Fiorina flips hat toward Senate rack
August 19, 2009
Align these three compass plot points, if you can, all announced within one week:
1. HP announces its toughest quarter in five years
2. Former CEO Carly Fiorina announces an exploration of a run for US Senate
3. Sentencing is delayed on the '06 HP phone spying case
The HP 3000 can provide a path across all three. Migrations are afoot or finished by 3000 owners because of Fiorina's business strategy. Not any specific swipe she took to cleave the 3000 from HP, but the natural evolution of shedding legacy business. Growth across all HP businesses was the 2001 mantra, increases that the 3000 community would not provide for the HP bottom line. "If it's not growing, it's going" was the mandate handed to intermediate managers.
Growth at HP in 2001 led to pruning the enterprise computer line by one notable system. Eight years later, enterprise servers and storage run a weak fourth to Services, PCs, and Imaging/Printer businesses. Three of the four legs of HP's chair are wobbling this year. It's the first genuine challenge CEO Mark Hurd has faced since he was brought in to replace the fired Fiorina. Enterprise solutions that are rich in profitability offered a profound sticky loyalty like the 3000, but they won't lift enterprise fortunes now. HP's moving away from hardware and proprietary environments in favor of services through The Cloud.
Fiorina told 3000 customers at a summertime HP World conference that HP “had never stranded a customer on legacy technology,” the only reference that even came close to a mention of the HP 3000 customers’ transition. Seven years later, HP World is gone forever, but Fiorina is mounting a comeback despite her legacy.
Despite what some community members believe, Carly Fiorina didn't arrive in the HP boardroom to take marching orders. She was hired to be a star CEO whose highest glam moment was sharing the stage with Gwen Stefani. Facing down the HP board's expectations, and marshaling support across a company rich in HP Way heritage -- these were not her strengths. A seat in the US Senate will require campaigning to win the votes of the little people, as well as casting off old millionaire's habits.
Being rich in 2009 -- HP gave her $21 million cash to leave in '05 -- can distance a candidate from people suffering through layoffs and pay cuts. That's one tough quarter that HP just reported, if you think of the company like 3000 users used to: a systems supplier. If not for the ink and services profits, HP might be looking tanked in the middle of this recession. Legacy systems supply long-term support profits, but the vendor is out of that business. No love for 3000s, little for OpenVMS -- it all adds up to making a business relationship out of serving instead of supplying.
Fiorina had to win boardroom fights to edge HP out of the last vestiges of its HP Way. People forget that she championed a merger with a massive PC maker that eked past a shareholder donnybrook. The next plan was to buy Price WaterhouseCooper, a step into the services business. The HP board didn't want to pay that much for a services entry. That same boardroom asked few questions about eliminating a 27-year-old business server line.
Within a year after the PWC failure, storm clouds were mounting around Fiorina. PCs hadn't delivered profitability, even while HP was selling more ProLiants than RISC servers. When the board fired her over an inability to take direction, the messy details were reported out of the boardroom and into the business press. This kind of insight on HP strategy would have been useful to 3000 owners in the year after Y2K. In trying to determine what HP might do about its declining server business today, insights to the past might help.
HP vowed to unmask the source of leaks from its boardroom after exchanges appeared in The Wall Street Journal and elsewhere, the kind of communications control craved by corporations of a certain size. HP ran roughshod over privacy rules in a phone scam afterward, paid $14 million in penalties, and gave new CEO Mark Hurd something to campaign on in his first year: The Return of HP Integrity.
No, he wasn't referring to the HP servers of the same name, but instead being able to believe HP could respect privacy. The final defendant in that spying case just had his sentencing delayed again this week, more than two years after Mark Wagner testified against HP.
Weak strategy from HP's CEO, focusing on commodity hardware and services, leads to a boardroom fight that gets Fiorina fired. The HP 3000 never has a chance in that kind of future. Illegal phone spying gives HP a black eye that still isn't fully healed two years later. And while the services business that Fiorina couldn't sell to the board now keeps HP sales afloat, the former CEO wants to represent California in the US Senate. Nothing ever seems impossible to the only HP chief who was ever forced to resign, until her designs hit the wall. While HP 3000 customers explore options to migrate in an era with frozen budgets, Fiorina will be looking for funding to capture her next job. Like HP customers, she'll need support that doesn't hold her legacy against her.