HP’s Panic Is Not A Good Look

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About turn

Howe noted that the shutdown of the mobile division will have a serious impact on the whole mobile patent situation that’s already in turmoil. He noted that Palm had more than 1,500 mobile patents, in addition to patents held by HP and Compaq. “I’d be looking very carefully at the patent portfolio,” Howe said.

HP should also be looking very carefully at its customers. IBM’s well-planned transition out of the PC market was intended to avoid panic. Customers knew well in advance what was going to happen. They knew that the products would remain the same even if the logo changed and that IBM had everything worked out ahead of time. Even customers that didn’t buy ThinkPads were confident that IBM was removing every aspect of uncertainty.

HP on the other hand, seems to be fostering uncertainty. For a company such as HP to abruptly change direction without planning is not unlike the captain of a 200,000 ton oil tanker ordering the helmsman to reverse course at once while underway. Anyone with knowledge of ship handling will know that this is unlikely to yield a good outcome. And so it is with HP.

Worse, when CEO Leo Apotheker (pictured) ordered the sudden change in direction, he did so while still surrounded by the detritus of the Hurd dynasty. While the acquisition of Autonomy obviously fits into HP’s long term plans, the other part–the closing of the mobile business and the planned sale of the PC business–must make customers and investors wonder if their money is in the right place or if HP picked the right man for the top spot.

A violation of trust

As this is written, HP’s stock price has dropped to just over five times earnings – an extremely low figure and an historic low for this stock. Over 20 percent of the stock decline has happened since the change in direction was announced. One can only guess what HP’s investors must be thinking, but it probably involves regret that they bought into the company at all.

But one must also wonder what the customers must be thinking. Unlike IBM’s moves that were designed to provide certainty, HP’s customers must be wondering if the product lines they’ve been buying for years will suddenly be chucked out the window without warning. Let’s face it, if you were considering a purchase, would you buy any HP hardware product knowing that you could find your product, along with the customer support farmed out to some new unproven entity or worse orphaned? I suspect that all of those people who bought TouchPads have already started packing them up for a trip to the retailer to demand refunds.

Those customers deserve it. HP has broken the trust with its customers and its investors, and should be forced to accept the consequences, including refunding the money to all of those customers who bought HP products in good faith.