but the number was disguised beautifully. First of all, it ignored the 5,000 folk with Fibercore and the Set-Top Box business who were 'sold', and it ignored the 500 folk with Flip-cam, jettisoned the day before they were scheduled to release their next great product. You'd think that with the top product in the world, you'd at least try to sell the division rather than just cancel it.

These moves get Cisco to 12,000 jobs 'lost' rather than 6,500. Then, some 3,000 were announced as 'taking the retirement or severance package' while another 2,800 declined such an offer. In spring 2011, estimates were that Cisco had 73,000 regulars (losing 15,000 by the count we've just listed, though the company later insisted that the 'retirees' were among the 6,500), and perhaps 25,000 'temporary workers' (plus or minus 15,000 or so).

Then, some unacknowledged number of 'temporary workers' were cut adrift, but the company would not comment on this one. The last time, in 2001, the numbers were staggering in the 'temporary ranks' -- then Cisco reportedly had 40,000 'regular' workers and 4,000 temporary. And 3,000/5,000 of the 'regulars' were let go, while 2,500 of the temps were dismissed. Estimates are that forty percent or more of the temps (vs. 60% ten years ago) were shown the door this time around. One key division reputedly had 75% of its 'staff' as 'temps' -- all of whom were dismissed.

All told, these frankly speculative numbers would put the real downsizing at 22,000 to 25,000 people, out of a total workforce of 98,000. That's BIG by any standard.

Why the secrecy re the 'temps'? Well, there are several reasons. First, this is a category that gets lots of Washington DC scrutiny after all the claims and issues around 'body shops' and cheap foreign labor and H1B visas. Books are now coming out describing some of the disgraceful practices, taking advantage of foreign nationals who have studied in America (50% of America's Masters degrees and 70% of PhDs granted in electrical engineering are to foreign nationals these days) and want to stay, or prospective graduate students who use jobs here as an entree.

Second, these jobs are by definition, and by law, restricted to "less than one year" in order to avoid the company having to provide health benefits and government wage taxes, costs that increase the labor cost to the company by up to one-third of the salary (but which tend to build longer-term loyalty as well as carry the fair share of the infrastructure cost of running our country). Anecdotal evidence, though, is that the average 'temporary' worker being let go at Cisco (just like most of the other Valley companies who use this same practice) has done the same job for an average of three and a half years -- the contracting 'job shop' just rejuggled the job title and description once a year. Patently illegal, but perfectly 'normal' in the Valley these days according to my sources.

And then, the rumor mill floated that Cisco's enormous push into 'the consumer space' with Linksys and the Scientific Atlanta acquisitions, as well as Webex and Tandberg for conferencing services, might be killed as well. The Tandberg folk we interviewed cheered this news mightily, but to date it is just rumor. When HP shot its own versions of teleconferencing a month later (June 1, 2011), the question became "does Cisco REALLY make money on these big Telepresence rooms? or do they give them to their biggest IT-shop clients to sweeten the router/fiber usage bundle?"

If all of this effort ebbs, it would be a shame, I think, for these are in fact game-changer technologies, just not particularly well executed as yet (little things like eye-contact sucks on the edge seats, because they save the cost of two extra cameras in a half-million dollar system).

All told, an interesting time at a company that has long been a bellwether in the Valley, both for a great place to work, and a progressive set of ideas for the market

Robert X. Cringely weighs in

2011-08-24T15:58:00.000-07:00

Metroactive.com, the little San Jose rag laying around in fast-food joints and coffee shops, this week has Robt. X. Cringely's SV411.com column headed "Losing the HP Way." As usual, Cringely doesn't pull punches. He cites the Agilent spinoff in 1999 under Lew Platt as follows: "While this made sense at the time, and even today, there were unintended consequences of that spinoff -- the loss of HP's corporate soul.... Lew Platt blew it in my view."

Cringely mentions the 10% time for employees working on their own ideas as an early HP idea, rather than Google who now gets credit for 'inventing it'. Robt even says (correctly) that if you needed lab stock for your 'wild-ass idea' or anything else needed to do the job, say a magnetron or a barrel of acetone, it could be taken without question on Friday afternoons.

The cruelest irony he notes is that Apple will now be building its new spaceship intergalactic headquarters atop what used to be one of HP's most important labs. He's right. Might be right in his final sentence too -- "HP may have no route back to greatness."

Compared to today's idiotic articles quoting asinine pundits in the analyst world who think it fine to speculate that Oracle will buy a beaten-down HP to give Hurd satisfaction for burying Leo, Cringely does a straight-forward sobering analysis. HPites everywhere (the old kind) are saddened beyond words.

bad news brings out more stories

2011-08-22T09:31:00.000-07:00

I had a chance this weekend to meet a CIO who 'knows' Apotheker and Hurd from days dealing with NCR, SAP, Oracle and HP. The story I found most fascinating concerned an NCR deal with Home Depot on some very customized, proprietary software for in-store customer tracking / inventory correlation. HD had a two-year exclusive, and it took about a year to debug the new system and get it functional, at which point it was instantly valuable to Home Depot. But, through a CEO 'decision' at NCR (guess who), a loophole was found that enabled NCR to sell the same SW to Lowe's, for instant installation. Lowe's was thrilled, Home Depot could sue but not walk away, and NCR shareholders all benefited. HD went later to SAP, and as it was reported to me, found them to be extraordinarily ethical. Hummn...

kinda called the shot?

2011-08-19T09:16:00.001-07:00

I just re-read my own blog a bit, in view of the news this week for HP. May 21, analyzing the second quarter numbers, I opined that HP is screwed in the consumer market -- PCs as well as TouchPads, etc. While hardly new news to anyone (since some pundits have said this for thirty years), it was satisfying to me to read my own prophecies and realize they were pretty accurate.

Today, I'd have to say, "What were they smoking over there?" This company has been out of touch with consumers for so long it is embarrassing. (Again, some longterm observers would say, "Charlie, name me one time they were in touch"). They make Motorola's disaster look like child's play, although they aren't (yet) being compared to Enron or AIG.

But for the world's largest revenue high-tech company on the globe, this has got to be viewed as mostly catastrophic. Predictably, the stories this morning go back to Carly's tempestuous acquisition of Compaq, clearly pinning the blame on the Wicked Witch. But it is hard to blame it all on Carly. She's been gone an eternity in Silicon Valley years. Consider -- she was bounced two and a half years before the i-Phone appeared, more than five years before the i-Pad appeared. Think of it this way -- Apple had yet to average 1 million i-PODs per quarter, or i-Macs per quarter -- when Carly was deposed.

It was Marc the Knife (the kindest appellation we've heard in a year for this abusive tyrant who was praised all over Wall Street) who presided over the destruction of R&D (along with ethics, any sense of community involvement, charity, or tragically, the HP Way) that paved the way for this denouement of an icon.

Apple did do R&D, with acute market sensitivity, and boosted i-POD sales by ten times in the next two years, boosted their PC/laptop sales by four times in the next five years (into a "dead, mature market"), and without the i-Phone and the i-Pad built a dynamic exciting company compared to the cost-cutting enterprise-focused Palo Alto progenitor of Silicon Valley.

And now, based on four exciting consumer-facing product lines (only), Apple has surpassed IBM in total revenues, and is about to pass HP. The only saving grace for HP in terms of 'standing tall' is to note that 'iconic' Intel, Cisco, Dell, Microsoft, Oracle, and SAP have all stagnated worse than HP, while other iconic companies, notably Sun and Motorola, have disappeared.

Unfortunately, American companies, by and large, are being managed (and lauded) by folk who resemble the leadership that has just failed HP. Check the statistics for DuPont, Merck, Kodak, Boeing, John Deere, General Motors, AT&T and Verizon, or your favorite retailer, and it paints a sorry picture for what the Wall Street Journal and Harvard Business School types admire.

end of an era

2011-08-19T06:11:00.000-07:00

The PC business for HP has beeen bookmarked by Apple. And "TOUCH"

HP, despite what the Computer History Museum august visitors think, invented and sold the first successful Personal Computer -- the HP 9100A, eight years before Ed Roberts did the Altair. And in the Computer History Museum timeline itself, Ed says "Jeez, the Intel Intellec I was a PC, and they just didn't recognize it." He is right, of course -- the Intellec I, which was a development systme for designers to write code to program their new microprocessors, was built by a team inspired by the HP 9100A, including Bill Davidow who moved from being one of HP's first three PC salemen to Intel. DUHHH...

And Wozniak, working at HP, proposed the "Apple 1" to them, but was ignored -- actually he was given permission to do it without HP interference -- about the time that Ed Roberts had his seance in New Mexico and met a kid named Gates.

It took another eight years for HP to "wake up" and decide to compete -- with the vaunted TOUCH-SCREEN, a machine with a TV ad of a Monarch Butterfly flitting onto the screen and causing magic things to happen. The Ad preview was screened for the HP Executive leadership in Napa at the tony Silverado Country Club the morning after the Apple Hammer-throwing ad ran for the first and only time at the 1984 Super Bowl.

HP execs were told confidently by our McKinsey advertising and marketing team that we'd go from 2% of a modest PC-world to 21% in a year with our machine and their help. This, bear in mind, is a year after the IBM PC was on the cover of TIME magazine as the MAN OF THE YEAR. And this team blithely wrote off Apple, whose Apple III (done by ex-HPites) and the LISA (done by ex-HPites) failed.

When the numbers were in a year later, the Mac sold 200,000 machines (only half of Steve Jobs' prediction, which fueled his unplanned departure from Apple), and HP's expensive, slow, unreliable, impractical TOUCH-SCREEN sold 40,000 -- not exactly hitting the 21% market share number. So the first head-to-head failed, pretty hard.

The second? HP announced the TouchPad in January 2010, but concluded it didn't work by April. Apple announced its i-Pad in January 2010, delivered in July, and sold one and a half million the first month, fifteen million the first nine months. Business Week reported that HP had to buy Palm and WebOS because they had outsourced R*D to Asia (gawd) and HP confidently said, "the TouchPad will be the businessman's indispensible tool" HP built 500,000 for the initial launch a year after the i-Pad launch (and four months after the SECOND i-Pad launch. Best Buy, the biggest electronics super store on the planet (but not exactly an enterprise supplier) took 300,000 units initially, and returned 270,000 yesterday.

So -- Touchpoint -- don't name your product "Touch..." and don't go up against Apple?

blockbuster news?

2011-08-19T05:41:00.000-07:00

Page 351 (and again on p. 503) of THE HP PHENOMENON has Packard's famous quote: "The only thing worse than a little shitty business is a big shitty business". His ghost doubtless jumped for glee yesterday.

The early morning San Jose Merc story said "HP has sold 25,000 TouchPads; Best Buy has 270,000 in inventory". Somewhat different than Apple stores with queuing customers for each new breathlessly awaited release of (your choice -- an i-Phone, an i-Pad, even a new Mac).

The mid-afternoon story was somber -- the TouchPad, the WebOS, and the Palm Pre are gonzo. And HP plans to (HOPES TO) abandon the PC business. Some bloggers said "Jeez, this guy Apotheker is killing the place" while others cheered and said, "This guy Apotheker just might save the place"

A fascinating week, juxtaposing the Google acquisition of Motorola's capsized phone business with HP's highly visible faux pas.

Consider -- Jobs now "walks on water, brings his own water with him." But for the first eight years after he returned to Apple, the headlines, analysts, and pundits all panned him. It wasn't until the third round of the i-Pod, circa 2005, that the headlines started being positive. And then for the i-Phone, Dvorak was merciless, and Ballmer beyond rude for early 2007. When sales 'tanked' a year later, everyone said "SEE" And for the i-Pad even, the erstwhile competitors (did we say Ballmer and HP combined this time?) all pee'd all over it -- "it'll be a failure like the Newton, no one really wants ... " Now he's viewed as this idiot-savant genius who can do no wrong. Some might say, "jeez, all he did was insist on CONTRIBUTION for customers, and insist on great innovative engineering" What a concept!

Little known fact -- the Mac (yes, they still make 'em) has gained unit sales of 28% per year for the last nine years, very profitably, in the 'dog-eat-dog' personal computer space. Hummn. This has been the annuity profit generator for Apple. This is a "mere" 15 million Macs per year today (everyone said the i-Pad would cannibalize it, but it has given a "halo effect" instead).

The i-Phone killed both Nokia and Motorola phones (there is a huge story here about how to go from the highest unit volume single electronics product -- the Razr -- in world history to virtual bankruptcy in six months, for one of the most iconic electronics companies in history).

And the i-Pad killed not just the TouchPad, but all of HP computing (a $40 billion business for which kings and queens fought and died) in one month of head-to-head. Whew!

makes you wonder where they get the numbers

2011-07-05T16:02:00.000-07:00

We went to see Cars II on Saturday night with our granddaughter. It was the #2 grossing film of the night for the nation, in 4,115 theatres, grossing $9.5M

We went to see Midnight in Paris on Sunday night. It was the #10 movie in the US that night, in 858 theatres, with $1.3m gross.

What was amazing to me is that Cars II was in its second week, and there were maybe twenty people in the theatre in the heart of Silicon Valley. "Midnight" was sold out at the first four theatres we tried with Fandango ticketing, and for the show we got into, it was jammed, probably two hundred people in the theatre, the seventh week after release. Every week of the first six for it have gone up in numbers, but no weekly number exceeded what Cars II did on that one Saturday night.

I don't question the box office numbers. But I do wonder why the 'on-the-ground' experience is so misaligned to what the numbers say.

I'm reminded of this because I am old enough to remember the MacIntosh and the original IBM PC. No one in Silicon Valley thought the PC had any lasting value (well, okay, 'no one' is a bit strong, but even Andy Grove was dismissive and his chips were in it); lots of folk were enamored of the Mac. The PC though won the dollar contest in business, hands down, by a margin of better than an order of magnitude.

So if there is any solace for HP today, after the dismal reviews of the TouchPad this weekend, maybe they can liken the iPad to the Mac, and the TouchPad to the PC?

No, no, don't go down that path, Charlie

my experience re iPad

2011-07-05T15:29:00.000-07:00

The day before Mother's Day, I wanted to get something electronic for my wife. She's used her Kindle sporadically, her Blackberry non-stop, her MacAir faithfully, and her HP PC from Cisco grudgingly, compared to her 27" iMac. She did work for HP for five years, admires the company to this day.

I loved the Sharp Galapagos, esp. the 10" screen, in March in Japan, but it didn't clear the FCC reqments in the US until today, and won't be available for months. So, in reading all the webdata, the Barnes and Noble Color Nook looked like the best bet. She reads every magazine there is, so this would be perfect, I felt.

Staples had a display of both color and B/W Nooks, as well as every Kindle model, the Motorola Xoom, and the Nokia, Samsung, and Sony machines. Android was available for all but the eBooks. I could fondle each machine, try it on National Geographic, Travel and Leisure, and Bon Appetit magazines,and also browse the web.

The Nook sucked, in a word. Poor quality, poor feel. The Xoom was the best, but not overly intuitive.

Four people were in the store, none looking at these 'hot items'. I asked the clerk which were the most popular. She said she'd sold a couple of Xooms. I asked which she preferred. She ducked her head, and whispered, "The iPad, but we don't carry it."

I went to the Apple store at the Stanford Shopping Center. I was the 32nd person in line to get a number to wait for a Specialist, who could take my order. I could fondle (after waiting behind a crowd) one of the twelve iPads on display while I waited. When my Specialist got to me, twenty minutes later, he said they were out of all iPads except the hefty-accesoried model for several hundred extra dollars, but he could sell me a very nifty gift card, and maybe by using the on-line store, she could get one in two or three weeks. Or, he said, she could check back next week.

She loved the gift card. I mentioned the Xoom and the Nook alternatives. She said, "you are kidding, right?"

The following Saturday, we were at the Apple store at 9:55am, they open at 10am. We were the 21st customer in line. No one else seemed to be anywhere in the mall. They told her, try the on-line, it'll be faster.

She got her iPad two weeks later. She loves it. I mentioned the TouchPad this weekend -- she said, "aren't they a little late?"

Ouch, and then some

2011-07-05T15:21:00.000-07:00

http://www.zdnet.com/blog/perlow/hps-touchpad-where-are-the-retail-fireworks/17671
This post has got to be concerning. What a great 'on-the-ground' report.
Jason Perlow wrote: "today on my lunch break I headed over to Best Buy over at Garden State Plaza, one of the busiest shopping malls and retail complexes in the entire country. Granted, the 4th of July weekend probably isn’t the smartest time to launch a new tablet. In New Jersey, a lot of people scooted out early and went down to the shore last night. But Garden State Plaza still was filled with plenty of cars at 11:30AM today. I parked my car outside of Best Buy. No lines out the door, no police attempting to keep order. I walked in.
I glanced at the security guard. “Where is the HP display, you know, for the tablet?”

“Oh… all the computer stuff is upstairs.” He motioned me to take the escalator. I took the ride to the top.

I walked over to who appeared to be the retail sales manager. “So where’s the TouchPad?”

“The what?”

“You know, the HP Tablet. The one that goes on sale today.”

“I don’t think we carry that here.”

“You’re supposed to be their primary retail launch partner, how could you not have them?”

“Well, all the HP and tablet stuff is over there… (pointing) it might be on display, if you get the SKU, just get one of the stock boys to get one out of the cage.”

“Okay.”

I walked over to the tablet area, where there was a prominent display for the iPad and various Android tablets, including the Acer Iconia, the ASUS Transformer and the Motorola XOOM. Off to the side, on an empty white formica table was the HP TouchPad.

Nobody was huddled around it. Nobody was playing with it. There were no lines of people asking to buy one. There was one other gentleman who came to buy an ASUS Transformer who asked me a few questions about it while I fondled it and took photos of the store.
I motioned over to the stockboy and pointed at the SKU for the TouchPad. “Can you get me one of these out of the cage?”

“Sure… you want the 16GB or the 32GB? We’ve got about sixteen units in stock if you want to buy more of them.”

“16GB, thanks. Do you have any accessories, like the Touchstone or the cases? Or the keyboard?”

“Nope. I can check the Fashion Center store though. (calls other store on phone, asks for the electronics department, waits on hold for about 30 seconds) No, no accessories. The other store has about another 20 of these. Here’s your tablet, I hope you like it, it seems pretty cool.” He hands me the box.

“I was kind of expecting HP to have a better display, with demos and stuff. Maybe a customer rep to show it off.”

“Yeah, well, HP came over to Garden State Plaza earlier in the week for an event when the Transformers movie came out as sort of a double promotion. But they haven’t been here since. I heard they may have given the guys some training at the other store.”

“How many of these have you sold today?”

“You’re the first.”

I handed the cashier my AMEX, paid, and walked out.

confusion in the marketplace?

2011-07-02T10:53:00.000-07:00

Friday's Wall Street Journal carried the following (by Ben Worthen and Ian Sherr):

"H-P's device, the TouchPad, comes more than a year after Apple started selling its iPad. In that time, Apple has sold more than 25 million tablets and added nearly $100 billion in market capitalization. H-P, meanwhile, has lost $50 billion.

H-P is planning a marketing blitz for the TouchPad. But it faces an uphill battle in the fast-growing tablet market, which is dominated by the iPad and crowded with devices from Samsung Electronics Co., Motorola Mobility..."
Read more: http://online.wsj.com/article/SB10001424052702303763404576418063248909764.html#ixzz1QyINXwXQ

A classic, really snotty article, by journalists with their heads parked where the sun doesn't shine. HP lost virtually all of the capitalization due to the Hurd debacle, not for lack of a TouchPad. And as we've documented here for several years, the Hurd shell game was essentially over, and whoever was next would have to deal with a shortchanged deck.
Yes, Apple's stock has gone nuts, rightfully, and the i-Pad is a huge winner (as are the i-Pod, the i-Phone, and the i-Mac). But Cisco, Microsoft, RIM, Nokia, Motorola, Intel, Oracle, SAP, and even IBM stocks have fared poorly also -- check it out, and no one is suggesting that they should be head-to-head compared to Apple's success.

