The old order changeth

The old order changeth

With Hewlett-Packard gently pushing its chief executive officer Lew Platt into retirement and Compaq Computer shoving its CEO Eckhard Pfeiffer out the door less than two months later, some industry observers see the moves as an admission that now two of the three largest computer companies cannot keep competitive pace in the age of the Web.

"It's not fun out there," said Rob Enderle, vice president of desktop technology at the Giga Information Group. "The market is changing rapidly and as a result companies that can't move rapidly aren't prepared to compete. In one instance, the board is allowing the CEO to transition out gradually, in the other case the board took the desk and threw it out the window."

Although observers generally believe HP may be in a better position to recover - based on its history of successfully making changes and the fact that it has less reliance on desktop PCs than Compaq - they said that both companies need to express a clearer, more practical vision of the future for their customers and shareholders.

In each case, both HP and Compaq were trying to assemble and reassemble multibillion-dollar puzzle pieces into a seamless picture. But neither one had a clear idea of how to do it without essentially maintaining multiple business models under the same roof.

"They really didn't know what they wanted to be. They didn't have a clear vision of what putting all these together meant or where it was going in the digital economy,'' said Michael Goulde, a senior analyst at the Seybold Group in Boston.

While Compaq and HP try to pull themselves together and address the market with their yet-to-be-named leadership, the big winners in the short term could be Dell Computer and IBM.

"I think Dell will benefit from this. They come off right now looking like the model of stability with Michael [Dell] firmly planted at the top and still growing. They haven't broken the code to get into the top tier, but this doesn't hurt their chances to get there,'' said John Dunkle, president of Workgroup Strategic Services.

Alternative revenues

IBM, unlike Compaq, has built up other revenue streams to compensate for its recently reported $US1 billion loss in PC sales in 1998. The company's host-based business remains strong, even growing in some markets, and its services business is rapidly approaching $30 billion. Some believe they have a cushion on which to sit comfortably, if only for the short term.

"What's saving IBM is that they have so much legacy technology in place that it takes an awful lot to affect them," Enderle said. "While the trends don't look good for them either, they're in a better position to weather the storm."

Observers agreed that the executives taking over from Pfeiffer and Platt will need to cleanly cut the ties of their old business models and more aggressively use the Web as an important building block for its strategies across the board. In the case of Compaq, that might mean more decisively de-emphasising its reliance on resellers.

"It is nice to be loyal to your dealer channel, but not at the expense of your company," Goulde said. "Resellers are going to be the dead weight that brings them down. Whoever comes in will have to really embrace e-commerce and the channel will have to adapt.''

Follow Us

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments