Relying on a Product That's Market-Proof
January 24, 2012
The thunder you might have heard today came rumbling down from the stock market, where Apple's shares rose $35 in trading after the company's quarterly report. HP's tablet and PC competitor is nearing the point where it laps Hewlett-Packard in PC sales, so long as you call an iPad a personal computer. There's great evidence you can use one for lightweight mobile tasks. Apple sold more than 15 million iPads, more than 5 million Macs (mostly laptops) and posted $46.3 billion in sales -- in just 90 days including the holidays. Apple is on track to out-sell HP in total numbers for the last four quarters, by a big margin. And speaking of margins, the profits on that $46.3 billion were $13 billion.
If you've forgotten, because HP's numbers don't matter so much to you anymore, HP recorded just $130 billion in sales for its entire 2011 year. There's a message here that matters to a 3000 owner, during this day when Apple's stock rose by more than the full price of an HP share. Public-traded companies are going to chase profits and market share. That's one reason why the life of a 3000 owner is a simpler existence today.
HP had no compelling technical reason for exiting its 3000 business. It was a decision based on revenues, profits and growth of the business. Apple hasn't exited the iPod business, but the popular Touch line got no updates during 2011. Sounds a bit like the 3000's offerings after February 2001, when the A- and N-Class servers finally surfaced. The canary in the mineshaft, warning of a lack of oxygen -- that's a lack of updates. This is something to be expected out of any tech product sold by a public company.
Is it too crazy to believe that in the post-manufacturing era of the 3000, its stable and static future could be a refuge? It's not like there's going to be any less HP involvement with the 3000. The server is now being cared for by the community of its users. Hundreds and hundreds of experts. They don't have investors or any public-trading demands to impact their 3000 curation mission. It's all about the customers.
No, that's not a scenario that will spark fresh installations of HP 3000s. Many a migrating company uses the departure of HP as a spark for a system's exit. But some companies have cleared out all HP gear except for their 3000s. So if a migrating company is stuck on the server for awhile longer, at least surprises are going to be few in that environment. This server has become market-proof, at least stock-market-proof. The history that we recall is that the axe descended after the 3000's creator hired a leader who was directed to boost HP's valuation.
If history is any lesson, let me note that any market where HP can't grab, say, a 30 percent share is abandoned, period. Remember the Photosmart cameras? Proprietary OS mini-computers like the HP 3000? Dot-matrix printers? HP TVs? Polyserve file clusters? With the TouchPad, they probably quickly realized they would never get 30 percent against the iPad, so they dumped it, full stop.
Remember, it's not at all about tech innovation, but all about market share, actual or future. ROI. Earnings per share. Gross margin. Operating profit. You name it. That's the way companies are run these days, and, by the way, it's what keeps them in business. Anybody remember the seven pillars of the HP Way ? Number One was profit.
It's not that the 3000 community has no regard for profits. Suppliers and tech vendors need profits to keep things stable, so someone can answer a call who knows that a 3000 is not a printer and can fix code that's spitting errors unexpectedly. That's a rare thing for a server that hasn't had an OS change in four years.
While it might not seem possible to avoid public-traded companies' products, open source and commodity hardware give you a chance. Migrating to a different environment controlled by a share-trading vendor is just asking for long-term pain, according to James Byrne at Harte & Lyne Ltd.
Do not buy anything from any publicly traded, joint stock, company, that you plan to depend upon for the long term. Period. The so-called efficiency of the market on the stock exchange amounts to a roulette wheel and companies that thereby choose to dance to the tune whistled by gamblers have no vision beyond that of the end of their own nose. Instead, buy from private firms that have some idea of what it takes to stay in their own 'business' and are not beholden to speculators.
The accomplishment of HP's shareholders is that the last bits of HP gear at our firm were gone by the end of 2011 (with the sole exception of the HP 3000). And good riddance.
So in the glory days of HP's stock, when it was a $70 item from a company paying dividends, there was as much to celebrate as Apple's customers can revel in today. But somewhere out there in this decade an iPod will become a historic footnote at Apple, just like the 3000 did at HP. Unlike your server, you probably can't expect an aftermarket of community stewards to keep the iPods relevant and stable.