Saturday's WSJ Blog repeats the quote, adding that: "Fifth Man in a Four-Man Race’: Starting today, H-P will have employees stationed in over 100 Best Buy stores, selling its new TouchPad tablet priced at $499. The device debuted to some mixed reviews, earning plaudits for its WebOS and criticism for everything else. A major negative, the lack of native applications. H-P said that the TouchPad will have 300 apps—roughly 89,700 apps less than Apple’s iPad. The company is working with software makers to develop programs for the device, but with no established customer base there is little incentive for developers. The WSJ tracks down a mobile games maker, Bryan Duke of Acceleroto who says, “I can reach a bigger audience—more happy customers and more potential revenue—with [Apple’s] iOS,” he said."

Well,duh... HP pointedly said for months that it is building a Business TouchPad, not an entertainment TouchPad. Accelerato builds games that no IT manager would allow to run in a business setting. So do the porn guys, but their stuff sells. An X-rated producer could give an equally appropriate WSJ quote.

We just hosted three grandchildren this week, two are eight years old and one is thirteen. We compared notes for our i-Pads (yes, we each have one). The thirteen year old girl had over two hundred apps; two were worth adding to my wife's iPad which she uses primarily for her business, but also for magazines and even the WSJ. Of my wife's seventeen apps, the girl wanted one. The eight-year olds had already used their monthly allotment of minutes, and filled a quarter of the memory with streaming video shot around their house. The first sixteen movies appeared mostly to show the family dog wandering all about. Deathless video, destined for YouTube.

Serious laptop users, serious book readers and researchers, and most folk who work for companies have real work to do -- if the 89,700 apps now available on the iPad and not on the TouchPad, help dramatically in those contexts, they'll be ported soon enough -- provided that HP can establish that it has built a quality product for real business users, overcoming the clear shortcomings of all current iPad-like devices for such environs. But such observations don't make good press copy.

Reading the signals

2011-06-28T08:39:00.000-07:00

So, in the last couple of weeks, HP has had three more announcements
1. Suing Oracle (and Hurd) again
2. Restructuring the Management Council, Executive team, and Board a bit
3. Rolling out TouchPad

Press reports to the next phase of the lawsuit, brought re Ellison bashing HP computers and in particular Intel's Itanium, seems fruitless in many circles. The really big news here might actually have been Oracle's quarterly report, where they were forced to report that their Sun computing arm had revenues shrink again, to about half of where they were a mere two years ago. This is a dead, dead line, with no chance at Oracle of keeping the inventive genii who kept Sun alive for so long. So Ellison is spending his time bashing HP, seeding doubt and fear as much as possible, and generally acting like ... well, like Larry

Apotheker continues, in a deliberate way it would appear, to put his stamp on things at HP. He moved Ann Livermore, the embattled, thrice-passed over Chieftain of HP services, out of the company and onto the Board. Ann, much-loved and disappointed once again in a goal to become CEO, has run services for a very long time. There is a truism that you can outstay your enthusiasm and creativity -- might be true here. He also elevated Steve DeWitt into PSG leadership, sending Tood Bradley to China. This is terrific news for innovation at HP, and could also be positive re opening China further. Bradley, a hard-charging exec with many of Hurd's better qualities, will be an interesting international player; DeWitt's chops are all about innovation, which can only be cheered from every vantage point.

"FINALLY" rolling out TouchPad, HP's belated version of the i-Pad. Recall that Steve Ballmer showed HP i-Slate at CES in January 2010, three months in front of the first i-Pad release. With a Microsoft OS base, and Intel chips (never competitive at cellphone architecture or battery-powered apps), and an outsourced foreign developer, this product was screwed from the get-go. And then HP, via Phil McKinney, had a chance to buy a distressed Palm Pre with its innovative next-gen operating system, WebOS. This was also a chance to snare Jon Rubenstein, a legendary designer with innumerable successes under his belt.

The Palm Pre failed because the cash-strapped company couldn't match Apple's gigantic Apps Store for the i-Phone, not for lack of product. Rubenstein knows Apple, leading the team for the original i-Pod, for example. He also knows HP, having led the first HP programmable computer years ago.

See todays San Jose Merc article with Steve DeWitt. HOPE that innovation is back!

What DO the numbers say?

2011-05-21T10:43:00.000-07:00

Second quarter performance was mostly terrific, some might say -- so why did the stock crater? Some say Cathy Lesjak shouldn't have been so bullish earlier in the year, and that Leo Apotheker had to retract her forecast -- perhaps true. Note that what he said was "earnings of $5.00 vs earlier a $5.20 statement". People (or automated trading programs at least) ran for the door.

But consider, HP has always been strongest in 1st quarter, due to its shifted fiscal year, and it has never been a "fourth-quarter phenomenon company" in sharp contrast to IBM, for example. And the first quarter was $1.17, up 27% vs. a years ago, while this quarter at $1.05 was 15% ahead of a year ago. So, even if there were no rain clouds on the horizon, they've got a tall order ahead to get a second half of $2.98 vs a first half of $2.22. So, retrenching a bit makes all sorts of sense without invoking the shibboleth of "what Hurd did to gut things, that now must be restored" or the issues surrounding Japanese supplychain with the earthquake and subsequent disasters in that unfortunate nation.

More instructive to dig a bit deeper, in my view:

PCs -- this is the Achilles Heel, perhaps. The i-Pad is going gangbusters, have you heard? And HP's tablet entree is late, off-target, and ill-equipped to compete. So that game is probably lost for this round at least. Does it matter to PCs? Sure. And we now have 1Q and 2Q results. HP PCs, the leader in the world, is DOWN 12% in Q1, and DOWN 23% in Q2 for the consumer markets. Thank goodness Corporate America (and the world) like PCs (and cannot figure out yet how to make iPads useful for work rather than entertainment), so corporate PC sales are UP 11% in Q1, and a remarkable 13% in Q2. Overall, HP PSG performance (never mind the re-org structure) is more-or-less holding its own, down 5% overall in revenue, and down from 6,4% to 5.7% in net profit.

Is Dell the issue? Not really. Their total corporate growth for the identical time period, was 1%, vs. HP overall at 3%. They now get 30% of their business from the enterprise level of servers, storage, and services as well. They reported DOWN 7% for their consumer biz, so in that $3B segment, they lost less than HP.

The real question for consumer level stuff is whether HP really can play here at all. It has not been a historic strength; it is unlikely that the current holdings will burgeon again, and it is clear from hindsight that the vaunted HP R&D creativity has yielded next to nothing compared to, say, Apple (not to mention Sharp, Canon, Android, and other hardware/software folk). This ignores completely any question about Google, Facebook, Skype, LinkedIn, Amazon, etc. services.

Enterprise stuff, sans services. HP, first quarter was down 2%, but Q2 was up a very solid 15%, vs. Dell, up 5%. Hummn. Here the right comparision is IBM (or Oracle, Cisco, WHO?). This could become solid, esp. when combined with Software up 20+% at great margins, and Enterprise printing up 41% after a solid 33% in Q1. So, we'd have to give HP very high marks in this space -- it has growth, margins, and a big territory. If the i-Slate (sorry, I cannot get past the old name) works for this arena, it could be GOOD. Bear in mind that the i-Phone, for rounds 1, 2, 3 and now 4 have yet to challenge the RIM Blackberry. It is Android, not an Apple mentality that serves corporate requirements. So, stay tuned, but this is where HP action is.

Printing. My Gawd, this just keeps performing. Up 5% in Q2 after up 7% in Q1. Clearly, the enterprise growth rates are helping, but paper must not be dead yet.

Services. Up 2% with a 15.2% margin. Vs. down 2% with a 16.0% margin in Q1. This is the truer concern, rather than PSG. This MUST perform. And these growth rates are anemic. And IBM is thumping HP right now, not to mention a host of dedicated companies. And this is the group that has not yet perceived that the HP Way exists, c.f. the comments of Peter Hill in his Amazon review of our book or the blog post earlier today. So Apotheker has to address this if HP is to find this business of value. And when you factor in all of the Corporate Board members, it is laughable to imagine that their expertise is very appropriate to this side of the business (c.f. Tiernan Ray's rant in Barron's). The E-Bay model was hardly "corporate services" and that charitably would be the closest of anyone on the Board to this world. So Apotheker, to a significant degree, is going forward here without much hands-on guidance.

BUY -- SELL -- HOLD?

The good news is that HP is currently discounted in the marketplace pretty well, so if you weren't an owner, you might consider it now. But it will be a longer rather than shorter 'play' if we are reading this correctly.

who IS in charge?

2011-05-21T10:26:00.000-07:00

Tiernan Ray has a provocative column today in Barron's, posing the question of who is really running HP today. Here's some of his heavy hitting: "WHAT I HEARD LAST WEEK, FROM SOURCES who would rather remain nameless, is that the board of heavy hitters think they know the strategy better than Apotheker and that there have been differences of personal style, if you will, between Apotheker and some members of the board."

"What might that mean? If two powerful venture capitalists, Lane and Andreessen, head up the board's technology vision, it's conceivable, some sources mused, that both individuals could be telling Apotheker, in effect, how he should spend investors' money, rather than that decision coming from Apotheker himself."

Ray goes further, mentioning Meg Whitman, one of the more interesting and arrogant CEOs in recent memory, renowned for her spotless record (actually spotty is a much better word, if you consider that the EBay board couldn't wait to undo her strategy when they helped her deplane. Then we all got to witness her maladroit run for Governor in a state which has gone completely soap opera).

Without getting deep into this discussion, which will doubtless unfold over the next few months, it bespeaks an interesting conundrum for Apotheker that link to the obvious issues inherited from the last fifteen years of CEOs from Platt to Firina and Hurd gutting R&D and contribution from "the bottom"

Apotheker was bold this week, proclaiming that he would accept shareholder dismay while he works to build the longer-term business, especially in the weakened services side. Shareholders heard him, punishing the stock price by 14% from ten days ago. Since the new estimates are that 45% of NYSE stock transactions are now held for nanoseconds in trading programs rather than months or years by traditional investors, this is not at all surprising. And HP stock increasingly, as with most on the Big Board, is held in institutional form, subject to the same slavish behavior of any herd mentality.

So, he's on a short string, vindicating the pundits and shareholders who were incensed when the draconian last guy (what was his name again?) ran things.

Must be a pretty hot seat.

Dead DEAD?

2011-05-21T09:48:00.000-07:00

A fascinating week! First, let me acknowledge Peter Hill's critical Amazon review posted last week. He takes strong issue with our HP book -- which he bought hopeful to "motivate me to think better of the company I work for." He's been at HP two years, coming via the EDS acquisition. His conclusion about our book -- two stars out of five, pretty damning! -- is that "Something is definitely wrong at HP and this book sadly is not much help in finding out what. It's a nostalgic look that is probably really interesting if you are 70 and remember working at HP in the sixties."

And yes, I agree with him when he paraphrases our opening "the HP Way is dead, Dead, DEAD" and he adds that "it's been dead for twenty years". I couldn't agree more. I left the company 20 years ago for that very reason.

Furthermore, I agree with him when he writes "you'd be better off to read the gossip columns about the Mark Hurd dismissal". The fact that we contributed heavily to those gossip columns -- I was the first one, and the only one in the worldwide press for 72 hours -- to pronounce that guy the thug that he was (and is), aptly caught in Hill's quote "the greed of the executive tier and the manipulative bunch of silicon valley insiders responsible for the acquisition bloat that is HP today."

If Hill were to review this three year running blog about HP, he might find more relevant material re "today's HP" than in our avowedly "strategic history book" about HP. My guess is that Peter is struggling with whether he is at the wrong company, or the right company at the wrong time -- just "reading between the lines"

But his question and extended critique begs a serious answer. Bianco's book "The Big Lie" about Hurd's corrupt leadership comes at it for an individual, at this one company. But the book that takes on Corporate America, not just greedy HP leaders or even Silicon Valley insiders, has yet to be written. That book would have to include Mike Cassidy's column when Paul Baran died, where he opined that Baran was a relic of 'the old days' in silicon valley, before "business bullies and braggarts" took over.

I call it "The Broken Dream: Wall Street vs. Main Street" (copyrighted here first). Such a book would analyze just when it was that Venture Capital, the nation's Business Schools, and Wall Street conspired, albeit loosely, to decide that Charlie Wilson at GM 58 years ago was wrong when he said "what's good for GM is good for he country." Now the thesis instead seems to be "what's good for (insert your favorite company name here) is good for the shareholders" while leaving unsaid the rest of the sentence -- "and to hell with the employees and the local community". The HP of which we wrote believed that shareholders were pnly one of four major constituencies to be served, and executives at the company were not even one of the four. Back then, employee contributions to local civic affairs was expected in both time and resources; employee satisfaction and enthusiasm were important, even vital. Outsourcing would have been anathema, even as intellectual contribution around the globe was celebrated.

That book would be more relevant, but it would be a depressing book to have to report that not only HP, but Intel, Cisco, Oracle, Microsoft, IBM, and practically any other of our 'revered' high tech giants of yesteryear have the same disease. Not to mention Citibank, Merrill Lynch, WalMart, Motorola, DuPont, Xerox, any car company of rank, the oil companies, AIG, Boeing, Kodak, and other "household brands" We've broken the bond, and this, more than sagging K-12 math scores, is killing America.

Not sure that such a book would be very popular, certainly not in leadership halls.

a cornucopia about to flow

2011-03-22T08:33:00.000-07:00

we're starting to have HP writers... hooray.

For some reason, for the first seventy years of HP's history, no HP executive ever published a book about the company, or even their own experiences. Sure, there was Barbara Waugh's personal saga which is a wonderful tale from an HR and humanistic perspective. And Dave Kirby and Karen Lewis helped ghost Packard's autobiography.

John Minck continues to update his essay about HP roots and personalities, first published almost twenty years ago now. Gosh, does that seem possible?

Now, there are new encouraging signs. John Stedman, who provided significant help for Ray Price and me on our book re the peripherals history, has published his memoirs, a 400 page extended essay that HP buffs will find interesting. He includes much about HP's move into Bristol England as well as the Boise, Idaho experiences.

More significantly, Webb McKinney is engaged in writing 'the story' of the last twenty years, from his vantage point on Lew Platt's and Carly Fiorina's staffs. Webb managed the integration of Compaq and HP, one of the alltime best large-company "mergers" He has been working with Robert Burgelman at Stanford's Business School on this project. They have a singularly effective article about HP's failure to seize the network hub business that I heartily endorse. This could be one of the best business books about a large company in search of keeping its excellence. I can hardly wait. Burgelman is well known for his close association with Andy Grove and the Intel story; his involvement will doubtless help the sales by giving the book credibility at the major business schools, something that we managed to avoid by taking our own approach rather than the Harvard Biz Press model.

gobsmacked

2011-03-22T08:06:00.000-07:00

Now there is a new word to me -- "gobsmacked"

I got a note from an independent writer, John Joss, who recently got a copy of The HP Phenomenon. He wrote, "Chuck,I am absolutely gobsmacked at your immense
effort with the book. The level of detail and historical accounting is staggering. I am, quite literally, in awe at what you have done."

I had to look up the word. Joss is British, fitting since the word is British slang for "awestruck, dumbfounded, as in so surprised that you clasp your hand over your mouth"

Joss continues: "I hope you're slaving over a new edition with the Hurd/Apotheker transition, since this is in its own way as fascinating--not entirely in the gossip
sense--as the pretexting subject. But of course the enormity of the corporation makes it very much a moving target. Also, for a reviewer, a bit like the blind men describing an elephant: wall, tree trunk, rope."

a kinda slow February for HP

2011-03-03T14:30:00.000-08:00

The first quarter earnings report was really quite interesting for the "HP Student"
Consumer-facing products, e.g. PCs and such, down 12%. Hummn. Along with the 'new' HP version of the i-PAD, announced a week earlier, which got reviews ranging from tepid to scathing. Hummn. And then yesterday, the i-Pad 2.0 with Steve Jobs himself going on-stage despite his medical leave of absence. Prediction -- as it once was, HP is once again struggling with the consumer side of things, for lack of excitement and Wow factor. Margins, which hit 6.4% (highest on record for a long time), will get hurt; revenue will get hurt more.
Does it matter? Probably not, in the middle term.
Services was down 2%, and margins were under pressure, according to the same press conference. But -- and it is a mighty big "BUT" -- this is essentially the largest segment of HP's total business revenue today, and the margins are 16%, not 6%. Guess what. This is the one that matters. This is the one where HP creativity, and EDS relationship building, can put new lead in the pencil, so to speak. Small wonder that this is where Apotheker moved to restore salary cuts, to help strengthen morale in a group that felt under-loved.
Does it matter? Absolutely, short-term, middle-term, but especially long-term
Printing and imaging. Up, surprisingly, 7%, with 17% margins. Same size as Services, same margins, still growing. Whew! This one perennially feels like it is vulnerable, but somehow keeps delivering. And the emphasis on commercial grade hardware units, up 33%, has to feel like a punch in the arm. Without it, and without ink, the rest feels plateau'd, but if this can stay the course for a few years, it will be the cash-cow HP has to have to make real inroads into the newer arenas.
Does it matter? Yes, for the short-term, and yes for the middle term. For the long-term, this is still best thought of as an annuity.
Which leaves servers and enterprise level stuff. And here there is a real story. Note that PCs for Commercial Clients were up 11%, servers were up 22%, and the i-Pad 'answer' and the Palm WebOS are all being positioned as Enterprise Tools. Margins for the aggregate approach 15%, with an aggregated growth with Software of better than 15%. This is the 'new' version of the 'old HP' -- not the one of voltmeters and scientific measurement, that divested long ago -- but the 'hardware centric' side of HP. This, not the consumer side, is the sweet spot for HP, just as IBM realized when they sold their PC group to Lenovo. Yes, HP has done a terrific job viz Dell and Lenovo and the old IBM PC guys, and their printers are still the class act (though tell my wife that as her 'high end home office machine fails yet again), but this set of focused products is where HP's edge can still shine, and is about to see even more emphasis. Shane Robison's focus for several years has been in this area; it has been a semi-invisible story, but believe me, it is crucial to HP's future. And the evidence is actually looking good, if we believe these numbers.
Does it matter? Didn't I already make that case?
Finally, what's to make of a quarter that is UP 27% in GAAP (or non-GAAP) earnings, given how tight a ship the last guy reportedly ran? This is an anomaly that is hard to understand. Yes, margins improved, but 27% is astonishing for a company that is up 4% overall in revenue. And it happened in a quarter when R&D got 're-invigorated' and salary cutbacks got restored, so everything is counter-intuitive here. I know Hurd took huge salary and perks for himself and a few others, but the firing bonus doesn't get compared until 3rd quarter -- what are we missing here? Nice that it went in the right direction for shareholders -- its time that they and employees both get treated well at the same time.

what is the early verdict

2011-01-24T10:09:00.000-08:00

So, what is the news out of HP re Apotheker, now that we have a couple of months?

First, he was successful in fending off the subpoenas from Larry and team re the SAP / Oracle mess, so that's a plus. He really wasn't particularly in hiding, working daily from his office at HP headquarters during those first harassing weeks.

Second, he reportedly re-instated some of the salary cuts that draconian Hurd instituted to boost profits.

