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February 2005

Pondering a 3000 Reboot at HP

Newswire Classic

February, 2005

Few dismissals in the world of business were as public as the ouster of HP CEO Carly Fiorina, just one week before the company would report its first 2005 quarterly numbers and days before HP’s 2005 Americas sales meeting. Fiorina’s forced resignation earned mention on all major TV news broadcasts the day it was announced; HP 3000 customers weighed in with emotional comments on how Fiorina’s departure might change things. Or might not, according to a majority of customers filling the Internet with messages.

The most powerful woman in business for the last five years in one magazine survey, Fiorina departed HP to the relief of many employees. Among analysts, her ouster was only decried by advocates of women as corporate leaders. The HP 3000 community could identify few supporters of the woman whose mission of HP business change included the demise of HP’s 3000 business. HP employees in the enterprise computer group said they felt shareholders and customers always came in front of employees for Fiorina, an outsider who never could assume a role that made her one with the company’s rank and file. Many quoted the line from the Wizard of Oz: “Ding, dong, the witch is dead!”

HP held a press conference with stock analysts to explain its reasons for Fiorina’s resignation, a move which the HP board of directors demanded. But statements from the board showed HP’s leaders have not committed to a different strategy. The company’s CFO Bob Wayman is now acting as CEO, in addition to his financial leadership duties, while HP searches for a replacement. Patricia Dunn, an HP director on the board since 1998, assumes the title of non-executive chairman for the corporation.

That board’s view of Fiorina changed quickly during 2004. At the start of the year the board paid the CEO a $1.5 million performance bonus. By the end of the 2004 a special group of directors was demanding that Fiorina share her executive responsibilities. On her exit, the CEO took a $21.1 million golden parachute, 50 percent more than former Compaq CEO Michael Cappelas grabbed when he left HP after the HP-Compaq merger. The board has voted not to retain the services of the same search firm that delivered Fiorina for the board’s approval more than five years ago.

HP 3000 fortunes fell sharply in that Fiorina era, but hopes for the product’s rebound were rising when she first took office in July 1999. A sales executive with no technical credentials, Fiorina focused on a corporate image makeover for stodgy HP, pushing its history of invention and then imaging products in high-profile ads. The resulting lurch toward consumer markets and commodity products left the 3000 standing to the side of HP’s new corporate path. Although the axe on Fiorina fell far from the 3000’s line of management at HP, some customers saw the ouster as another way to hope for a revival for the server.

“After all, Coca-Cola brought back the original Classic Coke,” said system manager Connie Sellito of the US purebred registry Cat Fanciers Association. Even migrating customers took a moment to consider a second HP act for the 3000 after the ouster.

“The ‘change’ did make me wonder if the HP 3000 decision might be revisited,” said Dave Seale, IT Director at Virginia International Terminals, HP’s earliest case study on migration practices. VIT is ready to turn over its migration project to Speedware in March after business growth slowed VIT’s projected timetable to leave the platform. “It would be very interesting to me if HP decides to reconsider their decision,” Seale said. “Logically, I never could understand it.”

But two-thirds of customers contacted after the ouster said their companies were already moving on, or they held little hope of a change in HP’s 3000 plans. Wirt Atmar, founder of application provider AICS Research and a 3000 advocate of many years, said HP can’t change its reputation about the server with a shift in CEO.

“Given HP’s untrustworthiness with the platform, HP can never again seriously attempt to sell it to anyone,” he said. “But HP could do wonders to improve both its image and its standing among its former users by actively and aggressively cooperating with the OpenMPE project.” After the news of Fiorina’s departure, Ray Meyers of Vera Water & Power looked back on the timing of his migration project with regret. “If this only could have happened six months ago!” he said. “I would have put a hold on the project until we found out what the new CEO’s intentions are.”

But even among homesteading companies such as Cannex Financial Services in Toronto, the change at the top didn’t change the outlook for much of the 3000 market. “Too much money has been spent by the customer base either migrating or planning to migrate,” said Cannex systems VP Steven Waters. “A reversal would not go over too well in those companies.”

Even if Fiorina’s failure to grow HP business won’t bring the 3000 back into HP’s product line, some customers believe her ouster can do some good for the MPE community. These customers think a change in HP management could present OpenMPE’s volunteer advocates with an opportunity they might not have had before.

“Is there better impetus for turning MPE over?” asked OpenMPE board member Donna Garverick. “I strongly believe so. I think we’re going to see a major attitude change. And with it will finally come the permission to release MPE’s source code.”
Outside those volunteers who are still working for a release of the MPE source, other customers could see OpenMPE potential. “The closest thing we can hope for now is the success of the OpenMPE project,” said Stevin Almes of Practice Management, “and HP making some progress on releasing the code to them.”

Steve Suraci, president of 3000 third-party support provider Pivital Solutions, said the idea of Fiorina’s firing impacting the 3000’s term at HP was a “silly notion. If anything, this should expedite the endgame. Why would anyone who wants to keep their job at HP stick their neck on the line for the HP 3000? It’s way too late for them to turn back, and everyone inside and outside HP should know that. Anyone who thinks otherwise better not be risking their own future on it!”

Some customers pointed out that the 3000’s fate was set long before Fiorina assumed her job. But many said they were ready to invest more faith in the company’s remaining enterprise solutions after the CEO’s departure. The Adaptive Enterprise, a fuzzy strategy often derided in the trade press, emerged at the center of enterprise solutions after HP pulled its 3000s off price lists.

Those solutions looked unlikely to change in the days after the dismissal, an ouster that HP performed because of Fiorina’s inability to execute — not over her direction. “She had a strategic vision and put in place a plan that has given HP the capabilities to compete and win,” HP’s press release assured investors. A successor will be picked by HP’s board, which still includes HP printer kingpin Dick Hackborn, who promoted Fiorina in 1999 as a outsider to shake up the HP Way. Remarks from other board members Dunn and Wayman indicated the prospects are remote for a change from the strategy of the last five years. The next CEO may have to march to a tune which Carly composed and the HP board sang in near unison

“The Board believes this is the right strategy,” Wayman said of HP’s decision to buy Compaq, delve into consumer markets and step up to battle Dell and IBM in servers. “While they won’t preclude any open discussion on a new CEO’s view of what the future strategy should be, we are looking for a CEO who also embraces that strategy in all probability.”