Hewlett-Packard's innovation trend flattened long ago
A cyclist rides by a sign outside of the Hewlett-Packard headquarters on May 23, 2014 in Palo Alto, California. HP announced on Thursday that it plans to lay off an additional 11,000 to 16,000 employees over its previously scheduled mass layoffs of 34,000.
Hewlett Packard helped create Silicon Valley. Bill Hewlett and Dave Packard started the company out of a garage in Palo Alto in 1939, and innovated like crazy for decades. But the company hasn’t been in the innovation business for quite some time, and it’s had a rocky 15 years. CEO Meg Whitman announced up to 16,000 layoffs Friday— bringing the total for this round to 50,000. And this is the sixth or seventh round of cuts since 2002.
Tech writer George Anders wrote the book on HP—Perfect Enough, which looked at the company’s efforts to reinvent itself in the late 1990s— after its work in innovation was over.
Hewlett-Packard’s last great innovation came about 30 years ago, says Anders, when it introduced the inkjet printer and the laser printer. "And that started as a small, stumbling little business with low-quality products, and it just kept getting better and better and more competitive."
After that, the company was too focused on looking for monster hits to tinker around with the little innovations that had made the company great. "At the boardroom level," says Anders, "HP was always thinking, 'Where’s the next printing business?'”
However, tech analysts say the company has a future. For one thing: It’s now the old dinosaur — HP’s major revenue comes from serving giant corporate clients — and that comes with advantages. "The case for legacy companies is that they have client relationships, they have client trust," says Jim Kelleher, a tech analyst with Argus Research. He says the core business HP is now in — managing data — is growing.
Even though that business is threatened by cloud computing, HP has time to make a transition, says Brent Bracelin from Pacific Crest Securities. "That $110 billion billion dollars of infrastructure that they sell annually doesn’t move to the cloud overnight," he says.