Third, he reportedly re-instated some of the R&D cuts that ...

Fourth, he announced a few personnel changes, including a shift in Corp Mktg director, and Corp Communications director. These did not play quite as well as points two and three; they instead generated some top-level angst about "SAP folk coming in"

Fifth, he and Ray Lane announced a sizable Board shuffle -- adding a couple of high-tech veterans, and more international perspective.

Sixth, the rumor mill swirls, as the Wall Street Journal circulated a story that HP immediately disclaimed, re Executive shuffle.

Certainly, the announced dividend and statement that the quarter is "on track" were affirming, and the stock price is back to where it was before Hurd's unexpected departure, but we'll know more by Feb 22 or so how HP is faring in fact in the market.

The followup blogs on the new Board, especially on the two women ex-CEOs, have not been very charitable, most noting that each had relatively undistinguished records -- but then, too, it has been a rough time for 'standard procedure'. That is maybe the bigger rap -- "HP has long since lost its leadership mantle, and this new Board shows nothing different in that regard."

Let's hope instead that we're about to see some further positive news

much ado last week for the HP Board

2011-01-24T09:14:00.000-08:00

New stories around the HP circuit. First, the Board is being recrafted. Four members are stepping down in the March re-election, kind of unheard of since Packard cleansed the Board in 1992. Joel Hyatt, John Joyce, Robert Ryan, and Lucille Salhany are all declining to stand for re-election; two of them reportedly for backing Mark Hurd 'too long' in the acrimonious debate about his stewardship and eventual resignation.

The new members include the by-now well-known Meg Whitman, a nearly as well-known Pat Russo, and Gary Reiner, Dominique Senequier, and Shumeet Banerji. The pedigrees read well, certainly in terms of worldly connections and high accomplishment. But so did the last group, in the main.

What makes for a great Board Member? And what distinguishes great boards?

Unfortunately, it seems hard to get very balanced opinion, even from avowed and acknowledged pundits. For example, one of the most celebrated (certainly in terms of proferred quotes) Corporate Governance experts, Charles Elson at the Univ of Delaware is Director of the John Weinberg Center for Corporate Governance there, opined Friday last week that "four directors going out at once is unusual. Boards should not have this much drama.... They are all quite respected. The question is why?"

Elson knows better. He even said better last summer. The strongest of course then was Joe Nocera with the New York Times, who wrote: "it ginned up a tabloid-ready scandal that only serves to bring shame, once again, on the HP Board.... The last time the HP Board did something shameful ... was the famous 'pretexting' scandal...."

But Apple's board consisted of great luminaries, from the tech industry. Eric Schmidt and Bill Campbell, for example, and Jerome York and Al Gore from the national scene. And they were, and still are, uniformly assailed for a variety of sins, even as the company has shown spectacular performance. But they haven't ousted their leader.

HP, recall, under Hurd showed great performance improvement, if only for a time. Cheating the future almost always helps the present. So, now we have change, at the Board level. One step at a time....

the story just won't die

2010-11-08T10:15:00.000-08:00

The HP Board must have wanted to get even, or at least "weigh in". After the calming of things for a couple of weeks, Ellison couldn't resist going on the offensive again, trying to tar Apotheker with fraud and intent to cheat Oracle (oh, my, takes one to know one?), and more importantly, tie his hands as he starts this week at HP with a lawsuit over IP and trade secret theft and infringement (weren't those the concerns of HP's Board if Hurd went to Oracle?).

So, in the Wall Street Journal, and in Fortune, we find stories back-to-back "illuminating" the issues behind the Board's findings that led to ousting Hurd. Ah, the drama and suspense -- imagine watching a key football game in Mark's hotel room after drinks downstairs (with a TV there), but our girl wasn't needed for the Boise meetings, she just happened to be in town on HP's nickel. Undoubtedly no sexual harassment. More like the claim, as yet not picked up by any local area newspaper, that ran last week in the NY Post claiming that Hurd and an unnamed Marketing VP of Sun Microsystems had consensual relations in 2007.

This guy sounds kinda like Clinton and Kennedy, apparently plenty capable in his main job, but a little driven by his loins.

HP 'sources' went out of their way to explain that, except for this set of lying cheating pecadillos, they loved the guy, contrary to some outside observer comments (presumably including mine). If so, I'm saddened. I would have hoped that the Board was indeed beginning to catch on that he had raped HP's future almost as badly, if not worse, than his consorts. But maybe as I feared, this too was consensual. In which case, they have complicity. And in which case, you have to ask, "who's really running the place?" Is there a long-term perspective around?

lucky break

2010-10-06T03:02:00.000-07:00

I had a most unusual opportunity this week, serendipity does work. I'd never met Henning Kagermann before, but I was in a session that he moderated at the STS Forum in Kyoto. Afterward, I introduced myself and we began from the Media X relationship at Stanford, for which Ike Nassi and Paul Hoffman at SAP Palo Alto Labs have been stalwart supporters. The D'School at Stanford, with which we work closely, is of course known as the Hasso Plattner Institute. Kagermann and Plattner were the leaders of SAP for many years, Kagermann as Co-CEO from 1998 to 2009. He picked Leo Apotheker as his co-CEO when Plattner stepped into being Chairman, and the two served together for five years.

So, of course, I asked -- "will this guy Apotheker help HP?" His answer was a bit surprising to me. He said ABSOLUTELY, IF THEY'LL LET HIM. He went on to say that the "CEO World" which can mean quite a lot in different circles views HP as a very difficult assignment right now. For three reasons.

First, there is a history of the Board shooting the CEO (he mentioned three, including Lew), and he didn't have any warm fuzzies for the current Board, except he thought Leo A was 'head and shoulders' more mature and stronger than either Fiorina or Hurd when they got the nod. He also had high praise for Ray Lane, but he focused on Apotheker, whom of course he knows a lot.

Second, there is a history of HP employees "thinking they own the place" and being, in his words, "whiners" if asked to change. This is not unlike the Wall Street Journal editor's view, who snottily said "they still believe in The HP Way". Well, Dave and Bill trained a generation to think of it as THEIR COMPANY, so that part is GOOD in my book. I agreed though with Kagermann that this can get carried away, and become an excuse to keep old patterns too rigidly in place even though external conditions have changed drastically. Kagermann's view was that THIS is the tough one, and he said he was hopeful that the company's employees would give Leo A a chance.

Third, he felt that HP had indeed lost considerable momentum in terms of customer perception about the vitality and creativity in their product and service offerings with the administration of the last guy (whose name I've forgotten). This he felt is fixable, especially if the second point can be re-energized. He felt (and said in the session) that ICT is a long ways from mature, that in fact the Cloud Computing metaphor, mobility, and Web 3.0 will make everything we've seen to date look primitive. I happen to agree with him -- so the best very well could be in front of all of us.

Overall, he was very encouraging about Apotheker and his value to HP. He had no specifics re Apotheker's leaving SAP except to say the dynamics of the world meltdown caused a lot of damage and that was mostly to blame. Hummn.

I felt privileged indeed to have him share these perspectives. He has himself retired from SAP, and is Chair of the German Academy of Science and Eng'g (think NSF in America), and also chairman of the EIT KIC ICT directorate of the European Union. Coincidentally, his new CEO in that role is Willem Jonker, our long time Media X partner from Phillips with whom I had dinner two weeks ago in Braunschweig, Germany at the European Research Initiative Council. At that meeting, chaired by Intel, there was precious little positive news or confidence in HP, which both surprised and saddened me. Enough that I didn't blog about it then.

Another surprise.... Leo Who?

2010-10-01T18:31:00.000-07:00

Howls from shareholders, question marks from insiders, blogs cranking up all over the Valley, now we have a target

What fun! Who is Leo Apotheker? I'd first of all remind readers that was the same reaction when the HP Board picked Mark Hurd, and the same when IBM picked Lew Gerstner. Not every outsider pick is a bad one, and not every insider pick is good

Apotheker is well known, and well respected, in Europe. Totally coincidentally I spent three days last week in Germany with the Intel/SAP Joint Ventures lead director. No, we weren't prescient enough to guess this selection, but it was a great visit re what is happening in Cloud Computing and ICT. SAP, of course, is the only viable contender against Oracle in the Enterprise Software world, and has done an incredible job over the years head-to-head. SAP has strong presence in Silicon Valley, both with their operations in Palo Alto (headed by veteran Ike Nassi) and the Hasso Plattner D'School at Stanford, started by David Kelley et al.

Several positives:
1. He speaks and thinks globally (fluent in five languages is a major plus these days), unlike the last guy. HP employees are 71% outside the US, as are 90% of their suppliers (this is no longer much of a US company, folks). HP sales are 73% outside US. The Enterprise wins will be elsewhere, not in the States. Every other candidate 'floated' was a US centric person.
2. He is a long-term SAP player, came up through the ranks, and served admirably as co-CEO for five years. The seven months before the sudden resignation can be explained (maybe rationalized) as a power play that didn't work for Plattner, and he was the sacrificial lamb. But this guy knows the industry of Enterprise Servers, Enterprise Storage, and Enterprise Software about as well as anyone out there. Put him together with Donatelli (work hard to keep Donatelli, by the way), and it could be very good
3. Getting Ray Lane to join, and LEAD the Board. WOW! This is blockbuster news actually. Lane was a HUGE part of Oracle success for years, was in fact the only humane face on the place. And he said for the WSJ, he joined HP "because of LEO A". Now that has to be read as extremely positive, from a guy that I have admired for years. The team of Donatelli, Leo A, and Ray Lane can be imagined as INSPIRED if you are betting on Cloud Computing and Enterprise Services as the play.
4. They did not pick someone from the hardware/consumer side (which is a hard business, especially as far behind as they are starting, and with the low margins of most of it).
5. They did not pick someone who was a Hurd clone (need I remind you how angry the employees were at him?)
6. He is not unafraid to be a spokesperson in public (this IS the largest high-tech company on the globe, and the only one of the top ten who had a CEO who would not take speaking engagements or talk to public issues).
7. He has high marks both as a strategist and an operationally sound guy (notwithstanding whatever led to the denouement at SAP)

Several negatives:
1. He is not an insider, nor is the new heir apparent leadership (Leo A, Ray Lane, Donatelli together are all new to HP Way)
2. Probably lose Bradley over the slight (not sure how to interpret this, stay tuned)
3. Half of HP's business, and two-thirds of its profits, come from PCs and Printers. He needs to keep some of the key leaders here
4. He doesn't look or sound charismatic. But then, compare it with Bradley, Livermore, or Donatelli -- not much different.
5. He doesn't sound inspiring (maybe the same point as above?).
6. He doesn't sound "lovable" in the old HP Way sense. And HP employees long for someone who will vote for them too.

All things considered, I would have to say, CONGRATULATIONS to the HP Board. This is an interesting, and bold choice. We're pulling for you!

Another score for illegal behavior

2010-09-27T21:33:00.000-07:00

What the hell is going on, we might ask. Headline in the San Jose Merc this time said "Valley's Titans Conspired". Citing a Justice Department investigation and findings, six companies -- Google, Apple, Intel and three smaller fry -- Intuit, Adobe, and Pixar -- agreed to quit their practice, now five years old, of colluding to 'not poach' each others' employees. Maybe that's why HP didn't pursue the suit against Hurd any longer -- if the Justice Department now is looking into restraint of employee 'freedom'...

These companies have been more respectable, outwardly, than many in the rough-and-tumble Valley. These are not (except for Apple) companies that got caught in the gigantic stock option 'backdating' fraud. These are the darlings in general -- Google far outpacing Yahoo to lead in Search and now perhaps in Android phones; Intel far and away the leader in microprocessor deliveries and now ramping up for fantastic n-way 'cloud computing'; Apple held in extremely high regard for pinpoint marketing savvy with the i-Pod, i-Phone and i-Pad hits in succession. Intuit is the world leader (and there is really no second place) for Home and Small business Accounting software; Adobe is the master of multimedia delivery security; Pixar -- my gawd, the greatest animated film company of all time (well, maybe Disney..., but Pixar does such complex wonderful stuff).

So what happened? Well, it seems that these leaders are all pretty good friends. The story implicated Eric Schmidt (CEO Google), Steve Jobs (CEO Apple), Bill Campbell (Chairman Intuit) and Paul Otellini (CEO Intel) directly. Otellini and Campbell are on Schmidt's Board (as is Stanford Prexy John Hennessy), Campbell was on Jobs' staff for years and is a close friend; Schmidt was on Apple's Board until the Justice Dept invited him to step down a year ago. Jobs of course was the key owner of Pixar before selling it to Disney (and now he is Disney's largest shareholder). Adobe was coerced by Apple, in order to have its software included on the new i-Pad. Hard to imagine that these folk all had cocktails at a barbeque one night, and someone said, "hey, I've got an idea..." but who knows?

What is clear is that, once again, the leadership in the Valley looks tawdry, cheap, and illegal. Classically, Intel issued the statement that it perennially has ready: "we've agreed not to enter into agreements (like this anymore). Intel does not believe its actions violated the law, nor does the company agree with the allegations." Unstated, but as we've seen in a multitude of other actions involving Intel non-violations, they'll keep a little extra cash around to pay the fine.

what next for HP and crowd?

2010-09-27T21:23:00.000-07:00

The beleaguered HP Board settled with Mark Hurd last week, getting $13.5 million back (of the $42 million they gave him) and in turn withdrew their injunction request to stop him from going to work for Larry Ellison at Oracle. Since Hurd's paycheck will total around $11 million with an upside 'prob,ability' of another $5 million, he probably felt that he could be a bit magnanimous.

After a suitable few days, the Board floated their current best thinking:
1. They want an insider (this after looking at a crop of outsiders, and presumably listening to a lot of 'oldtimers' about the last two choices)
2. They discussed a couple of outsiders that they had considered, sort of explaining that they were 'late' for the one who just became the new Nokia CEO...
3. They said Todd Bradley, Ann Livermore, and Dave Donatelli -- in that order -- were the leading inside candidates, while the newspaper showed a big article with Viomesh Joshi prominently talking about the peripherals business, far and away the most profitable part of HP. VJ was not "on the list" put forth by the board
4. Astonishingly candid, the article said "several members of the Board" backed Bradley, "who has many of Hurd's capabilities" The article went on to note that Livermore is the best candidate in terms of the company employees liking her, but "she's been passed over twice". It then said Donatelli hasn't been at HP long enough (just a year), so is "unlikely" to prevail. This was all big news a week ago; nothing has appeared since. Wierd, don't you think? Says they're wrestling with something that has them uncomfortable.

HP R&D and Palmissano

2010-09-15T08:06:00.001-07:00

The dirty little secret is starting to get wider currency. Sam Palmissano, in today's Wall Street Journal, p B1, is headlined at "IBM's Chief Thumps HP". Spencer Ante's story uses the wrong numbers (the same numbers that journalists have used for these past two months -- I have been flabbergasted by how everyone uses everyone else's words/numbers as though they themselves had done the work!), but makes the point that HP has been lowering its R&D investment steadily for a long time now.

Palmissano said "HP used to be a very inventive company.... (but re) buying 3PAR, HP had no choice. Hurd cut out all the research and development..." Damning, but of course, just words from a competitor.

Ante then repeats the mantra that HP under Hurd cut R&D from $3.5B (4% of revenue) to $2.8B (2.5%) in 2009 while IBM has maintained their R&D percentage at 6% ($5.8B). True numbers, but he (like others) uses a foreshortened lens to look at the facts.

I first reported this systematic reduction in R&D investiment in an May 2009 interview with Ashley Vance of the New York Times, who featured a barbed response from R&D VP Shane Robison, related in my May 26, 2009 blog entry "Whither HP Now". Our book, THE HP PHENOMENON, documents this in overview form on pp. 503-4, submitting that the Valley 'buzz' is that HP has become "innovation hostile".

It is perhaps noteworthy that HP tried to stop publication of the book, citing "numerous factual errors , inappropriate use of confidential materials, and unwarranted conclusions", none of proved to be supportable when we engaged on specifics. The errors we have found in HP website materials, pointed out carefully, have been ignored (such as how many oscillators they sold to Disney and the price point, etc., not that it matters except you'd think they'd care enough to have their own history correct).

Since Ante and others are insistent to show that Hurd screwed it up by going from 4.0% R&D to 2.5% R&D investment, I would at least like them to use the right numbers. For example, it is wrong to use the 2005 fiscal numbers as Hurd's baseline, since Carly was gone for eleven months of calendar 2005 and nine months of fiscal 2005. And Hurd was there for nine and seven months respectively that year. And we have three quarters of 2010 already reported, measurably lower than 2009 for R&D percentage.

First of all, the six decade continuous investment at 9.0% plus or minus 1% was ended by Lew Platt, who took it from 9.0% to 6.0% in seven years, 1992-1999 (5.8% 4th Q 1999). Carly continued the trend, at a somewhat slower decline, taking it from 5.8% to 4.9% (1999-2003). Under pressure from her Board in 2004, she held R&D dollars constant, and the percentage shrunk to 4.4%. Counting the first six months of fiscal 2005, she averaged 4.34% R&D investment for her last eighteen months (counting the 2nd quarter of 2005, ere Hurd was fully on-board).

Hurd quickly started reducing, cutting $46M out of the 2nd half R&D actual dollars, taking the percentage to 3.9% from 4.3% in six months. The carnage continued through his last days, the average for three fiscal quarters of 2010 is 2.3%. General selling and administrative costs are now 437% of R&D costs, vs. 308% when he arrived.

So, for the last three CEO's, here is the track record:
Platt reduced R&D percentage by 34% in seven years
Fiorina reduced it by 27% in five and a half years
Hurd reduced it by 47% in five and a half years

The claim at HP continues to be of the form that "it is hard to spend more money on R&D and expect better results; we're spending plenty...". But Apple seems to find new exciting products to invent, with higher investment rates and more risk-taking. Iterative R&D is really just D; memristors are indeed R, but somewhere inbetween is what used to be the sweet spot. Even when they out-invent the competition (great examples include 3D Printers and DNA Printers, plus HP Halo), they today have a tendency to license or outsource or forget to market their advantage. What gives?

"What gives" is clearly a focus on today, not tomorrow; pandering to quarterly results throughout the company which emasculates not just R&D, but the possible uptake or technology transfer from R&D to successful marketing launch. Palmissano got it right. He closed his statements by praising Ellison at Oracle, "Oracle invests". That might become the contest between Hurd and Ellison, which has not yet been picked up in the trade press as the possible hot button.

insider or outsider

2010-09-09T15:55:00.000-07:00

A number of my best friends -- "oldtimers" as they're affectionately called in our book THE HP PHENOMENON -- are clear. What's been wrong at HP is that the Board has picked two outsiders in a row, and they were both TERRIBLE when all the facts became known. Thus, without question, the Board has to pick an INSIDER this time, the way HP did it so well for the first sixty years. Otherwise, it is hard to know, respect, and honor "the HP Way".

There is a lot of wisdom in that view, in my opinion. The HP Way, despite what Wall Streeters and avaricious shareholders believe, is not outmoded or inappropriate for this day and age. Indeed, as we chronicle in the book, the very distributed nature of most multinational corporations today, whether using outsourcing or offshoring or merely localized operations to support international sales, MUST HAVE some sort of honor system akin to the historic HP Way. Consider -- one out of five professionals working for Intel, Microsoft, Cisco, IBM or HP have NEVER met their boss face-to-face. Wouldn't you, as a shareholder, like to imagine that those workers believe in their company and their leadership and work hard on their (and your) behalf?

