September 10, 2012
HP reports new job cuts as computers slip
Hewlett-Packard gave notice this week that its job cut program will run 2,000 employees larger than forecast back in May. The total reduction in HP's workforce will run to 29,000 by the end of fiscal 2014, according an Securities and Exchange Commission filing. HP has already seen more employees take enhanced early retirement (EER) than it expected.
Those early retirements are part of HP's workforce reduction plan. Some of the enterprise talent is being forced out, while others are taking HP's EER offer. Bob Chase, an experienced Business Recovery Specialist in HP Support, started his own consulting practice after a WorkForce Reduction. Chase counted 16 years of HP experience including years of 3000 support. The company expects to spend $3.3 billion on workforce reductions through October of 2014.
At the same time these fresh cuts were announced, analysts expect to demote HP out of the top spot in computer shipments. Although HP has been left far behind in computer company measurements of market cap, as well as total sales (both figures eclipsed by Apple), until this month HP had shipped more computers per quarter than any maker.
But the IBM spinoff of its PC business, Lenovo, is poised to take first place from HP. Even as HP tries to capture and retain the 3000 migration server business, its biggest revenue generator has slipped. HP shipped more than 13 million business servers and PCs in the second quarter of 2012. The September figures for PCs will change that, confirming a slide that Dell has also been experiencing -- even as HP tries to retake some sales with Apple-like designs.MB Foster's Birket Foster -- whose company has tracked PC issues even longer than it's offered database extractors and middleware connecting PCs and 3000s -- says it appears the market's enterprise sales have taken a hiatus. He noted that Dell's earnings on desktops and business servers dropped 10 percent in its latest quarter. That vendor once battled with HP for top PC sales spot, but that all ended after HP merged with Compaq. Now both Dell and HP have seen the curse of Moore's Law hit their sales.
"There may be something going on where the economy is just not spending on infrastructure," Foster said, "because Moore's Law says they can skip two more years and do their systems refresh then." Moore's Law promises that processor speeds, or overall horsepower, will double for computers every two years.
HP's still trying to capture fresh sales of desktops by releasing new products like the Spectre One, a new all-in-one desktop that bears a near-identical look to Apple's iMacs, right down to trackpad and keyboard. But Foster says that the enterprises which lifted up Dell and HP on laptop sales "are in some cases giving people smartphones instead of laptops. Or iPads, once they get around the security problem. Somebody will figure it out, and there's billions to be made in this."
Sales of HP's desktops and laptops worked in tandem with enterprise servers, during the years when they were working. HP booked enterprise business because it provided the down-line desktops and laptops, too. Those laptop sales helped smooth the choice of HP in markets like Unix, where there continues to be plenty of competition for a declining marketplace.
HP rolled out a press release in advance of new all-in-one models shipping by November, one which promises the vendor will even try to climb back into the tablet market. "Additional PCs and a tablet made for business will be announced in the coming weeks." The company's strategy came in for some hard commentary from Om Malik, whose GigaOM analyst network tracks the devices both HP and Dell have been trying to keep in the mainstream.
HP's pivot to enterprise servers represents a diversion, Malik said, from a failed mobile offering.
Dell, in fact, is no different than HP which also has blown the shift to mobile and now is trying to do a comb-over by using cloud and enterprise as its areas of focus. They are tied at the hip with Microsoft and its operating systems and as a result they cannot look beyond Microsoft. The fact is that both Dell and HP have offered consumers pretty much nothing in terms of innovation when it comes to PCs. Compare that with Apple and Samsung and you start to see that these two PC giants have been essentially twiddling their thumbs.
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