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September 02, 2008

Numbers show change for HP

Simple mathematics can show the total picture of Hewlett-Packard is changing, even as the vendor advises its customers to look at other figures. We have found a few in the last week that multiply our interest in HP's future direction.

First, a 14 percent decline in HP's Printer and Imaging business, as reported in the Q3 figures released last month. In Idaho, kingdom of HP board director Dick Hackborn and his printer empire, reports are surfacing of layoffs in the printer business. Printers, ink, paper, cameras — of all these things were the HP profits built, more than half of the black ink in recent years. HP means to make those profits flow on lower sales — with fewer employees. From yesterday's Idaho Business Review:

In what one employee has called “Black Monday,” a round of job cuts is taking place at Hewlett-Packard’s Boise-based Imaging and Printing Group today, part of the company’s global reorganization of the division.

While HP officials wouldn’t comment on specific numbers or areas in which positions will be eliminated, the Idaho Business Review and its news partner KTVB both received confirmation from several employees - one a 31-year veteran of the company - that their jobs had been cut. HP employs over 3,000 workers at its Boise facility.

Second, the 140,000 employees soon to be given HP name badges in the company's biggest acquisition ever: EDS. Regulators have cleared the way for a workforce to join Hewlett-Packard which nearly equals the current HP headcount. Nary a one of these will create a product, innovate with software code, or invent an algorithm. HP Invent means something very different when you purchase the creations of consultants: processes, plans, libraries and experience. Someone must build innovation, and it could be a long road to convince the world that half your workforce will innovate with their ideas and anybody's hardware and software.

The impact of Unix provides the third number in the trio of HP changes. HP's Unix has remarkable numbers of acceptance for the 3000 community.

We interviewed a vendor today which has created new versions of its HP 3000 accounting suite, such versions running on Linux, Unix and Windows. These are the platforms which are supported by the IMAGE database workalike Eloquence. Bill Miller of Genesis Total Solutions reports that nearly all of his customers who have migrated off the HP 3000 are going to Windows. Nearly all, he says, of a group of companies which might be called mom-and-pop for their size. Some approach $50 million a year in run rate, but better than three out of four won't be using HP's Unix.

Let's be generous and say that a good quarter of the 3000 sites are not mom-and-pop. So 75 percent of the market isn't big enough to want to take on Unix-grade administration and management. Windows, flawed though it may be, is good enough to get the job done. It's the expertise, Miller says, the numbers of Windows experts on the market versus the numbers of Unix gurus.

We hear similar stories from other vendors of utilities and applications, and the numbers do not vary much. Even Ecometry, which has become Escalate Retail, is selling mostly Windows solutions to its 3000 shops. And plenty of Ecometry sites are brand names, not mom-and-pops.

These are not numbers popular with Hewlett-Packard's enterprise story, especially with the HP group which is trying to offer HP-UX as an alternative to the IBM world. HP must sell Integrity to those IBM prospects. HP won't even identify how much of its Business Critical Computing footprint has become Integrity server-based. Integrity is the only future for HP's Unix. Even 100 percent acceptance of Integrity among BCS customers will pale in the face of other HP server solutions. Industry Standard Servers, the other HP group calls itself, is having nothing to do with HP-UX. ISS is the growth engine in HP servers. Printers profits and sales are on the decline. Close to half of HP workers are in Services, not servers. You can count on it.

09:44 PM in News Outta HP, Newsmakers | Permalink

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