But, this begs the question. The first question to consider is "who is an insider?" Are there any left? Who knows what the HP Way even means. Instructive to read page 245, where old-timer VP Bruce Wholey was vituperative about the "new kids in computing and in Headquarters" circa 1980's. Page 384 documents the fact that these disgruntled employees led Packard to "ask for John Young's resignation" for lack of empathy with "the HP Way". Lew Platt certainly fulfilled the founder's hopes, and the company employees adored him by and large. Worth noting though that what Hurd was good at (and I do give him credit for running a lean, mean organization which did bolster Wall Street bidding 'while it lasted'), was just not Lew's strength.

So, the first thing to note is that the Board replaced two insiders (Young and Platt) in just about the same timeframe as the later Board got rid of two outsiders. This job ain't easy. In other words, they were looking for help outside when they found Carly; the insiders had not measured up twice in a row.

Perhaps the more important observation, though, is how many "insiders" are left, and from when do you count? By our 'count', only about five percent (ONE OUT OF TWENTY) employees at HP worked there before Packard passed away in 1996. And only about ten percent (ONE OUT OF TEN) employees at HP were there prior to the Compaq merger eight years ago. If those numbers seem out of whack, go do the math. It should scare you!!! Lest you think this is a new problem, consider page 383 where Bill Hewlett observed that 58% of HP employees in mid-1976 had been with the company less than 18 months, so how could they possibly know yet "the HP Way"?

So, it is folly to think that the ONLY CHOICE is to "go inside" -- and it is even more silly to think that if the Board does so, that it will mean that the CEO selected has any HP WAY DNA built in over a long acculturation period. Granted, there is still a pool of several thousand folk who have been at HP a long time, and "know deeply" the HP Way -- but they are more or less unlikely to be on the short list of CEO candidates.

So, I submit that the Board's task is to study the meaning and impact of the HP Way of doing business, try to correlate that with the distributed / chaotic / inchoate / highly competitive world in which the company has to perform, and select someone INSIDE or OUTSIDE, who can balance three things --- 1. the HP Way of leadership and ethics, which means empathy for, trust in and responsibility given to employees; 2. bold, decisive strategic choices; and 3. crisp operational excellence.

Thinking about these three points -- Packard and Hewlett shared power for a long time, and both were legendary for Point #1. Packard was great at #3, not too bad on #2; Hewlett was generally intuitively great on #2, and almost absent on #3. The pair did good work. Young was excellent on #3, as was Hurd. Hurd failed #1 on every count imaginable, and #2 mostly. Young did better, certainly excellent on much of #1 (not so hot on empathy, but able to delegate). Platt was superb on #1, better than either Dave or Bill on empathy and trust. Lew did not, however, do #2 or #3 particularly well. Carly... gets an A from me on #2, although the trade press and many pundits didn't agree even on that. I think time has vindicated her two biggest moves, even though the PwC attempt failed, it was the right direction and IBM has shown that to be true in spades. She actually should get fair marks on #3, because the truth was that the PC integration with Compaq was much further along under Duane Zitzner than the current team gives credit for -- Dell was already on the run. Carly's failing was that style issues clouded #1 so badly that it would have taken herculean measures in #2 and #3 to 'win'. Kinda like Hurd -- herculean #3 stuff at the expense of #1 especially, and #2 eventually, catch up with you.

So, what does that say? No new CEO will walk on water for very long; Hurd and Ellison will help see to that, not to mention legions of other observers. And no person can be great at all three (presumption, yes, but perfection is rare, right?). So, it might be that an organization of two or three shared roles is worth considering (possibility one) or that if just one person, they should be a good listener, able to let their team help on all three points, but in particular, they must not be ONE-DIMENSIONAL. A choice to be empathetic and operationally tough is tricky at best, but if you're ethical and fair, it is easier. It'd be wonderful to imagine that someone could be found who is a leader, not a manager, good at two of the three and not terrible at the third; who could accept a COO who could be really good at two of the three with a different balance than the CEO. That's my dream...

Marc Andreessen -- the linchpin for the HP Board

2010-09-08T08:34:00.000-07:00

Lots of speculation running through the Valley about HP's Board. The San Jose Mercury-News had two front-page stories on Monday, Labor Day, one about Hurd joining Oracle, and the other profiling Marc Andreessen, the 'high-tech heavy' on HP's Board. I had the distinct pleasure some years ago (maybe fifteen years, gawd is that possible?) to introduce Marc to Doug Engelbart. One was 24 years old at the time, a wunderkind for his Mosiac invention and Netscape company that ushered in the modern Internet with its exciting browser. The other was 74 years young, the almost forgotten creator of the PC / networking paradigm when he was at SRI in the mid-sixties. Each exclaimed at the time to the other, almost simultaneously, "I am so glad to meet you!!!"

Several of us managed to get Doug nominated the next year for the Lemelsen/MIT prize, at $500,000 the highest prize in America for scientific achievement. I hand-carried the nomination forms to MIT the last day of submission; Doug won handily for his 1968 "Mother of All Demos" that we profiled at Stanford on the 40th anniversary in December 2008 -- but the context was that until Andreessen's creation, the world had a hard time seeing more than a 'mouse' in Doug's contributions, so until the Internet 'exploded' in usage, Doug labored in obscurity except within our 'techie circles'. Once this happened, of course, he got acknowledged widely, including ACM's Turing Award and the Presidential National Medal of Technology.

Marc, for his part, lived through tumultuous times at Netscape, with noisome persona such as Jim Clark, the founder of Silicon Graphics, Netscape, and Healtheon doing battle called "the Browser Wars" with the Darth Vader from the North, Microsoft. The net result was a 1999 firesale (well, $4.2B) to A/OL, itself the darling and eventual casualty of the dot.com boom and bust.

Nearing forty, Andreessen has matured enormously. He has founded and led two other companies, restructuring one with considerable success that he later sold to HP. His positions on the Boards of Facebook, e-Bay and HP are worth a moment's consideration. We are in the midst of a profound restructuring of society, driven by Internet applications of every kind and description. The triangulation view that these three Board seats afford him has got to be pivotal for assessment, not unlike the view that Eric Schmidt got while seated on the Apple Board for several years. Marc also has a strong position at the Venture Capital table through his 'day job', seeing all manner of the 'newest ideas' that run rampant through Silicon Valley; he and his wife have a major commitment to social philanthropy as well, unusual (and incredibly commendable) at his age.

Andreessen, moreover, is one of the small minority of HP directors who came aboard without prior ties to Hurd; he is the only director who has worked in engineering or innovation in a direct way (unless I missed something in the other bio's). So we're pulling for you, Marc. Help 'em get it right this time...

Hurd lands on his feet, maybe

2010-09-07T17:45:00.000-07:00

Amid speculation all week, the next shoe dropped finally yesterday, as Oracle's arrogant Larry Ellison announced that Mark Hurd would become the new co-President of Oracle, replacing beleagured married Chuck Phillips (whose jilted girl friend put a saucy Times Square billboard up in January). HP wasted no time in filing for an injunction to prevent it, filing in Santa Clara County court at 11:30am this morning, citing a clear violation of their mutual contract and a damaging competitive unfair practices situation. These are tough things to win in California, since judges have viewed them as 'limiting a person's ability to hold a job'. But this one is about as high-profile as you can get; if it is unwinnable, it could well launch a whole new level of pirating key execs.

HP's claims, that Hurd four times in the past three years has signed confidentiality documents, including the finale on August 6, 2010, seem clear enough. HP further noted that he was WELL COMPENSATED in the resignation, partially in order to ensure the confidentiality clause. Well, it would seem that $42 million should have tided him (and any payments to women) over for more than thirty days. But maybe his $7.15 million Atherton home is a bit chilly these days, and he has to husband his cash.... And doubtless, the mere two years that he is supposed to be enjoined might seem longish if you're used to having $20 or $30 million in spending money each year. Poor man.... has to find employment somehow, especially at his advancing age

My take is that this may be the straw that breaks the camel's back. This is an incredibly confrontive act on the part of Ellison and Hurd, a pair who could find even closer friendship in the days ahead since they obviously share core ethical disregard for ordinary laws and rules. It figures -- one of Larry's previous tennis partners and erstwhile competitors in databases went to jail for kiting Informix financials a few years back, a mere 'billion dollar misstatement' for a company whose annual revenues were about that same size. Were it not for cases like Enron and the amazing theft via stock option backdating, "a mere billion" could have raised hackles. We still, of course, don't know the extent of the infractions that led to HP and Hurd separating...

Think about it this way -- seven hand-selected Hurd lieutenants and three others vote UNANIMOUSLY to ask for his resignation -- at a time the world viewed Hurd as "the" HP shareholder savior. They KNEW this would not play well on Wall Street, but they voted their conscience. Doesn't it stretch all credulity to think that the Board was concerned enough about non-sexual non harassment and supposedly $1,000 or maybe a little more in faked expense reports to fire this guy? I give you example A -- yesterday's announcement was as deceitful as the way he managed at NCR and at HP for the past decade. He is dishonorable, unethical, a total fraud and cheat, and he just got exposed more clearly. Plus, as I noted before, he's still a thug.

My gawd, the HURD story is still alive?

2010-08-19T06:03:00.000-07:00

These things usually abate fairly quickly; sexual pecadillos, robbing the till, and egregious acts of other kinds have a titillating capability for hours or a few days at most. Why is this one still going strong two weeks in?

Perhaps because it still seems surreal, even in the Cheshire Cat world in which we live. Hurd hand-picked seven of the ten directors who voted unanimously to have him resign immediately, for 'piddling offenses' (a wonderful phrase used yesterday by WSJ apologist Holman Jenkins Jr , who had the gall a year ago to inform his readers that the Wall Street meltdown of late 2008 was 'our fault' because we panicked, rather than any culpability by the banking/Wall Street community). Hurd's cronies -- unanimously? For no reason at all? Come on. Get real.

One columnist said "let's look back at his track record at NCR, before coming to HP." The finding: NCR has stagnated ever since -- for the same reason that HP has been stagnating for 34 months -- costcutting, especially when it cuts into bone (i.e. the innovation engine) cannot succeed in building long-term strength. You can build efficiency, but not momentum. And it usually quits working, especially in the brainiac high-tech world when your talent walks out the door. That is why it became double-edged when R&D is slashed so far and key resumes are flooding out of the place. Jenkins calls this "the sickly moanings of the vaunted HP-Way", demonstrating fairly clearly that he hasn't a clue what that 'vaunted idea' meant or means.

No one in this recent brouhaha has resurfaced the cover story for Business Week October 9, 2006 which noted that Hurd was so popular with his NCR employees that they repeatedly slashed the tires on his car in the NCR parking lot, and the company had to hire bodyguards to protect him at home from his 'team'. Wow! And no one has focused really on just how hated this guy was by his HP team -- 34% approval by "the home team" when even a Larry Ellison can garner 78% at Oracle. To blame this on "sickly moanings" of archaic nostalgia for "the HP Way" is seriously demented.

The problem with such drivel is that there is a germ of truth in it, and WSJ readers are not in a place to appreciate the nuances, especially when a too-clever by half editor picks up the cudgel. The HP Way did calcify under Lew Platt; Carly Fiorina was brought in to shake it up; she was resisted mightily under the guise of "protecting the HP Way", and she did ultimately fail. In part, that failure was due to passive compliance, if not outright resistance, to her ideas and leadership -- and "the HP Way" was invoked time and again as the stalking horse for such antics. But just as the bankers might have had just a spot of culpability for the Lehman et al debacle, it is just possible that Carly's leadership style had a little bit to do with all this.

Similarly, there is no question that Hurd did some -- even a lot of -- necessary and valuable 'tough leadership' to 'right the HP ship' in terms of operational effectiveness. That is to be applauded -- UNTIL it crosses the line. To become unethical -- with vendors, customers, employees, shareholders, investigative journalists, and even the board -- is OVER THE LINE. This guy, plain and simple, was and is a thug. There is no place, in the HP Way, the American Way, or in a Fortune 500 leadership company, for such a person to be exonerated, let alone exalted. Jenkins owes the HP Way an apology.

Boy, they are VERY WELL PAID

2010-08-12T21:19:00.001-07:00

Oldtimers think Carly is when HP went over the cliff -- and certainly her Public Relations engine was in overdrive. But most folk we talk to think she started the corporate raiding of the till. The Proxy Statements on file show a different story.

There are two meaningful comparison sets of years. 2000 was the height of the dot.com boom; 2001 the bottom. 2008 (before the Lehman collapse) was the "best year", 2009 a disaster. I left out imputed stock option values, since those are remarkably hard to understand, thanks to your Federal Government's arcane FASB rules. I figured CASH PAID OUT is a good comparable.

In the 'good year comparison', Hurd and team made 700%, 266%, 1790%, and 1920% more money for CEO, CFO, PC Chief, and Services Chief than the Fiorina team. The next year for each, all took 'cuts' on both teams -- but for 2009, Hurd and team made 1400%, 368%, 970% and 1011% more than the comparable Fiorina team. The employees didn't fare nearly as well.

The Board did better too, averaging 320% more in 2009 per director than in 2001. Each full-time director, for a few meetings per year, made on average $328,000. Pretty good hourly rate.

To the best that I can figure, Mark Hurd's severance pay, for a "profound lack of judgment" that caused IMMEDIATE RESIGNATION, exceeded John Young's lifetime earnings. Young, CEO for fourteen years, gave 32 years to HP, and never had, so far as we know, any sexual harassment suits filed against him. He grew the company by a factor of sixty from his first organizational impact time until he retired WITHOUT ACQUISITIONS of consequence; Hurd grew it by a factor of 1.4, buying all of the growth in acquisitions, and the amount that he added in profit was less than the amount of R&D that he took away. The amount of debt that he added, to a company that never had any, is hard to calculate on a percentage basis.

But he did take away something akin to $150 Million in personal earnings (what some of the current HP employees have called "theft") in the past three years. WHEW. What has this Board been doing? What IS this Board doing?

Who is writing this blog?

2010-08-11T08:16:00.000-07:00

From a blog posting June 1,2009 by Joel Birnbaum, long-time R&D leader for HP, and definer of the HP/PA computing program, commenting about Chuck House and the new book by him and his co-author Ray Price:

"When I came to HP as a rare outsider hired into a high position, many people advised me to look up Chuck as someone who really understood the soul of the company. He was famous within HP for his wit, his creativity, and his willingness to speak out against things that he thought short-sighted or self-serving. I found that he more than deserved his reputation.

"His soon to be published book (The HP Phenomenon: Innovation and Business Transformation, Stanford Press, 2009), for which I was interviewed extensively, is likely to find wide acceptance and is a marvel of careful research and writing.

"Chuck is a witty, daring and very effective speaker, and during our time together at HP, he lent his name to many causes that resulted in dramatic improvements... not always with the prior approval of upper management. HP was eventually proud of these sometimes irreverent accomplishments, and many found their way into the literature and are in wide use in the industry today.

"For all of his career, Chuck's signature style has been his refusal to accept the status quo for purely historical reasons, and to think creatively and deeply about a problem or opportunity and then, often with recruited partners, to seek a novel solution. Chuck's style, while often flamboyant to attract attention to his causes, is inherently a modest one.

what were you saying a year ago?

2010-08-11T07:39:00.000-07:00

From this blog on December 13, 2009

"Dave Iverson (of KQED and NPR) moderated the CHM (Computer History Museum) event, very ably, and the questions were good ones. One in particular had to do with the current 'regime' and pay practices. Tough one to answer, and my answer "unconscionable if true" for the reported $113 Million for the four top people caused a murmur. I did say, 'Bill and Dave, for their egalitarian company, would find that an unusual pay practice'." The CHM video of this event is still available; these comments occur at about minute 60.

From this blog on Sept 2, 2009

"Hewlett and Packard have had multiple occasions to turn over in those cold graves -- the selloff of Little Basin and the merger/acquisition mania pale alongside pretexting, forfeiture of long-promised benefits, and rules banning executive participation on civic boards. Ethics and a huge belief in the dignity and value and worth of all employees were cardinal elements, weren't they?"

And from August 17, 2009

Five long-term HP employees (144 years between them), including two current VPs and one ex-EVP, commented: "the image of HP being the leading corporate citizen in the community, long a cherished hallmark of the company, has dried up in the current regime. Carly, they averred, was as strong on that as Lew or even Dave himself; not so under Hurd.... {At a key STEM (Science, Technology, Education, and Math) meeting for America recently, leaders} were outspoken about HP absentee-ism on topics of science and math education in America. They were outspoken... that HP only cares about sales, and ties 'corporate giving' only to 'deals' at best these days."
"Moreover, the considered opinion was that nine of the top ten high-tech firms in America (recall that HP is now the largest) have their CEO or Chairman or both involved enough in STEM education to be carried on the front pages of the Wall Street Journal while HP stands aside. What the hell has gone wrong at this place? Is the new guy in touch with anything besides the bottom line?"

Larry Ellison shows his colors

2010-08-10T08:17:00.000-07:00

Mark Hurd's "close friend" Larry Ellison weighed in yesterday, to say the HP BOARD just made the biggest mistake in history for HP shareholders, as big as the idiots who removed Steve Jobs at Apple twenty-five years ago.

Surprise! This is the 4th richest guy in the world (Forbes, January 2010) who brazenly took $3 million away from the Portola Valley school district in 2008, while spending nearly a billion on his boat. Might makes right! Begins to give you a sense of why The Robber Barons were called that a century ago.

And Larry says no CEO fills out their own expense reports, so that must be a trumped up charge. Right! His minions tried to cover up the (non-sexual) dalliances? And he ... umm... voluntarily agreed that maybe he should resign?

Check out Bianco's BIG LIE

2010-08-10T08:08:00.000-07:00

Anthony Bianco had the perseverance to dig into the mountain of filed data re pretexting. He had the courage to write the book. He fingered Mark Hurd as "the guy", and in addition fingered him as "nailing Patti Dunn" (without violating the HP sexual conduct code) to take the fall for him.

My Amazon review of Bianco's book on June 13, 2010 (before Jodie Fisher sent her complaint to the HP Board June 29), says "where there's smoke, there's likely a fire. Unfortunately, from Tiger Woods and Enron and WorldCom leadership, to Lehman Brothers and other Wall Street "leaders"... we are getting accustomed to leaders being less than they seem. True at HP now?"

Howze that for calling the shot?

Holy mackerel

2010-08-10T07:32:00.000-07:00

The e-mails were flying fast between 2:07pm and 2:09pm last Friday afternoon. I arrived home from a visit to the Palo Alto Medical Foundation at 2:21pm, unaware that HP had just announced that Mark Hurd had just resigned. The e-mails were from a varied lot -- KGO/TV who had never ever tried to call me before; reporters for Business Week, CNBC, etc with whom I'd met once or twice in previous years; friends and colleagues from HP today and "the old HP".

Sexual harassment that didn't happen?

A few mis-stated expense reports, that "totalled" somewhere between $1,000 and $20,000? This turned out (missed by nearly all the columnists) to be for EACH ONE. The 2008 10K report says Hurd was re-imbursed $79,814 in tax "True-ups" for the estimated $243,000 in "personal meals" that he ate on behalf of HP. This was in the midst of the three years cited with "his girl friend" -- sounds like a little more money than the initial reports.

All bogus, in my view. This guy was a thug, nicknamed Mark Turd by ex-HPites who worked directly for him -- stories that have circulated in the Valley for three years. He raped HP employees (figuratively, without violating the sexual conduct code at HP) by eliminating the sixty-five year concept of profit sharing, preferring to move to obscene bonuses for himself and his five top minions -- a mere $113 million payout for them in a year he chopped everyone else's pay by 5% plus profit-sharing. These were raises for some of the five people by as much as 400% -- a tidy uptick.

