And so to a characterless but swanky London hotel to see Hewlett-Packard's post-merger big guns, wheeled out yesterday morning before the UK press.
The Top Five managers, two from HP, three from Compaq (although one of these, the Service Guy, joined Compaq only last year - from HP) took their turns on the twin podiums yesterday and ran us through the PowerPoints.
They were here to talk strategy; and we were there to listen. As is the modern way, no questions were taken from the floor. Instead, the hacks were bundled afterwards in small numbers into little side-rooms for breakout sessions. Most unsatisfactory. The Top Guy, country manager Stephen Gill, for example broke out, we were told, for two one-on-ones. For Pete's sake, this is a computer company we're talking about, not Afghanistan. What are the news managers so afraid of?
From the Top Five we learned that a: HP is very big in the UK and Ireland - £4bn annual turnover, making it no.35 in the FTSE 100 if it were a standalone company b: HP is very big in the UK and Ireland - 11,000 employees and c: HP is very big in the UK and Ireland - add up HP and Compaq market share and you get a company which is no.1 in servers, no. 1 in enterprise storage, no 1. in PCs; no 1 in PDAs ; no. 1 in printers, no. 3 in services, no.3 in middleware software, and so on and so forth. We learned that the next tier of managers for the UK and Ireland will be announced in a couple of weeks.
We did not learn how many of the 15,000 redundos will hit the UK and Ireland, but as this is HP's biggest sub outside the US, "a microcosm of the company" with R&D and manufacturing units as well as sales and marketing, we can assume that the UK cull will be a microcosm too.
So, HP UK 'owns' approx. one-thirteenth of the worldwide payroll - which means that around 1,100 jobs are on the block. We know that customer-facing jobs are safe, we guess that R&D jobs are sound as a pound, leaving manufacturing and admin jobs to take the brunt.
But hey, you can't make an omelette without breaking some eggs. This old French proverb made famous in the wider world by Josef Stalin, is apposite, as the merger appears predicated on some weird Marxist determinist world view. The computer industry is consolidating massively - and cold outside for us teeny $40bn+ t/o companies. Let's consolidate, before we get consolidated.
HP even has its own version of the Five Year Plan: The Three Year Roadmap. None of its rivals go this far, the company boasts, possibly correctly. But it strikes us that a Three Year Roadmap is of little relevance to users of, say, the Alpha server platform and Tru64 Unix, two Digital Equipment technologies with large, devoted followings. Except maybe as the longest suicide note in history. Compaq squandered this heritage - the customers may be for the taking.
HP UK's Enterprise Guy, Andy Isherwood, notes that no-one likes change: "People buy products, they buy services and they expect to be looked after." It's how they're looked after which will determine if it's HP which will do the taking.
In his podium pitch, Isherwood refers to his "passion" for customer service. At the end of the day the company is "only as good as the interface that's provided to the customer". Isherwood is a salesman and from his CV is obviously one of the best. In 1992 he "won HP's prestigious President's Club award for his high sales achievements". His CV also shows that he's used to managing big sales teams, so he can do the customer interface bit, no problem.
But with what message? On the techie side, Isherwood is not so surefooted. He reckons that HP is an innovator - it spends $4bn a year on R&D. Sorry, but we can't see how that now applies to servers, with HP throwing in its lot with Intel and Itanium (yes we are aware of HP's key role in designing IA-64).
In a breakout session, Isherwood points to the enormous, "untenable" expense of developing and manufacturing CPUs inhouse. How long can Sun afford to keep its own CPU platform, he asks. Which is a reasonable point and a reasonable question, even if it is rhetorical. But with foundries and big semiconductor firms looking for partnerships, and the likes of Cadence gagging for design work, we think there are safety nets still for the go-it-alones.
Interestingly, HP divvies up its server business into two categories: industry standard i.e. Intel, and Business Critical, which mops up HPUX (and, we infer PA-RISC), Alpha and Non Stop. Does this imply that industry standard is not Business Critical?
Sales and Channels
We did not learn how the company proposes to nurse combined sales revenues through post-merger. In SEC filings, HP estimated that it would lose five per cent of sales through the takeover. But we all know and HP knows we all know that this figure was simply plucked from the air.
So what else do we learn? Stuff about the channel - the company will not dictate to its customers where they buy from, but it remains keen to work with computer dealers, especially outside its very top accounts - c.140 corporates (or global accounts) and 1,000 enterprise customers, very big, but less multinational.
We'll be looking at Gartner Dataquest Q3 figures with particular interest for early warnings. But indications from the channel are not particularly promising. The threat here is of de-emphasising HP.
We learned something about services? Oh yes, HP is the only company that has the potential to take on IBM head to head on the services front. However, it's sticking to its knitting. High-end consultancy is out - leave it to the likes of CSC and EDS and hope to pick up business from them along the way. Break-fix is a big component of services revenue - which is not exactly the most profitable business to be in.
Publish and be Damned
Printers. How can we forget printers, the huge lump of the business which Walter Hewlett Jr, dissident director, son of founder etc. etc. , wanted HP to concentrate. Just like Xerox. But without the dodgy Mexican accounting, or the botched sales reorgs.
HP's printer business is massive - and the opportunity is even more massively massive. It's got a $20bn print business globally, making it number one with 55 per cent share of the printing market. But it accounts for only four per cent of all the printed pages produced each year. And while you're at it, stop thinking of it simply as a printer business. Digital capture, digital publishing, that's where it's at. The purchase of Indigo shows where HP's headed.
This is all very well, so long as it doesn't get its knickers in a twist like Xerox. Which mucked up a perfectly respectably copier business through its obsession with being The Document Company. Not much talk about supplies, but we know, and HP knows we know, that this is the big money spinner, and will remain so, until the regulators beat up on them. ®