Lenovo and HP: You Just Cant Compare

 
 
By David Coursey  |  Posted 2005-08-19 Email Print this article Print
 
 
 
 
 
 
 

Opinion: The sailing looks smooth at Lenovo, where the merger has not been disruptive. Meanwhile at HP, new CEO Mark Hurd is trying to chart a course for success after Fiorina's big misadventure.

Recent good news at Lenovo and bad news at Hewlett-Packard have caused some to start comparing the Communist Chinese companys purchase of IBMs PC business to HPs purchase of Compaq. Making such a comparison is a temptation we should resist, no matter how happy we may have been to see Carly get her come-uppance. Its also not fair to new HP boss Mark Hurd, who faces many challenges Lenovo doesnt. Lenovo purchased a business that was doing nicely, except that its level of profitability no longer meshed with the image IBM wanted Wall Street to see. Lenovo was already building product for IBM and since there was little overlap between the two companies, IBMs staff became Lenovos staff. The company even moved its headquarters to New York.
The reason Lenovo bought the IBM PC business was a sound one: It would turn the company into the worlds third-largest PC manufacturer, essentially overnight. Such growth was something Lenovo might have found impossible to accomplish by itself. Lenovo also bought one of the worldss most recognized and respected PC brands.
Compaq and HP, on the other hard, were both in a mess before they joined forces, resulting in a bigger mess. It also resulted in tens of thousands of layoffs. Essentially, HP bought the Compaq name, but dumped the same number of people, more or less, as worked at Compaq pre-merger. Plus some. Lenovo is looking to grow as it competes with HP and Dell. Click here to read more. HP already had a good brand, but gained a second and the problems associated with a two-brand strategy. It acquired a number of products that competed with its own HP lines. Its still not clear to me what—or if—Carly Fiorina was thinking when she dreamed up this misadventure.
In some ways, its sort of sad that Lenovo didnt buy Compaq. But, I digress. The reason HP bought Compaq had something to do with building market share. But, for one struggling company to buy another is almost always a recipe for disaster. Mark Hurd, the low-visibility NCR CEO chosen to replace Fiorina, is still too new at the job and faces too many troubles to have gotten HP turned around in a big way. I havent met the guy, but from what Ive read and knowing a bit about NCR culture and its stellar performance under Hurd, I believe the HP board made a good choice. Where Carly was about shaking up HP culture, Hurd seems to be about becoming a tougher competitor and playing to the companys enterprise strengths. It will take time for this to play out. As for the comparison, I am not surprised that HP has done poorly of late, but its too early to say that Lenovo has done well. The IBM PC business must have had several years of product plans already in place, and since the staff merely went though a change of business cards, its not too surprising they continue to execute. Its hard to tell, thus far, that Lenovo ownership has meant anything to the IBM PC business, at least externally. From that limited perspective, the Lenovo buyout is a huge success. Will it stand the test of time? If Lenovos ownership, which includes the Beijing government, charts a wise course, the deal will be one of the few successful big tech-company mergers. If the management screws up, it will be a typical big tech-company merger, just like HP and Compaq. Lenovo should do well, but it will take years, perhaps, for post buyout decisions to play out in the marketplace. Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at david_coursey@ziffdavis.com. Check out eWEEK.coms for the latest news in desktop and notebook computing.
 
 
 
 
One of technology's most recognized bylines, David Coursey is Special Correspondent for eWeek.com, where he writes a daily Blog (blog.ziffdavis.com/coursey) and twice-weekly column. He is also Editor/Publisher of the Technology Insights newsletter and President of DCC, Inc., a professional services and consulting firm.

Former Executive Editor of ZDNet AnchorDesk, Coursey has also been Executive Producer of a number of industry conferences, including DEMO, Showcase, and Digital Living Room. Coursey's columns have been quoted by both Bill Gates and Steve Jobs and he has appeared on ABC News Nightline, CNN, CBS News, and other broadcasts as an expert on computing and the Internet. He has also written for InfoWorld, USA Today, PC World, Computerworld, and a number of other publications. His Web site is www.coursey.com.
 
 
 
 
 
 
 

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