He was profane, a bully, autocratic, threatening, demeaning, vindictive, and rude. Blogs over the weekend by current employees said "Hooray, the tyrant is gone!" I couldn't contain my glee on the 11pm news -- best news for HP in a very long time!

The Voice of the Workplace, HP's thirty-five year historic 'measure' of employee feelings (done every five years) showed in April an astonishing finding -- more than two-thirds of HP's employees would quit tomorrow if they had an equivalent job offer. Not a raise, not a promotion, simply an alternative. That number never used to be in double digits. Other companies in the Valley have reported an amazing rate of HP resumes being submitted; one large company saying, "we didn't know they had that many people working there".

There's lots more to "worry about", and it is easy to imagine that the HP Board was worrying about all of them, but didn't know where to "pin the blame". This "non-sexual" harassment was simply a convenient foil...

disquieting input

2010-07-12T12:33:00.000-07:00

Barry Katz, a consulting professor at Stanford's Design School, stopped by a few weeks ago, thrilled to find that we had included nearly ten pages about industrial and HCI design in our book. He is in process of doing a "definitive historic book" about ID and HCI in the Valley, and we chatted convivially for quite a while. Barry and I taught together in Stanford's VTSS program in the 1980s. I gave him a number of names worth following up with in the Valley, including the long time head of HP's Design Group, Allen Inhelder.

Imagine my surprise with an e-mail blast a few weeks later, from Allen (his P.S. note said his name is not spelt Alan, which we got wrong in the text p. 234, but right in the footnote, p. 577 -- embarrassing!). The bigger concern though was his message: "Your creative story telling about the history of HP Industrial Design is incorrect. Your writing also denigrates by omission an outstanding body of work that has never been duplicated. Your literary alchemy has managed to turn the HP golden years of industrial design into a mound of bullshit. It is obvious that you didn't bother to fact-check your sources. I am deciding how to tell the readers of your book the facts about the early days of industrial design in general and at HP."

Allen included his phone number, and I called him directly. His chief concern seemed to do with our crediting Carl Clement as heavily as we did for the "Clement Cabinet" which Allen feels he mostly designed, but politics meant that Carl was the chief name on the patent filing. We do credit Allen with the replacement cabinet, done fourteen years later -- he calls them System 1 and System 2, but really was clear that he, not Carl, was chiefly responsible for both. Couple this with the fact that we didn't acknowledge that Allen led the Corporate Design Group for nearly twenty-five years -- you can imagine that he was pretty worked up!

I doubt that the call placated Allen much, but it was very important to hear his point of view, and reflect on so many good things that he did do or did lead. We can patch some things in a later printing perhaps; meanwhile, he will have his story told more fully in Barry's definitive work.

Joel warned me about the likelihood that this will be a common kind of occurrence, based on what he has seen with other authors trying to give credits that are elusive sometimes to pin down. Ah, well... For those of you from the ID / HCI community, our apologies if we were inadequate here; our intent (by contrast with most computing and electronics company histories which ignore ID / HCI altogether), was to try to include it and give some context for its importance as a discipline in this crazy-quilt high-tech world

interesting feedback

2010-05-14T22:03:00.000-07:00

A longtime acquaintance whom I haven't seen in years wrote last week to say, "I was given your book by a friend as a birthday gift. I didn't tell him, but I secretly thought 'I'll never read it' since (a) I don't have much time for reading any more, and (b) if I do, it is 'books on tape' for long car trips. To boot, this was daunting, at some 600+ pages. About a week later, though, I took it to the restroom, and opened it to some middle pages. To my surprise, the story there was one I knew about. Another week, and a similar thing happened. Before you know it, I was hooked. I went back to the beginning and started fresh. It is not just the stories that hooked me; it is the exceptional writing. You and Ray have done an outstanding job, and I fully expect to finish the book. Thanks for doing such an ambitious and valuable history!"

We love to read such notes, obviously. Pretty good for engineers, huh? "exceptional writing!" I'm thinking it'd be great to pull my old English teacher out of the grave and have her chew on that one.

NPR in Sacramento last week

2010-04-21T09:17:00.000-07:00

We were invited to an interview -- another 15 minutes of Andy Warhol's "fame quotient" -- last week, which is on the web, at:
http://capradio.org/programs/insight/default.aspx?showid=7708&bhcp=1
I didn't name her, but our niece is working at the Roseville division there

Discussion w David Liddle

2010-04-21T09:09:00.000-07:00

After a Brian Arthur lecture last night at Global Business Network (GBN, now part of Monitor Group), we adjourned to dinner, where the question came up about the demise of "Big R" such as Bell Labs and XeroxPARC. Both Arthur and David Liddle at the table had been at PARC during the "heyday" which they said was 1972-1982 (altho Arthur thought the best work was actually in the mid- to late-eighties, when he was there).
Liddle proferred the idea that only large, monopolistic companies have been able over time to support "Big R" and when the monopoly fails (with the AT&T consent decree in 1984, for example, or the success of HP LaserJet and other incursions into Xerox's main lines), the game is mostly up. He was more sanguine than, for example, Judy Estrin (or me for that matter) about the way in which Venture Capital is actually providing a more efficient research model for academics to get their great ideas capitalized. Arthur's clever retort was to say that in Sacramento it is pronounced "Cah-Pit'-al-ized"
The reason to include this in an HP story blog was that Liddle offered, unsolicited, that HPLabs has been the most singularly successful "R" lab in the world over time, in terms of actually transforming the parent company, as well as in keeping a "low profile" and not setting the "R" expectations particularly high. Music to my ears!

check out the Harvard Biz Review OnLine

2010-04-14T13:41:00.000-07:00

Michael Schrage, the wellknown innovation commentator, now a Fellow at the MIT Sloan School, penned some nice words for the Harvard Biz Review online series two weeks ago:
"The Delicate Art of Unauthorized Innovation" http://blogs.hbr.org/schrage/2010/03/the-delicate-art-of-unauthoriz.html

He wrote: '"Better to seek forgiveness than to ask permission.' That's been the rallying cry of organizational intrapreneurs and innovators.... The paradigmatic story is of Hewlett-Packard's Chuck House, who persisted ... despite being directly told by... David Packard to knock it off.... House was forgiven -- and has co-authored what is arguably the best book about HP."

Nice words!!! Michael e-mailed me later to say "I'm a fan. It's a terrific book. Congratulations!" I look forward to meeting him someday....

commentary from Bill Terry

2010-04-12T02:56:00.000-07:00

Got a thoughtful note from EVP Bill Terry the other day -- he'd finished the book, and had 109 comments to share! Took us four hours to go through the material for which he had questions, additional information, or another perspective. It was a marvelous time, made all the more pleasant by a complimentary lunch and convivial mood. More importantly, it gave me some new insights, several important errata, and even more respect for a great gentleman who took more than immodest time to help on this archival project.

Many others have sent helpful illuminating notes, points of view, and corrections. All of these are sincerely appreciated; this is a harder task than you might imagine, and 'getting it right' is not an easy thing to do (maybe even an impossible belief -- who's to say 'who's right'?). ALL input is valuable

available on Kindle

2010-04-12T02:55:00.000-07:00

not sure about when/whether it will be on i-Pad, but it is now on Kindle

the University of Illinois talk with Ray

2010-03-12T05:57:00.000-08:00

For any who might be interested, the full 75 minute presentation at the University of Illinois, Champaign-Urbana, described earlier in February, is now available for viewing at http://engineering.illinois.edu/videos/ray-price-and-charles-house-discuss-hp-phenomenon

and what about HP alumni

2010-03-12T05:36:00.000-08:00

I had lunch with Ken Tingley yesterday, a person not mentioned in the book. He said we met in Colorado Springs once, forty-four years ago when he was part of a Palo Alto review group and I was a presenter of some of the new displays. I didn't recall, but I had heard his name a number of times during interviews that we conducted for the book -- we just never followed up. He had been involved in HP from about 1958 through 1970 -- heydays, going from $30 million to $350M -- and he had managed International Sales as the international divisions were started, etc. He had some nice background stories, and some wonderful insights since he worked closely with Noel Eldred and the Executive team of the era.

But his chief question, at the end of an informative and pleasant luncheon, was "have you considered a book about the HP alumni?" The question he posed was a great one -- okay, this company had its great HP Way, and that turns out to have fueled the world's most consistent performing company in terms of revenue growth and consistent profitability -- how exportable was that ethos? The glib answer might say that those who left "didn't fit in" or didn't understand the HP Way, but that'd be a total cop-out. When you consider the top level management talent that was grown and nurtured at HP, and then left at the peak of their leadership days -- and we enumerated a number of them in the book -- how successfully did they take this semi-mystical methodology and culture into their next environment? If not, why not?

He named Eric Schmidt at Google, John Chambers at Cisco, Justin Rattner at Intel, Steve Wozniak at Apple, as a few who 'learned their views' at HP. I demurred, saying that each of these (and I'm not sure that they all WERE at HP to start) were only briefly at HP, and that'd be a hard thesis to defend. But certainly Rick Belluzzo, Doug Chance, Dick Hackborn's time at Microsoft, Tony Perez, and many others DID grow up in the HP milieu and did go on to lead other large companies -- how'd they do? And a number of others did startups, or near startups, such as Charlie Trimble, Bill Krause, Fred Gibbons, Ed McCracken. Tingley left HP to become CEO of Northern Tel, for example. And then a full career as a high-tech executive. How'd he feel about it? Like, this ethos was REALLY hard to transplant... and WHY could fill a volume.

It'd be a great question to examine -- another one of those Monograph opportunities!

surprises from readers

2010-03-12T05:07:00.000-08:00

As I have mentioned before, many who first see the book say "wow, BIG, looks like War and Peace", but within fifteen minutes, say something like "but MY stuff isn't in here".... It is more interesting sometimes when "my stuff IS in here, but you got it wrong". Fortunately, we haven't had too many of the latter kinds of responses, although to be sure, I always felt when journalists covered an event for which I was a participant, that I wished I'd been at the same event they describe.

But of late, three "communities" have apparently 'ramped up' purchases, and hence readership. One is the Colorado Springs contingent, where I spent about sixty percent of my HP time; another is Boise, Idaho, the home of Dick Hackborn for the past thirty-four years (and hence the 'capital' of HP Peripherals); and a third is the CAE groups (IC Test, Board Test, PC Test, SESD, CAD tools for ME, etc.) where I spent nearly a decade.

Colorado Springs folk -- such as John Riggen, Hal Edmondson, Gene Warrington, John Strathman, Dave Dayton and many others -- have been surprised by how little of the 'Springs history (their history really) was described. My 'defense' has been of two forms -- first, I wanted to be careful that this book was not an autobiographical account, and a lot of my own career was intertwined with events there, so it would be hard not to mix it up pretty good; second, the Springs mostly was organized for a long time around oscilloscopes, not exactly HP's most shining star. To emphasize a relatively negative chapter of HP when so much was positive, especially a chapter that is a footnote to the "main story" seemed somehow inappropriate. My assessment currently is that a wonderful monograph awaits, that would capture a blended history of these tools that really ushered in the digital age, along with the historical figures who led for so long.

The Boise folk, a proud and extremely successful group on balance over many years, give perspective something like "DMD (Disc Memory Division) was once both the fastest growing and the largest single division of HP; it got extremely short shrift in the book". Or "Boise Printer Division was mostly Big Printers, and you mostly tell the story of Small Printers -- and Enterprise Printing was and is strategically valuable for HP". Or, you tell the stories of each with just a few personalities, not really the key people (or at least ALL the key people). Other views include the notion that the Peripherals Group was under-described, not just Boise, for its many contributions and magnitude in HP history from a revenue, profit, and growth momentum standpoint. A fair assessment. Again, my feeling is that this could be a powerful monograph -- HP often dominated markets (e.g. Digital Voltmeters, Spectrum Analyzers, even Logic Analzyers), but there is something awesome about a company that goes up against the world's largest most successful companies (IBM, Xerox, Canon, Konica) and takes a 50% share or more for two decades. HOW in gawd's name could this be possible? Doesn't happen in cars, planes, or candy bars, and didn't last much longer in CPUs.

The CAE groups look in vain for much description of their long sojourns, again feeling that they pioneered many incredibly valuable contributions for the discipline as well as HP. True enough, but again, this never became the field for which HP was noted, all due respects. And again, my story is intertwined, so to some degree we felt as authors that this was too loaded with our own bias to tell with much depth. Here too, a monograph awaits, but it might better prove to be the story of the field and its impact on designs everywhere rather than an HP story (personal view).

These have been interesting critiques, extremely valid perspectives, and things that were "on our mind" but for various reasons, the choices we made were not as fulfilling for folk in these areas. Our apologies -- but as Joan Didion told us, "let them write their own book"...

Washington D C feedback

2010-02-28T09:23:00.000-08:00

Artie Bienenstock (Stanford's Emeritus Dean of Research) came back from DC this week with the story that several told him "that HP book is terrific"... nice to hear it's getting some 'press'

I spent two days at the NSF-sponsored CyberEducation symposium Friday and Saturday. One of the key topics is educators (esp. the pedagogically pure) need "proof" that these Cyber tech ways of educating are effective. The HP book documents (mostly in Stanford Eng'g Dean Jim Gibbons' words) how well the Honors Co-op program worked -- see pp. 236-241). John Seely Brown also described this more briefly in "A Social Use of Information" a few years ago.

What the book did not describe was how and why the experiment ended, after thirty years of relatively significant success. And the ending is disturbing, to me at least. The official answer is that Stanford administrators got greedy (they use a less pejorative word) and tried to substitute faculty time via email for the on-site tutors -- the faculty, not paid extra for the extra work, said "the hell with you" and voted to end the program, and move their work to the extra-curricular extension program for which they did get extra pay. The unreported and under-researched answer is more compelling -- WHY didn't the beneficiary companies and their off-campus students rebel, go to the Stanford admin, and say, "YOU CANNOT ABANDON THIS!"

I think the answer is that the Valley changed, even more than HP changed. From a mindset that engineers are truly important, and long-term employment is a tremendous goal, the Valley has shifted dramatically to a 'hire-and-fire' mood, where outsourced R&D (yes, Virginia, Santa Claus forgot to show up for this one) and high rotation between companies is accepted if not fully encouraged. HP for four decades had less than 2% annual attrition of professional folk; the Valley average today is reputedly twenty times higher than that. In such a world, the onus is on the student, not the company, to take advantage of further education. And benefits like those that HP derived -- a common skillset and vocabulary across multiple countries that linked their labs -- seem archaic at best, and immaterial to be sure.

As for "proof" for educators today, Gibbons himself said that they never reported the results -- if the results were cited today, they'd be dismissed for their irrelevance (anything happening forty years ago cannot be of value today, right?) if not the fact that it is a "failed experiment". On the other hand, engineering is a relatively 'factual' pursuit in coursework, and some 15,000 students over thirty years outperformed (by a full third of a grade point) an equal-sized extremely selective graduate engineering pool. Wags at our meeting said "well, they were focused and motivated since they were more mature" but that ignores the fact that for the first decade, the same "motivated, focused, mature" individuals did worse by a full third of a grade point until the right technology and tutor focus was put in place.

We could in fact learn from history, if we wanted to. But NIH (not invented here) runs deep...

HP Way interviews for CHM

2010-02-21T21:38:00.000-08:00

For an alcove of the Computer History Museum Timeline project, due to debut at the end of 2010 or so, there is intention to have an "HP WAY" video clip since HP helped pioneer the spirit of Silicon Valley. I interviewed four 'oldtimers' this week -- Al Bagley, Carl Cottrell, Bob Grimm, and Art Fong. Each interview was approx 2 hours, and we covered a lot of ground.

The most interesting fact for me was the easy description each of the four had for how they decided things -- Dave and Bill were coaches, not deciders or directors. Amazing to listen to each man describe significant events -- product strategy, marketing strategy, feature decisions, business approaches -- for which they felt responsible, and for which they made the decisions.

The range of responsibility and the level of trust that was exhibited is almost awe-inspiring. Hard to imagine most CEOs today allowing such antics.

errata #2

2010-02-21T14:30:00.000-08:00

Last errata was listed Nov 4, 2009. Some additional errata below:

NAMES:

p. 129, 564 Emery Rogers, not Emory. Spelled correctly on p. 544

p. 180 Bill Waters was the SRI marketing person who conducted the focus groups, and concluded that the HP 35 would not sell, due to a very high price and low demand

p, 389 Hennessy, not Hennessey. Correct on pp. 263-64, 417, 629

p. 577 Mark Weiser, also a key XeroxPARC researcher, died prematurely, in 1999. Mark Stefik, still at XeroxPARC, is very much alive -- our apologies

p. 629 Add Fred Gibbons to the index, for citations on pp. 321-22. Remove those pp. from Jim Gibbons' index

FACTS:

p. 51 adopting Fourier analysis "and Laplace transform" mathematics...

pp. 60-61 there were in fact TWO Sonoma meetings -- the Executive Committee and a few others in January, and a General Manager's meeting in June. Bud Eldon supplied data re each

p. 65 Re "Management by Wandering Around" this long-standing practice was named by John Doyle in a speech to the GM meeting in January 1976

p. 70 Doyle also spoke German at the time, but that fact was apparently not known to Hewlett

p. 142 IBM 1401 average rental was $6,500 per month; $2,500 was the cheapest available. See Philip E. Ross, "Rebuilding the 1401", IEEE Spectrum, November 2009

p. 157 Jerry Carlson managed PAD (Palo Alto Div), not AMD (Automated Meas Div, which came later)

pp. 166, 170. 211 "network database", not a 'relational' database

p. 178 BPC stood for Binary Process Controller

p. 197 and p. 341 "Personnel", not 'Human Resources'

p. 309 the crucial product... was the HP 7470A

p. 321 the HP 85 debuted in 1980, not 1981 c.f. p. 309

p. 329 Doyle managed both the Automated Test Division and the Automated Measurements Division for two years

p. 438 "the whole company" is obviously an exaggeration. It is true though that many on the Executive and Management team resisted.

p. 506 the $3.06 million tax break for Ellison was a one-time rebate for the previous three years of taxes paid

p. 572 Footnote 32 -- Doyle gives Hewlett credit for instigating the Corp Training Prgm for high-level execs, not Packard

TYPO's:

p. 259 'very' --> "every"

p. 630 IBM 1401, p. 142

Cisco day

2010-02-19T06:33:00.000-08:00

Holy smokes! At noon on Wednesday Feb 17 in the Building 3 auditorium at Cisco, some 400+ attendees, 80% by remote technology, 15+ questions at the end, about evenly split between on-site attendees and those on Webex or in video conference rooms. My gracious hostess was Filomena Pereira, who had advertised the talk widely and given me great advice ahead of time.

Joel Bion, Cisco's SVP for R&D, gave me a tremendous introduction, noting that I'd been a key figure in cementing Cisco's first industrial order back in the early days (1986/7), and it accounted for two things -- in 1989 when he joined, it was about 25% of Cisco's annual revenue, and more importantly, HP provided the reference site of value for their sales efforts with other corporations. He provided this without my telling him the story -- amazing to me, but then, he's been there since the early days.... I linked it to the Medal of Defiance in terms of some of the HP exec's enthusiasm for inking this deal -- in truth, the system we built is why the Wizard award happened some years later from Smithsonian.

We had fun! A key point or two revolved around this question of what kind of 21st century corporation will prove most successful and why, and where does Cisco fit in that new world. We'll have a video of the talk online presently!

