Can HP Succeed Where IBM Failed?

Last week, HP turned in a financial report that seemed to provide a strong counterpoint to the view that the world was heading into a recession, or at least that tech was going to be sacrificed to that recession.

However, this took me back to IBM and what stopped its turnaround in the ’90s and whether HP could succeed where IBM failed.

Microsoft is also going through major changes and faces some very similar problems with being as open as the market wants. Inside, the company is clearly torn and who wins the internal battle will dictate how sincere the firm actually is.

Finally, EMC last week defined change and formed what may drive the most significant change in how you store and get access to your stuff. These are all huge and we’ll take each in turn.

We’ll also talk about our product of the week, which is the first ThinkPad to take on Apple.

Pulling Off What IBM Couldn’t

HP is in the process of the most amazing turnarounds I’ve ever observed. It started with one of the largest mergers in the history of tech and has resulted in the most powerful mixed technology company currently in the market. However, the effort is far from done. Looking back at IBM’s turnaround that started strong in the early ’90s but had stalled by the end of that decade, I wonder if HP can cross what for IBM was the longest yard: eliminating its own bureaucratic process.

If you’ve ever worked for a large company, you will have discovered a group of folks that all large companies have who actually work — in most cases unintentionally — for competitors. I say most, because in one instance at IBM, the guy evidently actually did secretly work for our largest competitor. These people obstruct efforts that are critical to the firm’s success, undermine smarter executives and exist as a bigger threat to the success of a company than any outside competitor can ever be.

Louis Gerstner, the IBM CEO credited with turning the company around, promised to address this problem but failed miserably in his attempt and eventually gave up.

This is one of the reasons why HP is arguably more powerful than IBM right now, but HP has this same problem in spades, and if Mark Hurd can’t get his own people out of the way, eventually those that are currently finding ways around them will give up or move on — and HP’s advancement will stall and then reverse.

The reason why HP’s PC Group is growing at an amazing 33 percent rate is that it has critical mass of mostly ex-Apple and Compaq folks fighting daily — and successfully — to overcome people in HP trying to stop them.

It makes you wonder how fast they could grow if this impediment were removed, but, if this isn’t fixed; eventually these internal champions will move someplace where they don’t feel they are fighting their own firm. Hurd, to his credit, is personally backing these HP heroes up, but at some point he needs to realize that he shouldn’t have to and fixing that needs to just get done.

Microsoft’s Open Source Sincerity

Microsoft made several announcements last week which are market changing. One was to supply free development tools to upper education. This showcased a fundamental change in a flawed Microsoft policy that too aggressively went after every nickel and was killing Microsoft’s future. The bigger change, however, was Microsoft’s aggressively going after the needs of developers and customers who wanted greater shared access to Microsoft technology.

This change reflects what has been a massive change in Microsoft’s line staff over the last several years and the influx of open source believers into the firm. Big companies change slowly, but often we see the changes as rapid because the external representations of these changes take awhile to become visible.

This change has been cooking for some time and represents the biggest cultural change inside the firm. While some are arguing the trigger was Google, the actual trigger was the European Union — but the fact that both Google and Apple seemed largely unaffected by any of Microsoft’s traditional approaches likely contributed to the realization inside Microsoft that a change was overdue.

This is simply the first step, but there are clearly those inside Microsoft who believe this is a step too far and will be looking to derail the change. If these people — who are currently out of power — gain back their lost power, then Microsoft will fall back on old practices and we will conclude they were not sincere. While unlikely, this could be triggered by the EU not giving Microsoft any relief and making the effort look pointless.

On the other hand, if the market and regulators respond favorably to this change, then the folks currently in power driving it will gain power and the change will stick — and Microsoft will be seen as sincere. This is what I think will happen, but there remains the risk that the very folks who seemingly want this change may unwittingly derail it. I don’t have a lot of confidence in bureaucrats.

EMC Gets a Microsoft Exec and Moves Into the Future

EMC’s this week acquired a little known company — Pi, which is run by Paul Maritz, a historic Microsoft ex-executive — and then formed a division around it.

Think of this as the first step to an iPod-like product from EMC, and while that product won’t show up for some time the result could be as big for that company as the iPod was for Apple. By iPod-like product, I don’t mean an MP3 player, but an offering that captures a lot of consumer excitement and defines the company in a massively different way.

It has the potential of changing everything from personal computing to home entertainment as we know it, and is an incredibly gutsy move from a company that exists in a market segment not known for them. Realize this is the firm that also saw VMware as big before anyone else did and you get the sense that this isn’t a one-trick pony.

While the concept of getting your stuff on every device you own isn’t new, getting it all to work together has been a daunting and near impossible task because no one firm had all parts of the solution. As bandwidth, both wired and wireless, increases along with concerns surrounding both content ownership and privacy, I think we will increasingly rely on what we call the “cloud” (basically the Internet) to supply a broad spectrum of services. This move puts EMC solidly on this path and could become the biggest single thing it has ever done.

Product of the Week: ThinkPad X300

Most of you know I think the Apple MacBook Air was a gutsy move by Apple that showcases the future of the laptop but it is impractical for a lot of reasons. The ThinkPad X300 is the first practical notebook in this new class of full-sized, ultra-light laptops, and it addresses all but one of the shortcomings of the Apple product.

The one that remains is that the flash drive remains prohibitively expensive, though I’m not sure I’d go for an iPod drive in a product like this. Still, I understand why Apple went this way and why it might make sense for a consumer offering — just not for a professional product. The X300, what Business Week calls “the perfect laptop,” is targeted at executives, and these folks can afford to get the thing as it was designed. They aren’t the types to put a VW engine in their Porsche.

In the end, this is the first ThinkPad since the Butterfly that I’ve had serious lust for — and lust is a drop-dead sure way to become product of the week.