Fellowship Forum

2010-02-19T06:23:00.000-08:00

Tuesday Feb 16 the Palo Alto Fellowship Forum had about fifty folk assembled for the 6th meeting of the 61st year at the Westin Palo Alto hotel -- including HP oldtimers Al Bagley, Don Hammond, Bob Grimm, Skip Ross, and Peter Moseley. This is a group of VERY accomplished individuals, most with long-term Bay area roots, and a lot of perspective about HP history.

I had a lot of fun with some of the sidebar anecdotes that necessarily accompany any talk these days about HP, including the one about the HP 35 market study that member Bill Waters did while at SRI, concluding that it was probably not a winner (something that Hewlett ignored...)

Out of time in the main setting, I had a lot of questions afterwards in a small group. One in particular made a point that he had lived next door to Bill Hewlett for 25 years, "an incredibly nice man". Asked for any specifics, he said, "Bill always dried dishes with his wife Flora" which of course says a lot about this genial giant.

Holiday week

2010-02-15T11:35:00.001-08:00

This week features two talks in the local area -- one at the Fellowship Forum in Palo Alto tomorrow (Tues 2-16) and one on Wednesday at Cisco. Both allow guests, if someone from the respective organization sponsors you...

Last week on Monday, Greg Loew sponsored a talk for me at SLAC, the National Linear Accelerator lab. Physicists galore, and great questions. Lots of history from this major facility in terms of Nobel Prizes and other key physics awards. For example, the J.J.Sakurai prize for theoretical physics was awarded to a neighbor, Stan Brodsky, in 2007. The Hans Bethe prize, the Irving Langmuir prize, the James McGroddy prize and the George Pake prize are among other key prizes given annually by the American Physics Society, and this team wins an uncommon number of them.

Mike Roberts, a good friend from Washington D.C. involved in the international nuclear fusion program, has been associated with this group for years. We had a stimulating time, and a great dinner afterwards. What a privilege!

Illinois trip

2010-02-15T11:25:00.000-08:00

Last week, landing in the middle of a "nice" snowstorm in Chicago and driving 140 miles on black ice to State Farm's headquarters in Bloomington, IL was an exciting time. Apparently readers of the HP book thought so too -- Amazon sales boomed over the three-day weekend something phenomenal. Started on Saturday morning, hitting #13,329 by 8:30am, then #9,453 by 1:20pm and #9,022 by 4:10pm (I don't watch these numbers very often...). By 6:10pm, it hit #8,080, and then on Sunday it hit #7,143 by 2:20pm, ending the day at #8.675 at 9:15pm while watching the Short Track skating at the Olympics. It has relaxed today back to #13,509 at 11:30am, still "phenomenal" given that it has been out for several months, with NO advertising

Ray Price and I did have a nice presentation at the Champaign-Urbana campus on Thursday, and we were featured on a local TV show that day as well (to be aired later). Ray's colleagues were wonderfully supportive and we had a great set of questions and discussion later. We agreed that this has been quite the experience, one to savor for the friendships and the deep inquiry that it seems to have stimulated. We are indeed "lucky pups"

Google Engineering Management Week

2010-02-04T23:10:00.000-08:00

A rare privilege today, to talk at Google's author series for the engineering teams and managers. Kepler's supported the event, selling a dozen or more books on site. Probably a hundred attendees, plus others in separate 'beamed-in' rooms. The theme I used was "relevance to today"

I began with the New York Times quote this morning from ex Microsoft VP Dick Blass, where he posed the question of why Microsoft is 'killing innovation'. It was a compelling article, easy to lay alongside the sad spectacle of the Presidential Commission on Competitiveness, and say "what the hell is going on in our boardrooms and at the top of our companies?"

Then posing the three issues we see at Media X -- collaboration, participation, and complexity -- I outlined how Media X comes at those questions, and then suggested that the book is a direct outgrowth of such inquiry. From there it was a simple and fun task to select a couple of projects as examples.

A key thing -- easy to do -- was to correlate Google practices today with the "old HP", especially with respect to "Citizenship" and "Employee Dignity". Another statement that resonated was about the satisfaction / happiness factor for employees. How many stay late at night, because they love what they're doing rather than fearful about losing their job?

Stimulating questions -- lots around HP Culture and its modification since 2000; some around the apparent success of HP in the last decade on Rev/Profit/Growth, with much higher feeling of pressure or worse. I left, feeling enormously energized by the teams at Google -- this is a very talented, very dedicated, very confident group!

CMU presentation

2010-02-04T22:57:00.000-08:00

Tuesday Feb 2 I had a wonderful afternoon at Carnegie Mellon West Coast Campus, talking mostly about the HP book, but also reminiscing with some of the faculty (Steve Rosenberg, Ted Selker, Stuart Evans) about how design criteria have changed, along with the companies.

A surprise for me -- shouldn't have been, but was -- is how unaware most of the students were with the heritage of their own school. Herb Simon and Allan Newell were 'unknowns' to the entire room, and granted, it was 55 years ago that they started the AI program at Carnegie Tech (which was a name they'd not heard either). SEI -- the Software Engineering Institute -- which is celebrating its 25th anniversary this month -- was likewise a "zero" for the students. For me, SEI was a 'zero' -- they persisted in teaching process to the near-total exclusion of tools until you get to Level 4, thereby setting back software engineering practice a full ten to fifteen years, but ensuring their own consulting fees for that entire period.

Code coverage tools, which they disdain to this day, likely could have uncovered the issues bedeviling Toyota's "fly-by-wire" gas pedal -- such tools adopted twenty years ago would have altered the safety of airliners, automobiles, and most every 'real-time' software environment in the meantime. Instead, we all fly on, drive on, or ride in elevators, etc. "the lowest bidder"

Good questions at the end, especially re distinctions between invention and innovation. It is easy to think they should 'know' some of the things I find important; there is no question that they know a host of things that ARE important that I will never learn -- the kids today are smart, Smart, SMART, and it is such a privilege to get to talk with them on occasion.

I missed your speeches so far...

2010-02-01T07:38:00.000-08:00

Well, we learned some fascinating news last week

Out of a list of hundreds of books, ours was the #3 best seller in the Stanford Press catalog for the first four months of fiscal 2009/10 (from September 1 thru Dec 31). Since ours wasn't available until late October, that's amazing. All told, sixteen or eighteen hundred books to date

The keys undoubtedly were two events in early December:
1. the NPR radio show, which is available in case you missed it, at
http://www.kqed.org/epArchive/R912041000
2. the Computer History Museum YouTube video, is at
http://www.youtube.com/watch?v=Y9GVC4FH2gU

Both of these were ably moderated by Dave Iverson, of KQED. Wonderful host

Attending a February event?

2010-02-01T07:18:00.001-08:00

Some of the talks (listed in the last Post) are open to the public, such as the two at universities -- Carnegie Mellon, and University of Illinois @ Champaign-Urbana

The person to contact for CMU is Stacy Marshall @ smarshall@west.cmu.edu (tomorrow @ 1:30pm)

The person for UIUC on Feb 11 is Ray Price @ price1@ad.uiuc.edu

The Google talk this Thursday is open only to Google employees and guests. Contact Shoshana Abrass with questions at shoshana@google.com

The SLAC talk, next Monday Feb 8, is hosted at the Panovsky Auditorium at 4:15pm; it is open to Stanford faculty and staff and their guests. Contact is Greg Loew, galoew@slac.stanford.edu

The Fellowship Forum in Palo Alto Feb 16 is open to members and their guests only; Skip Ross is the contact at waross@closereach.com

The Cisco talk is on Feb 17, open to Cisco employees and their guests. Filomena Pereira is the organizer, at fpereira@cisco.com

upcoming events in February

2010-01-29T18:11:00.000-08:00

Hard to imagine that FEBRUARY 2010 is already upon us

The book continues to do well. In fact, we are thrilled with the reception to date.

February speaking events are sort of fast and furious. Each is "tailored" to the audience, there is no way that I could ever give the same talk twice anyway...

Feb 2 -- Carnegie Mellon West, streamed to CMU Pittsburgh

Feb 4 -- Google's Engineering Development Week

Feb 8 -- SLAC, Panofsky Hall

Feb 11 -- University of Illinois, Champaign-Urbana (Ray's university)

Feb 16 -- Fellowship Forum of Palo Alto

Feb 17 -- Cisco Engineering Symposium

Whew! Much fun

HP Labs is alive and well... well, alive at least

2010-01-11T16:32:00.000-08:00

I had a rare privilege today, invited to HP Labs in Palo Alto to talk about the book and about recent events at HP. Last Friday's ACM Communications had Prith Banerjee (HP Labs VP) featured for a full page about "8 Big Bets" and the redirection of the labs -- very timely

Counting an overflow room, we had 150+ folk show up, sort of amazing by my count. Stanford Bookstore graciously donated a person to provide some books for signing, at a 20% discount yet since the book now is on their Top Ten list (for the second month in a row).

Discussion was wide-ranging -- (a) explain 'next-bench syndrome' in today's terms; (b) what WAS the definition of a 'G-job' and how did it work (i.e. how can I get 10% time to work on things I think are important); (c) software contributions are easier today than ever, EXCEPT there are no divisions in that business, so who do you transfer to; and (d) explain again what it means to get a 'medal of defiance' without getting fired.

Afterward, at a small lunch, we got 'down and dirty' about some specific ideas, in areas that I have passion for, such as immersive communications. And I was thrilled to hear thoughts every bit as bold, exciting, and pioneering as I had ever experienced from HP Labs folk. I think the place can still thrive, if the 'leaders' get out of the way (oh, where have we heard that refrain before?).

a long-term executive

2010-01-07T14:46:00.000-08:00

"this book is in a word OUTSTANDING! It struck me that you had taken on 'Mission Impossible' and what a roaring success of conveying very complex organizational and strategic issues. I simply cannot imagine all the work that went into this gathering and recording of information and the horrendous book organizational issues involved in bringing the huge data base of facts/opinions into an interesting/readable book... The overall picture conveyed of what 'really' took place at HP over the years is a "REALITY SHOW" deserving of an Oscar....

"I think that this book is fair and equals reality as close as it can be approximated vs. the eulogy it could have been if done by the Packard/Hewlett families. Yes, and it's certainly obvious why HP or the families do not endorse it.

four VPs weigh in

2010-01-07T14:27:00.000-08:00

#1 -- "I was there last night (CHM). Good job, very nice opening. You handled yourself skillfully during Q & A -- and with good humor. Sometime maybe we can have another breakfast and a friendly personal discussion over a couple of points..."

#2 -- "Many thanks for such an exhaustive history of HP and thanks also for the balanced view of my small role in the evolution of the company. You have made a valuable contribution.... I became fully aware (circa 1991) that Packard was suffering from four years without Lucile and what a marvelous and moderating influence she had been..."

#3 -- "My memory of some events involving me is slightly different than what you heard from others involved..., but I can give you an overall grade of A+. The writing and the prose was excellent, surprisingly so for this type of book. Easy reading and fascinating. The story was comprehensive and devolved into several stories. There was something for everyone."

#4 -- "Chuck doesn't just tell what worked, but also describes in details what didn't work and how challenges were solved. As with any highly successful organization there wre struggles, conflicts, and disagreements coming from a team of passionate visionaries.... Chuck, in his own unvarnished way, shares it all.... Not just a history lesson, but (it) is about what it takes to create/enable an organization to innovate and transform.... a fundamental belief in 'bottoms-up innovation' -- a trait sorely missing from many organizations today where corporate anti-bodies seem to be the norm."

a reader

2010-01-07T14:08:00.000-08:00

From a reader: "I just finished reading The HP Phenomenon book. I am speechless. Anything I write here will fall short of the merited justice and compliments it deserves, but I'll try. I've been looking forward to the publication of the book for several years. 'What's taking them so long?' I wondered... This book about HP is not like any that I had imagined. It is awesome.
"In it there are far more details, references, interviews, individual history, product history, project history, division history, corporate history and HP history than seems possible.... I noticed, while reading each page, every line and sentence has detailed meaningful information. It surprised me how much detail is included about our competition, their history, products, and successes (or failures).
"A fine reference book. I was thankful that you covered many events, meetings, and quotes of many of our managers at HP. When I read the last page I found I had tears in my eyes because your book was a good read, sincerely appreciated, and precious. Thanks for writing it."

new month new year

2010-01-07T13:57:00.000-08:00

And book sales are 'holding up' which is well nigh amazing. The Amazon count yesterday morning, pretty much equaled this morning, was #22,214. In "Hot New Releases" it ranks 3rd in High-Tech, 8th in Company Profiles, and 7th in Manager's Guides to Computing. 94 libraries are listed as having one, per the Google tracking site, and it managed to be on the Stanford Bookstore Best Seller list for both December and January.

More pleasing is the fact that we are getting some great testimonial letters, things that warm the cockles of your heart (or cause a tear to well in the eye). Readers, especially 'old HP' readers, seem to like it a lot. Thank goodness. If they didn't, it'd be worrisome.

And even seasoned exec's, the likes of Ely, Morton and Doyle, have read it and pronounced it sound, even as each has said something to the effect of 'here's a significant correction'

Satisfying!

two BIG events

2009-12-13T06:43:00.001-08:00

All on the same day. First, the HP/Agilent Bay Area retirees met, on Pearl Harbor Day (Dec 7th) for their annual luncheon. Some 450 folk listened to a brief half-hour outline of the book, and 82 bought books on-site for signing. Then I was featured at the Computer History Museum that night (the anniversary of many things besides Pearl Harbor's day of infamy -- I pointed out the irony of HP launching its EPOC printer that day, and didn't mention the HP-IB original meeting on 12/7/71 (courtesy of both Dave Ricci and Don Loughrey), or Jenny's first day at HP.
Another 35 books sold at CHM, managed by Kepler's.

Dave Iverson moderated the CHM event, very ably, and the questions were good ones. One in particular had to do with the current 'regime' and pay practices. Tough one to answer, and my answer "unconscionable if true" for the reported $113M for the top four people caused a murmur. I did say "Dave and Bill, for their egalitarian company, would find that an unusual pay practice". Dean Morton wants to have breakfast again this week, for some public speaking counseling.

It was a day that Ray Price hated to miss -- he was caught up in semester finals; he'd have enjoyed it as much as I did.

Yes it was fun

2009-12-04T22:52:00.000-08:00

Yes indeed. First time I ever was featured on a one hour radio show. Up in San Francisco, at KQED, with Dave Iverson as the interviewer. He was magnificent. See his documentary re Father and Sons (about all three with Parkinson's -- very touching story).

We covered a lot of ground, and Q&A took us into a lot more places. Predictably, a number of folk called to say I am reporting nostalgia since the company has done a hopeless bastardization of the HP Way under the last two CEOs. And while I too go down that path on many occasions, I felt compelled to point out that (a) Carly Fiorina DID save the marquee name/company, doing no more acquisition than Dave Packard did in his second "term" (from going public to leaving for Washington DC), and (b) many current employees reported in interviews and in book signings this past month that THEIR unit, THEIR division, or THEIR arena is doing great, thank you, with the HP Way largely intact. Not to say it wasn't LOTS better in those great old days, but somehow it is asking a lot to expect a company of $120 BILLION to act as personal and intimate as a company of $120 MILLION, which is a fair amount LARGER than it was when I joined.

We had calls from Portland, and Phoenix, and San Diego, and Wisconsin, and lots of other places -- and I got emails all day long from friends who heard it and liked it, including our god-daughter who heard it twelve hours later in Las Vegas of all places. VERY NICE

And maybe that accounts for the surge in Amazon ratings, as it "zoomed" back to #6,751 at 8:00 pm tonight, with our book being #4 overall in Mgmt Guide to Computing (and #1, for the first (and probably only) time on the HOT NEW RELEASES list). It was #5 and #4 HNR on High Tech, and # 26 and #8 HNR on Company Profiles. Barnes and Noble didn't do as well, having it still at #45,301. (No, he's not a numbers guy, and he really isn't very competitive... )

SUNY Stonybrook

2009-12-04T05:52:00.000-08:00

Wednesday (12-2-09), Karen Sobel-Lojeski arranged a wonderful group at State University of New York, Stony Brook campus, for me to present re the HP book. Deans from the Biz School, the D'school, the Tech in Society group, CS, Eng'g were among the audience. Very privileged.

Plus a full room (>75) and turning away an estimated 30 more (fire marshal rules). Great questions, including (a) what has been HP's response to the book, (b) how do you compare IBM and HP on services creativity these days, and (c) discuss the new leadership at HP Labs, this one from an ex-colleague of Prith Banerjee at UIUC.

I am increasingly using the "relevance" theme -- what can we learn from this history that applies to our world today -- and the notion that "bottoms up" leadership with marketplace deciding on success rather than "tops down" dictates wins the popular vote, no question. Students groove on that one, for sure. For experienced folk, the engineering-led vs. business-led notion garners lots of enthusiasm, particularly from engineers (duh)

I'm on KQED NPR radio this morning (FM 88.5 in San Francisco, 89.3 in Sacramento) with Dave Iverson. Should be fun.

Wallenberg talk yesterday

2009-11-20T06:22:00.000-08:00

A large number of old HP friends and colleagues, coupled with a complement of Media X followers, filled Wallenberg's Learning Center. In addition, a first for us, we did a live streaming from the talk. I even had a few books on the front table (demonstration-proof that there is a book) and the Stanford Bookstore sold some as well, I heard...
The talk began with the three points that Media X has been observing -- 1. the World is Flat, leading to both a very heightened need for collaboration and a much higher competitive pressure from 'everywhere'; 2. the Social Networking phenomenon is 'real' rather than a fad, so whether it's YouTube, Facebook, or Twitter, the kids want to participate, not spectate; and 3. it isn't clear that anyone can marshal support or energy for long, drawn-out difficult scenarios ala the Global Warming issues or the Health Care debate. Participants are just not inclined to be followers, so there is kind of a double whammy happening here.
Then it moved to a thesis about Company Leadership styles -- including both the Tops Down vs. Bottoms Up duality, and the Engineer Led vs the Business Led duality. The assertion is that "the Old HP" was Bottoms Up / Engineer Led (Intel was and mostly still is Tops Down / Engineer Led), and that such a company is vastly more apt to be innovative, and able to renew than a company managed for productivity, profitability, and efficiency. Not necessarily better, and almost certainly less effective in the short time, but more resilient and more apt to create new jobs, especially new kinds of jobs.
And then some stories from the book -- and Packard's resolute reluctance for almost every new market shift, but nonetheless, willing to let it play out and have the market decide, plus betting on the enthusiasm, drive and perseverance of the 'innovative kids'.
Great good fun, at least from my perspective

The HP 35 market research story

2009-11-19T08:47:00.000-08:00

Ray Price was in town, and he was my guest at the Palo Alto Fellowship Forum. The guest speaker was Nils Nilsson, the fabled longtime leader of the SRI Artificial Intelligence Lab. And appropriately, several guests were in attendance, some of them old SRI types.

Just before I intro'd Ray, another member intro'd Roy Clay, who was HP's first software jock. He is featured in our book re the HP 2116, HP's first minicomputer (or instrument controller). I'd not met him; Ray conducted that interview. I stood, held up our new book, and mentioned Roy as well as intro'd Ray.

On my right, a fellow said, "oh, I met Bill Hewlett once". Asked the circumstance, he said, "I was at SRI, and he had a little balsa wood model of a handheld calculator, and he wanted some market research done. So I put together a plan, and some focus groups, and conducted them in San Francisco. Turns out, he wanted more than $200 for this thing, and everyone loved it but not at that price. So I wrote a "won't work" report." His name is Bill Waters, and I showed him our passage in the book that said, "Hewlett ignored the dismal market research report from the prestigious firm, SRI". We laughed together.

The product unalterably changed HP forever.

HP and Silicon Valley

2009-11-19T08:31:00.000-08:00

The book has generated some 'new insight' re HP's involvement in 'silicon' -- some of those unwritten stories that James Burke with "Connections" always treasured.

The book notes that HP had more semiconductor processes "in production" by a factor of two than any other chip manufacturer, ever. This was due to unique needs for instrumentation leadership mostly. But it translated into more than half of all Gallium Arsenide chips for satellite communications, and more than half of all Light Emitting Diodes (the flashing red lites on your VCR or digital clock) for years -- HP was the undisputed III-V compound semiconductor manufacturer, whether for truly high frequency signals or for light output.

The book also documents HP leadership in microprocessor architecture, design, and manufacture, leading Intel usually by about three years, up to and including the Itanium design, still the world's most "powerful" microcomputer chipset which was designed by HP and licensed for manufacture by Intel.

But memory chips are what built Silicon Valley, actually, and HP's role here was more interesting and more lightly mentioned. Yes, HP helped craft the specs for the Intel 1103 DRAM, the first 1K memory chip, and yes, they bought 40% of the output from Intel for the first two years (East Coast computer folk were still wed to magnetic core memory). But it had never been documented, and I only pieced it together last week, that the Anderson Bombshell (in the book) which nearly derailed the U.S. push for MCC and Sematech, was heavily stimulated by the YHP (Yokagawa HP joint venture) semiconductor testset, derived from HP's acquired R-L-C meters from Boonton Radio. I reported on this in last week's blog, so this will just add a bit.

This is one of those stories where a resourceful group bucked HP top mgmt, survived long and difficult development cycles, found only ONE customer (Hitachi) which figured out how to build radically more reliable, higher performance chips cheaper as a result. YHP never was able to sell Silicon Valley manufacturers; the net result is that today the $20 Billion (yup) memory chip business is entirely elsewhere -- a shift that happened in a mere five years (between the 8K and 64K memory chip 'space'). I have now interviewed four HP top managers involved with YHP, and I don't believe that HP top mgmt or Intel top mgmt ever had a clue that this is all related; if Intel had known it, Andy Grove's epiphany in 1985 might have been hastened by several years (or he might instead have been able to adopt the 'winning tools').

Great speculation at any rate. Fun to hear the stories come forward...

connecting is such fun

2009-11-12T09:27:00.000-08:00

This week, with Ray Price in town, has been wonderful for us. We've met a number of old colleagues around the circumstance of the book being published. Alan Bickell shared a cup of coffee, and we reminisced about Y-HP, and he helped put more "flesh on the bone" about the semiconductor test set done there, as well as the emergent Samsung memory chips a decade later. Dean Morton added his perspective the next day, and Art Fong contributed more that night. The story is impressive -- it has to do with how a small remote division ignored Palo Alto leadership for years, finally prevailing on a very difficult project, only to find they couldn't sell it, and yet eventually would reshape the entire semiconductor world and the companies in it.

When Y-HP sold one unit, eventually, to Hitachi, that company found that it could control doping levels for impurities much more precisely -- a fact that relatively soon led to a massive adoption by other Japanese firms, and gave the world better memory chips much cheaper than U.S. vendors, notably Intel and Texas Instruments which were two of the leading worldwide Dynamic RAM vendors. There were three repercussions in relatively short order:

1. The Japanese "took over" the 16K and then the 64K RAM chip business, going from less than 10% of the business in 8K chips (1977) to more than 80% of worldwide chips in the 64K chips in six years. Midway through, U.S. vendors got very concerned, even going to Washington DC to seek "government relief" --> leading eventually to MCC (1982) and Sematech (1986) national initiatives. Bob Noyce, co-founder of Intel, left that company to head Sematech.
2. Dick Anderson, HP's Computer Systems VP, delivered the 'Anderson Bombshell' in Washington DC in March 1980, describing the twin facts that Japanese 16K memory chips were not only cheaper (and thought to be "dumping" in America), but 1000% more likely to pass incoming inspection, and lasted 500% longer in operation. Intel and TI both viewed this as "sour grapes" from a competitor even though HP was the largest memory chip purchaser in the world at the time. HP's BPC microprocessor (16-bit micro) had shipped 77,000 units to customers before Intel could source 8086 production units to anyone; TI and HP had been locked in a nonsensical price war initiated by TI over handheld calculators. TI, infringing heavily on HP patents, threatened to withhold memory chips if HP sued. Bad blood flowed.
3. Intel's Andy Grove capitulates to the Japanese in 1986, taking Intel out of memories and into microprocessors. He still describes this as "an epiphany." All other U.S. manufacturers bail out as well. The memory chip market today (2008) is an $18 Billion worldwide market, with no U.S. manufacturers.

No one, to our knowledge, has until now made the connection between the HP semiconductor test sets and the radically better processing technology that Hitachi and others then pioneered. The incredible 'rest of the story' is that Y-HP tried for years to sell its testers to U.S. vendors, with no success; consequently, it was virtually HP's only division with radically higher sales in Japan than anywhere else in the world. Palo Alto management for years associated this with bad marketing skills at Y-HP in contrast to NIH within U.S. semiconductor firms.

Attendees at Keplers event

2009-11-12T08:48:00.000-08:00

We each recognized many, and we "knew" more (but like a class reunion, couldn't quite put a name with a face sometimes). Art Fong -- Mr. Microwave -- was there, and we got some pictures with him; Curt Gowan, who runs the HPAA alumni group for Agilent and HP retirees said a few words; and Steve Leibson, who has a brilliant Colorado Computing website, http://www.hp9825.com/, introduced us to the audience.

Our brief outline of the book, and some perspective on the two founders, four successor CEOs, two strategists, and two technologists, was followed by a great interactive Q & A, including the inevitable "how is the HP Way today?" or, for many, "what happened to the HP Way?".

Many actually bought books, and asked us to sign 'em; quite a privilege, and I even was coached on which page you're supposed to sign your name (no, it is not the inside front cover page). But almost last in line, shy and diffident, was a slight man with a wry smile, who asked for our signature. I asked, "who for?" and he said, "I'm a relative". Turns out, he said he was a son of the shy and diffident co-founder and my alltime hero, Bill Hewlett. I tentatively stammered, "are you Jim?". And yes, he was Jim. We had never met, but he was the only scion from either founder to ever work at HP. He programmed for Roy Clay on the HP 2116 for a year and a half -- a fact that we had put into the manuscript at one point, but somehow that part didn't survive the editing process (along with many other wonderful pieces that we wished we could have kept). Again, an incredible privilege for both Ray and me to meet this man, and to realize he came to hear us.

Many others were in attendance; it'd be folly to try to list them all, but two others merit some comment -- Roland Haitz, who shared some terrific stories about the LED and components business with us, and has built a great Components timeline, but alas, we chose not to use most of that for the book (it will be featured in an evening at the Computer History Museum next year); and Srini Nageshwar, who "named" the LaserJet (even tho at the Personal Computer division) when Boise Division had the prosaic name, HP 2686. Sukumar was key to the original HP 250 saga, as well as the HP 150 Touchscreen, and many other programs.

It was a wonderful evening to realize that we barely scratched the surface of this wonderful HP legacy for so many people.

keplers was a great venue

2009-11-12T08:43:00.000-08:00

Kepler's Bookstore, already a stronghold in Menlo Park when I arrived at HP in 1962, is 'enduring' -- hard for bookstores to do in this digital age. They graciously hosted Ray and me last night for an Author's Nite -- it is a real thrill to see a booktable of your own book, and then to have a video interview by knowledgeable booksellers, followed by a wonderful crowd of friends and HP colleagues and friendly others. What a privilege that Keplers afforded us!

They have a "Literary Circle Membership" for any of you locals, that helps to defray the costs of their Author program, and also helps to keep them "in the game". While we all like the lowered costs of Amazon and the other online sellers, speaking from VERY personal experience lately, I can aver that "in your hands", browseability, and ambiance are still unmatched in a bookstore environs. Kinda like TV baseball or football is great, but really different than going to the game.

harvard Biz Online re innovation

2009-11-05T20:10:00.000-08:00

This week HBR Online is featuring a series of folk about innovation vs. Core Competence and other moves such as significant Outsourcing. Great debates! We are going to try an entry; who knows...

Our belief strongly is that the HP book is relevant now more than ever as an alternative to CEO's who manage to the numbers, for efficiency rather than innovation. And trust in employees, in people closest to the problem working best on the solutions, etc. is fundamental to The HP Way. It also is the only conceivable way to imagine running a company spread across the globe, where one out of five professionals has never met their boss face-to-face, and half of them never expect to do so. (We didn't ask how many don't want to meet them).

errata

2009-11-04T09:42:00.000-08:00

Well, there will doubtless be lots of discussion on multiple points. And we welcome input, commentary, debate, and certainly corrections. Please, feel free...

Distinguishing between facts, historical recollections, interpretations, and opinions is part of the fun. But "facts" are the most awkward to get wrong. And of course there will be some.

For a previous book re HP, I compiled 16 pp. of single-spaced typing errata; not sure that the author was particularly appreciative! And even for Joan Didion, I once offered some constructive helpful commentary (she icily said she thought "the book could stand as it was")

So, here's a few "nitpicks" from various places (as one kindly reviewer titled his email):
p. 68 Narda built Microwave gear only; Berkeley Labs (cf p. 51) built only counters
p. 117 Boonton Radio (not B. Electronics) was bought (two places). Footnotes (#46, p.558; #12, p. 563) got it right; the text did not.
p. 129 confusion between text and FN re Howard Harrington's microwave molecular rotational spectrometer vs. the quadrapole mass spectrometer done at HP Labs.
p. 132 John Minck was in a meeting w Weindorf and Hewlett; wonders if this was Bill, not Dave
p. 144 The HP 8405A was not linked to the HP 2116; instead it was the HP 8410 successor unit.
p. 253 The system shown is the HP 8540 Automatic Network Analyzer system, using the HP2116 and the HP 8410 mentioned above. The operator is Dr. Steve Adam, one of the early inventive HP Microwave folk, called "bombastic" by many. He could have been profiled; regret that we missed him
p. 275 The dual sampling head was used by 'scopes and by the HP 8410 Vector Network Analyzer, not by the Spectrum Analyzers...
p. 391 Eugenie Prime prefers to use her real name rather than Price (Freudian on our part)

upcoming events

2009-11-04T09:34:00.000-08:00

Both Ray and I will be talking / answering Q at Kepler's Bookstore in Menlo Park next Wednesday evening Nov 11 at 7pm. This is our only "scheduled" joint appearance; kinda like flying on planes, spread the risk and don't let too many catch you both in one spot...

I will be featured at Wallenberg Learning Theatre (Rm 124, Wallenberg Hall in the Main Quad at Stanford) on Nov 19th, noon to 1pm as part of the Media X autumn lecture series.

December 7th (Pearl Harbor Day), I have the privilege of addressing the Bay Area HP/Agilent Retiree Club at their annual luncheon in Palo Alto.

That night at 7pm (reception at 6pm, sponsored by Intuit -- not HP or Agilent!), I'll present at the Computer History Museum in Mountain View.

And December 9th, the Monitor Group and Global Business Network are hosting in San Francisco.

Each talk will be "different" in specifics, if not in the general outline. You know me....

interesting intro, about like old HP products

2009-11-02T20:50:00.000-08:00

We called this a "rolling start" in the old days. The book was "available" from Stanford U Press on October 9 supposedly, told to us as October 19, shipped from Amazon that day to pre-orders, receiving it on Oct. 20. Orders to Amazon have consistently filled within five or six days, sometimes much sooner. Barnes/Noble dropped the price to $18.90 for members on Oct. 24; yesterday and today, they canceled all of those orders, saying that they "cannot obtain books despite strong efforts" which means they are losing money on each, and don't want to fill them, I think. Their new price = $28.00, $25.20 for members. Amazon today filled morning orders by evening time, at $20.47, down from $23.10 last week. And Borders stocked the book today in some stores. Kepler's and Stanford bookstore have had it for two weeks.

And today, Stanford publicists sent out a press release about it, to about forty correspondents with various books, magazines, and newspapers, along with the promise of a book "sometime". HP used to introduce products this way, somewhat leisurely and dependent on who was where. Ah, well...

We've stayed pretty consistently in the top 12,000 or so for Amazon for a couple weeks, with three categories usually earning a Top Five for new releases -- "High Tech" (8th overall, 4th in new releases), Manager's Guide to Computing (13th overall, 3rd in new releases), and Company Profiles (42nd overall, 9th new releases) at 11,139 tonight at 9:06pm. All things considered, pretty good for "unknowns" with an "old, tired company"

someone must be buying

2009-10-24T17:00:00.000-07:00

Wow... today's metrics just got better and better. I'm going to record this for posterity; lightning never strikes twice in the same place, they say.

First, it is probably key to note that George Anders (who wrote Perfect Enough in 2003 about HP, Carly and the proxy battle over buying Compaq) penned a very positive review for Forbes.com. Two responders promptly said, "Boy, the authors must have left a LONG TIME AGO; it surely isn't like that now".

But, here's the Barnes and Noble web-metrics at 3:37pm on Saturday, October 24.

Barnes/Noble since noon has the book on "pre-available" $18.70 heavy discount price, and it is number 337 on their list at 3:37pm; it was 360 at 1:30pm, 846 at 11am, 983 at 10am, and 183,883 at 8am. Glad they woke up...

Amazon, at $23.10 for members, has it at 3,030 at 3:37pm, down from 5,184 at 1:30pm, and 8,863 at 11am. Now it makes the Business Biography and History category as #24, 6 on the Hot New Release; for Computer Profiles, it is #16, and 3rd on the Hot New Releases; for Manager's Guides for Computing, it is #3, and #2 on the Hot New Releases.

Hard to get much better... THRILLED out here in the back forty.

ya luv metrics when they're good

2009-10-24T11:32:00.000-07:00

At 11:10am on Saturday October 24, 2009 (need to record this, it may be an alltime high),

Amazon listed the following:

Popularity among all books: 8,863

Popularity, Company Profiles: 32
Hot new releases in this category 7

Popularity, Managers Guides to Computing 13
Hot new releases in this category 3

Barnes and Noble listed us as: 138,883 at 11:00am
and 983 at 11:38am

Peter Burrows interview

2009-10-23T15:58:00.000-07:00

Peter Burrows is probably the most astute journalist covering HP; certainly he has "time and grade", having covered them closely for a decade. His book Backfire is still selling, seven years after the events that it covers, and his periodic insights into the HP role and position in the scheme of things for Business Week are among the most trenchant of anything available.

So it was with great anticipation that I met him for lunch today. Guess what? He has a different opinion on a half a dozen great topics, so we had a lot of fun gabbing. My guess is that the book will engender a lot of gabbing, and not a little "what were they smoking?" reaction. Which could be good for public debates, or lively chat rooms, or even interactive blogs.

What do we differ on? Well, for starters, the role that Carly played, the forward prospects for Hurd's leadership, the relative merits of Platt's strategy and people selections, and John Young's contribution. He didn't know much about Ely; respects Hewlett's legacy enormously. I can't wait for the feedback and interaction to begin

The book stared back at me

2009-10-23T15:46:00.000-07:00

It is on the shelves! Or at least one copy is on one shelf, at the Stanford Bookstore. Heady to see your name and your work, displayed on the top row, the cover facing out. Emotional thrill indeed! They've sold seven already; three left in stock.

My ten free copies went in a flash, can't even remember who to... Well, lessee, several who helped mightily, including Don Hammond, Bob Grimm, Al Bagley and Paul Ely. Several who are working with the material, including Peter Burrows (Biz Week), John Hollar (Computer History Museum), and Gardner Hendrie (CHM also). A couple of Media X clients... and, oh yes, Craig Barrett, re the inclusion about the Glenn Commission and his advocacy of STEM issues.

John Minck got one for being a reviewer, as did Cort Van Rensselaer (Cort actually hasn't gotten his yet), and Bruce Abell. John promptly sent a note that Footnote 5 in Chapter 2 is wrong. There are only 1,127 footnotes in the book, hard to get them all taken care of cleanly.

Heady stuff...

AT&T -- and the new order

2009-10-12T20:30:00.000-07:00

I dropped my Motorola Razr 3G last Thursday. Broke the LCD seal, pretty hard to read it. Jenny said, "let's go get you a new phone". I have an i-Phone, but the sound isn't so hot. I think if the title says "PHONE" it means that it isn't a good one. True, it is fabulous for all those apps, and it has great finger spreading graphics, and a million wonderful reasons to love it, but the phone quality sucks.

Now, I had bought the Razr for a Motorola client meeting in April 2007; it pleased the visitors, who subsequently invited me (and 41 others) to Schaumberg, IL for a Research Advisory Council meeting the first week of September. The i-Phone, you may recall, came out in July that year.

So, when I got to the meeting, I asked at dinner "why didn't you guys invent the i-Phone? Aren't you worried?" Their quick answer: "We did invent this, and we're selling it in China; have been for eighteen months. But it is hard to work with Verizon and AT&T, etc." But the clincher was when they said, "they predict selling one million this year; we sell one million a week".

The next day, I asked the group -- 36 of the 42 raised an i-Phone in the air, six weeks after it came out. And we suggested as a group that M look at Twitter. The answer: doesn't do much.

At the AT&T store last week, there were two Motorola phones on display, amid nearly a hundred from other vendors. Our associate told us that the i-phone accounted for 50% of the store's 2,000 phones sold in September, and RIM Blackberrys were another 24%. Motorola phones were 0.1%. Quite a lesson in broken strategy.

Chance to chat at the Cupertino Rotary

2009-10-12T18:59:00.000-07:00

Jagi Shahani invited me down for a luncheon meeting last week, in the Cupertino civic center, with about 100 Rotarians. Good lunch, great chance to chat about "the old HP". Orrin Mahoney was one of a number of HPites in the audience; he is today mayor of Cupertino, up for re-election. We had fun, discussing whether and to what degree the HP Way had morphed.

Most of the audience was quite surprised, though, to learn the relative revenue for HP, IBM and Dell, not to mention Boeing, AT&T, GE, Intel, and Microsoft

Next stop? Kepler's on November 11. See you there?

Holding a copy "FINALLY"

2009-10-12T18:48:00.000-07:00

A mere twenty-two months after 'completion', I got to hold a copy of the book, The HP Phenomenon. And, of course, I 'googled' it to find out that the release date for sale is now October 19 (THIS YEAR). What surprised me was to find out that the HP Phenomenon has become an incredibly popular topic of late... thanks to J.K.Rowling.

How were we to know that when the author of all of those popular Harry Potter books wrote her last book (supposedly) that the series would become titled "HP Phenomenon"? Ah well, fame in a curious way.

Go check the reviews at the Stanford University Press site -- I especially like the one by Don Hammond, one of HP's most important historic contributors.

Agilent and the Agilent Way

2009-09-02T15:32:00.000-07:00

It might just be rumor, but rumor has it that Agilent has retreated on a long-term employee benefit, that of Retiree Survivor Benefits. Seems the current economic climate is tough enough (and there is no question that it is hard out there) that the Agilent executive team decided to shut down a number of long-cherished items.

Among them -- this one. Since many of the long-term Agilent employees were male, and in "our age bracket" women outlive their spouses by several years, this well could mean a decade's guaranteed income, long counted on as a funded legacy by that most paternalistic of companies, "the old HP", will not happen after all. A cruel decision, one has to think. Unless you are more concerned about shareholders than ex-employees -- Wall Street would doubtless applaud, just as they thrill and rally stock prices when more layoffs and outsourcing is announced.

Hewlett and Packard have had multiple occasions to turn over in those cold graves -- the selloff of Little Basin and the merger/acquisition mania pale alongside pretexting, forfeiture of long-promised benefits, and rules banning executive participation on civic boards. Ethics and a huge belief in the dignity and value and worth of all employees were cardinal elements, weren't they?

Lunch with Paul Ely

2009-08-20T05:56:00.000-07:00

I got a call from Paul Ely the other day, and he invited me to lunch at the Sharon Heights Golf Club to talk about his reaction to my "Secret Sauce" lecture which is still posted on the MediaX website http://mediax.stanford.edu/video/2008Apr16ChuckHouse.mov

He focused on several elements -- one was the 15% "breakthrough ideas" funding; another was the role of the Silicon on Sapphire and the Gallium Arsenide work for HP leadership in microwave communications, followed by LEDs, and inexplicably but vastly important in inks for the later Inkjet business.

He also spent some time on The HP Way, and how he thought it emanated from the founders; he put a reverent, almost religious, tone on it, while agreeing that he never heard them talk in such terms, but clearly they were enlightened in terms of the dignity of EVERY individual who worked for the company. This is not to be confused with "soft-headed" management; we both had no trouble agreeing that they were very hard-headed business guys who set an absolute standard of excellence for work done.

Paul, in my view, was the ONE cog in a long pantheon of HP folk without whom there clearly would not be an HP today in computing. Birnbaum later would provide the competitive strategy that worked for enterprise activities; it would not have been possible or needed without Paul's pioneering leadership. Great to meet a legend, and hear his considered opinion.

SIRS lecture yesterday

2009-08-20T05:38:00.000-07:00

I had a great invitation to give a luncheon talk about the forthcoming book yesterday, to the "Sons in Retirement" group in Mountain View, CA. These folk, some 225 strong, are all retired by definition, and for the most part, they looked older than I feel. Although truth be known, I couldn't hardly see them; my eyes were dilated from an earlier visit to a Vitroretinal specialist (good guys to know if you have my problem, but better if you never need to know them).

I held forth for a half-hour, mostly reminiscing about "the origins of Silicon Valley" and filling in gaps for them that the Steve Blank lecture from a year ago managed to omit. Key things like the correlation between the US Forest Service, Cyril Elwell, and the use of short-wave Poulsen transmitters that GE and Marconi wanted "removed from service". The US Navy commandeered all radio manufacturers during WWI, and allowed GE to persuade the US govmt to set up RCA in 1919, and withhold returning assets to the West Coast companies for another two years.

The HP early years, especially the General Radio vs HP evolution, was a fun topic; some of the people were old enough to have been there...

I did manage to irk some ex-IBMers in the crowd apparently; during Q & A, one challenged me saying that IBM earns double the profits of HP. My rejoinder was, perhaps, unkind, citing the recent Biz Week article which noted that IBM has been specifically unfriendly to Americans and hardly worthy of its heritage by spending $73 billion on stock buybacks, creating 133,000 jobs abroad, and jettisoning 36,000 US jobs in the past eight years. Probably shouldn't have been so chary, but it certainly doesn't fit the "citizenship" or "community service" instincts that HP (and IBM) so long espoused. Dunno why I keep beating this dead horse...

Data Visualization

2009-08-18T03:29:00.000-07:00

One of the original hallmarks of HP was its "measurement capability". To a hammer, everything looks like a nail. To HP, everything looked measureable. So, whether it was atomic physics, chemical analysis, ink composition, or inventory items, HP engineers (and recall that virtually all salespeople were engineers at the time) thought in terms of measuring quantities of things, sizes of things, rates of change, productivity measures, and so forth. This still prevails, as any deep discussion with Ann Livermore's Services teams will quickly reveal (even the EDS acquisition folk are sometimes heard to talk this way).

Enter "data Visualization". You've all seen, perhaps played, the Flight Simulator software packages, and I'm sure that you're aware that all jet pilots in training now learn in simulators (even the hijackers, training in Miami). No one would send a would-be pilot up in the sky to "shoot touch-and-go" with a new Dreamliner, or even a 747. And, thankfully, no one would demand of an erstwhile pilot that he or she solve the calculus equations of landing safely.

And some pretty cool math packages now exist, for PCs and Macs, and even graphing software for HP and TI handheld calculators. By the way, did you know that the HP-12C functions can be bought for the I-Phone now, for a cool $1?

But, we don't teach "mapping" or "data visualization" or any of these "intuitive" tools until or unless you're a math major, well down the road of arcane statistical analysis. Why not? Why shouldn't these be the tools of junior high school kids, alongside algebra and geometry, etc. These tools will be far more useful for citizenry in the 21st century than trig or calculus. Try that idea on your local school board!

Objective Seven -- Community

2009-08-17T13:41:00.000-07:00

Dinner last weekend with two HP VPs and two other long-term HP veterans -- 116 years of total service between them. Three of the four argued that HP still had plenty of enthusiasm and dedication, and that the HP Way was alive and well in groups where their leadership was "old school" or simply enlightened and bought into the HP Way as long practiced.

All four, however, reported independently that the image of HP being the leading corporate citizen in the community, long a cherished hallmark of the company, has dried up in the current regime. Carly, they averred, was as strong on that as Lew or even Dave; not so under Hurd.

At a key Foundation meeting in Chicago two weeks earlier, I was astonished and saddened to hear the perspective of leadership at the Gates, Ford, Kauffman, Knight, and MacArthur Foundations, not to mention the Tiger Woods, Carlsen, and other smaller foundations share their feelings about HP absentee-ism for the topic of science and math education in America. They were outspoken about their perception that HP only cares about sales, and ties corporate giving to "deals" at best these days.

Moreover, the considered opinion was that nine of the top ten high-tech firms in America (and recall that HP is now THE top high-tech company on the globe) have their CEO or Chairman or both involved enough in STEM education to be carried on the front pages of the Wall St Journal while HP "stands aside". What the hell has gone wrong at this place? Is the new guy in touch with anything besides the bottom line?

Other featured folk

2009-08-04T09:45:00.000-07:00

The HP/Agilent names index has 404 names cited, and this is without noting a sizable number of HP Journal authors cited in the notes sections. So, to some degree, the book celebrates lots of HPites. In addition to the ten folk listed in the last post, there are five other Senior VPs cited on 25 pages or more, another five with 20 pages or more, another eight with 15 pages+, and yet another seven with 10+ pages. So, all told, 35 folk have at least ten pages of their HP career outlined herein. Odds are, you've find someone you know in this list!

And, just think, there are only another 482,000+ HP / Agilent employees and alumni whose stories are not included, that we might try to capture through a Forum...

Some featured folk

2009-08-04T09:18:00.000-07:00

In the foreword, six CEO's (2 founders, 2 insiders, 2 outsiders) are mentioned, along with four others (2 R&D leaders, 2 business leaders) who had differential impact on the evolution of HP. Interestingly, to me at least, while other books about HP have included nearly every CEO (some with pretty pointed perspective), virtually none have featured the other four in any depth if at all. Yet it is very clear to any who lived the HP experience that Barney Oliver, Joel Birnbaum, Paul Ely, and Dick Hackborn each had unusually huge impact on the evolution of HP. So from that perspective alone, this book will enrich our understanding of how HP evolved so strongly into the sciences, and then into computing, and later into printing and imaging.

At the same time, this is not to celebrate (only) these individuals, but merely to make it clear that leadership happens at a lot of levels besides the CEO

Agilent and Varian

2009-08-03T13:57:00.000-07:00

Last week, Agilent announced intent to buy the Life Sciences portion of Varian, one of the three strands of the original Varian Associates, now fifty-some years old. The San Jose Mercury-News carried a nice story in the Sunday edition, describing some of the long history between the two companies.

The ties, of course, were strong and deep. The Varian brothers were friends with Bill n Dave; Dave was on their Board for many years. Varian was the first company into the Stanford Industrial Park; HP second. Terman was on both Boards. Packard's first "company acquisition" was buying the microwave components segment of Varian in the early 1950's when they moved into NMR (later MRI).

The story did not mention that HP Cupertino began as a Varian site, and when Varian had cash flow problems in the 1970-71 recession, HP bought the site from them for $5M (their asking price), which has been a pretty good purchase, all things considered.

Nor did it mention that much of HP's early semiconductor leadership came from Varian as well, and even the Computer History Museum in its celebration of the 50th year since Fairchild's planar transistor has to date omitted HP's singinficant contributions in this sphere. Does anyone care?

getting out of the penalty box

2009-08-03T13:48:00.000-07:00

A reader sent a note this morning, remarking on one of Packard's famous diatribes -- "the Give 'em hell" talk circa 1974. According to the reader's recollection, Packard publically described inappropriate behavior, having to do with putting HP in debt, to a couple of key managers. Later, one became CEO, and the other ran the computer group successfully for years. The question was -- how rare was this, to get out of the penalty box? And does the forthcoming book have some more stories of this type?

I personally experienced this, in an event later given a positive credit via "the Medal of Defiance". It surely didn't feel like a medal at the time!

But of course there are a ton of such stories. We're wrestling with how to collect more of these stories, for in many ways this is the clearest expression of THE HP WAY -- go ahead, make an error, one big enough to get noticed and even singled out for "stupidity" as Obama might say, and then tell how/whether you got back into "good graces". Or, you never did, which makes for a different story

a rare privilege

2009-07-25T21:41:00.001-07:00

Phil McKinney, the CTO for HP's Personal Computer Group, invited me down to Cupertino yesterday for a "living legends" interview. He has a PodCast service, and he has recently interviewed Art Fong and Dave Cochran. What an honor to be included with them!

Phil is one of those firebrands, with red hair, a wiry beard, and a ready smile. He is Irish through and through, though we did the interview without libation. He is the genius behind HP's new Vivianne Tan netbook, a cosmetic accessory that hiked the price and sold out within days for the distaff half. He has been involved with many more serious pursuits as well, including the VoodooPC acquisition to position HP much more strongly in the games/virtual reality space.

The questions were great -- what made you pick HP in the first place? When and why did you leave? How would you suggest that innovation be kept alive in a large, nay HUGE, company? What were you most proud of? Tell me the REAL story behind the Medal of Defiance....

We chatted for the better part of two hours. He is a skillful interviewer, and he clearly brings passion and desire to his job. My guess is that people who work around Phil McKinney would agree that HP still has the HP Way working. What a privilege!

indexing MBWA in the book

2009-07-24T13:00:00.000-07:00

MBWA -- Management by Wandering Around -- is covered in the book in several places. A quick perusal of the index shows the following pp: 7, 65, 80, 85, 277, 358, 374, 530-31

the HP Way is covered in much more depth, to wit, pp: 5, 9, 78, 113, 120-21, 217, 284, 295, 325, 385, 402, 404, 452; business value, 30, 34, 465; challenged, 277, 284, 358, 385, 436; by computer folk, 126, 169, 191, 210; by Fiorina, 2, 383, 439, 442, 450, 453, 463, 473, 474-75, 477-78, 482-83, 515; by Hackborn, 438, 453; by Hurd, 3-4, 437, 475, 477, 480, 483, 497, 514; by Yansouni, 329; by Young, 245, 479, 484; compared to..., 19, 116, 456-57; 501; definition, 7, 21, 23, 35-36, 89, 177, 282, 382-84, 469, 486-87, 536; espoused (by Barnholt, 422, 465; by Doyle, 463; by Platt, 386, 390, 393, 484-85; irrelevant, 34, 404, 419, 507; nine-day fortnight, 158, 452; resilience, 383, 469, 473; scaling, 60, 62-63, 79, 84; teaching, 197, 199, 276, 484

the HP Way (Packard's book), 14, 28, 540

The HP Way ... still alive?

2009-07-24T11:50:00.000-07:00

The HP Alumni Association has had a brief and wonderfully spirited exchange these past few days about MBWA and the HP Way. One particularly great input came from Myron Tuttle, a 28 year veteran:

"I remeber hearing a story about Bill walking into one of the manufacturing lines (I think it was Santa Clara) and after talking to one of the production people took the instrument they were assembling and dropped it to the floor -- just to see how sturdy it was. Shortly after that a (polite) memo was sent to Corporate that Bill and Dave would no longer be allowed into the divisions unannounced or unescorted. They caused too much disruption to the production lines!

"One day I was eating lunch (I think it was in 5L) and Bill was there carrying his tray to a table. He saw a spill on the floor, set his tray on a table, and went and got a towel to wipe it up. Somehow I just can't see Carly or Mark doing something like that. (I don't know if either of them have even ever seen the employee cafeteria.)

"Wonderful memories. But those were the days

"Myron Tuttle, HP 1974-2002, APD, DTD, POD... NSD

Indexing the book

2009-07-16T18:31:00.000-07:00

Twelve thousand seven hundred thirty one citations in the indices (so far), and going blind from the process. B-trieve datatables and search terms for pdf. files are helpful, but not perfect. For example, Hennessy (a big name at Stanford, and this is a Stanford Press book, recall) was spelt correctly on the submitted pages, but not on the pageproofs. And a search block didn't find the misspellings, which of course are what you are looking for primarily.

Speaking of going blind, I thought that I was -- this is a lot of text, and reading/rereading has taken a toll. Mostly psychologically, I tried to convince myself. But upon reflection, I had had one of those funny little incidents, where some big reddish floaters appeared in one eye after awakening one day. I don't know about you, but I usually go to the Web to do some investigative self diagnosis. This said, go see an eye doc. Well, I was in Italy, and the floaters sank out of sight in a few hours, and ...

Anyway, more recently I seemed unable to focus on small print stuff, and lo that eye doc idea resurfaced. After an immodest four hours of tests, and learning about optical coherence tomography, I was pleased (I think) to learn that I have Macular Pucker, which is somewhat better than a lot of other things it could have been. First of all, it is not degenerative, and is not particularly disabling. So that's great. Second, it is to some degree amenable to surgical fix -- though not able to restore what was once (hell, I've got lots of things that will never again be as they once were).

OCT was basically invented circa 1995 at MIT, and this version of equipment dates to early 2003. There is stuff now that is 100x as sensitive, able to pinpoint tumors and all manner of problems. Now if we could just match real-time surgical tools to these highly accurate imaging tools, what a breakthrough that would be. The OCT technique relies on a combination of sonar, backscattering lightwaves, and transmission differences in sub-surface retinal tissue -- oldtimers at HP might call it Time Domain Reflectometry ala Barney Oliver's old thesis that Lee Moffitt productized beautifully before he left for a career at Bell Labs. Damn, now that I think about it, I didn't include TDR or Lee in the book.

Ah, well, viva those medical instruments that rely on great physics...

Calif governor contenders

2009-07-16T18:15:00.000-07:00

Some are asking -- what's with ex-CEOs running for public office, especially in these hard times? Not everyone recalls when H. Ross Perot ran twice for President, probably drawing enough support in 1992 to swing the election to Clinton. The great thing then, or joke depending on your persuasion, was his strong use of pie charts and graphs -- typecast him immediately as "gasp" an engineer. So now we have, in the broken financial state of California, vying for the chance to become the governor, two Republicans -- Carly Fiorina, ex-CEO of HP, and Meg Whitman, retired CEO of E-Bay.

They had very different exits from their respective CEO roles.

Fiorina, mostly vilified for breaking the vaunted HP Way, and a terrible approach to "the people", not to mention a dumb strategy to buy Compaq after a ludicrous failed attempt to buy PricewaterhouseCoopers for whopping big money. The Board, belatedly said many, gave her the boot unceremoniously; the old guard danced for joy (that is, until the next one brought PRETEXTING into the vocabulary).

Whitman, almost reverently revered for her kindly and mannerly approach, plus her clear success in leading EBay from a virtual standing start to a global powerhouse.

The irony today is that the E-Bay strategy has been described in many circles, by Whitman's chosen replacement and several Board members, not to mention pundits galore, as BROKEN, and the company is trying hard to figure out how to remake itself to "save itself" from disaster.

HP, meanwhile, was able to displace Dell despite all the pundits, and it did so quietly, but with vengeance almost from the hour that Fiorina inked the deal. Granted, it took three years to catch them, and two more to thump them, but she did see the opportunity and seized the momentum when almost everyone decried it. And the PwC deal? Despite the hype about overpricing, IBM wound up paying 92% of Fiorina's offer (in post dot.com denominated $$$), and it is today the basis of more than 60% of their total business. Hurd read the tea leaves, one might assert, and bought the nearest competitor with the EDS purchase -- and services for HP are now larger than printing/imaging/ink as a collective group, not to mention those PCs and enterprise servers. Imagine -- HP's seventh incarnation, services, which last quarter became the #1 play of HP.

So, the choice for the Republican nominee will likely pit two or three classic politicos against a friendly non-strategist and a combative leader. Recall that Churchill only got the nod in wartime

HP Halo vs Cisco Telepresence

2009-06-01T22:02:00.000-07:00

Once again, with a different rival this time, solid HP engineering and miniscule marketing weighs in against someone with almost reverse skillset. The HP Halo design has much to offer -- the eye gaze is really pretty good, even "cross-court", and the sound is inherently crisp and clear. Cisco Telepresence is terrible for "straight-ahead" discussions for people not sitting at the head; you are always looking at a side profile as the person intently gazes off over your shoulder.

For HP, the psychology of the users has been carefully thought through, and it shows, in minute detail after detail. For Cisco, "the wrong people" have been using the system more than was anticipated, but utilization is up, WAY UP. And they are awakening to the fact that "everyone" is thrilled to use there tools.

HP Halo marketing is akin to the old joke about HP trying to sell sushi, by marketing it as "cold, dead fish". Here, they market the travel cost savings, while the most significant gains are increased productivity, decreased mistakes at a distance, and better collaboration -- hardly mentioned in the standard materials.

Cisco on the other hand, has a proselyting CEO who loves this technology, one who uses it daily and speaks glowingly about it in forum after forum. In 135 weeks, they have installed 480 systems within the company for 40,000 employees; HP in almost two hundred weeks has managed only to install 80 in a company with 320,000 employees. Some might note that the cross-product is (320)/(40)*(480/80)*(200/135) = 72x more enthusiasm at Cisco than at HP

What's wrong with this picture (that $10,000,000 won't fix it)?

Joel commenting about the author

2009-06-01T21:53:00.000-07:00

In response to another request, Joel Birnbaum filed some interesting words about the book, and about Chuck House, one of the two authors:

"When I came to HP as a rare outsider hired into a high position, many people advised me to look up Chuck as someone who really understood the soul of the company. He was famous in HP for his wit, his creativity, and his willingness to speak out against things that he thought short-sighted or self-serving. I found that he more than deserved his reputation

"When he noticed that much had been written about the history and influence of HP during the Hewlett and Packard era, and still more about Carly Fiorina and her successor, but almost nothing about the 20 odd years in-between, he decided that this transformative period (HP went from a test and measurement company to the world’s largest printer manufacturer and the second largest computer company in that period) needed to be documented accurately. His soon to be published book, for which I was interviewed extensively, is likely to find wide acceptance and is a marvel of careful research and writing.

"Chuck is a witty, daring and very effective speaker, and during our time together in HP he lent his name and his energy to many causes that resulted in dramatic improvements in the infrastructure and internal toolsets, not always with the prior approval of upper management. HP was eventually proud of these sometimes irreverent accomplishments, and many found their way into the literature and are in wide use in the industry today

"For all of his career, Chuck’s signature style has been his refusal to accept the status quo for purely historical reasons, and to think creatively and deeply about a problem or opportunity and then, often with recruited partners, to seek a novel solution.

"Chuck’s style, while often flamboyant to attract attention to his causes, is inherently a modest one

"