Can Leo Apotheker make Hewlett Packard a cool company?
- 28 January 2011
- From the section Business
Four months ago, Leo Apotheker took charge of troubled computer giant Hewlett Packard. But is he the man to turn things around?
On the sidelines of the World Economic Forum in Davos, Mr Apotheker gave an exclusive interview to the BBC.
In the eyes of many, Hewlett Packard is one of those big old-school computer-makers. Their share price is stuck in the doldrums.
If you were asked what colour you'd associate with them, you might say "beige".
You encounter their products in the office - tall printers or chunky computers, probably still running Windows XP. At home, you arguably buy their computers and laptops out of necessity, not desire.
It doesn't help HP that last September the previous chief executive was forced to resign following salacious rumours and an expenses scandal; and just last week, the firm replaced five members of its board.
Apple it ain't.
But Leo Apotheker, a softly spoken German whose parents escaped the Holocaust, believes that he can turn Hewlett Packard around. And that HP has the ingredients to become cool again.
Hewlett Packard is the archetypal Silicon Valley firm, founded in a one-car garage in Palo Alto back in 1939.
Today, it's a company with a $126bn turnover, more than 324,000 employees, and a stockmarket value of $103bn.
But HP's share price is flagging, currently at around $47. Twelve months ago it was priced at just under $50.
It is time for a relaunch.
New products, new vision
The starting gun will be fired on 9 February, with a "big product announcement" on mobile devices, and hints of phones and tablet computers.
The product line will get a new name and come under the HP brand, Mr Apotheker says; the days of Palm and Palm Pre seem to be numbered.
Then, on 14 March, we will get the big unveiling, Mr Apotheker's "secret answer" and "vision of what HP is capable of in the future... the starting point".
It will be his big chance to convince investors and customers that he can pull together the hugely diversified HP, that its very sprawl is actually a "basis of strength".
No other company, he says, can offer such a complete range of IT solutions: servers and enterprise software, the cloud and other IT services, desktop and mobile devices.
And even now, Mr Apotheker says, there are still "a few holes" in the company's portfolio - a hint that HP is likely to announce a few acquisitions soon, with software firms on the target list.
Leading the revolution
"What's happening is probably the biggest revolution in the history of IT," says Mr Apotheker, slightly raising his voice.
"The internet is going totally mobile, the bandwidth is there... so many technologies are converging, and HP is the one company that can put it all together. We want to be the leader in this.
He'll explain, he says, how "all the pieces of HP come together in a coherent way, and why each part is so important."
And gone will be the days when HP announces a product to great fanfare, and then nothing happens because the product will not hit the shelves until many months later when the buzz is forgotten and the technology ever so slightly-out-of-date.
"HP will stop making announcements for stuff it doesn't have. When HP makes announcements, it will be getting ready to ship," he promises, saying the products launched on 9 February will be on sale just a few weeks later.
"That's a simple management decision, I don't need to re-engineer the tanker [HP] to do that."
'As cool as HP'
He wants HP to ship products that deliver a unique experience, that are well designed and intuitive to use.
"I hope one day people will say 'this is as cool as HP', not 'as cool as Apple'," says Mr Apotheker.
So far, so obvious a sales pitch.
But HP, he says, is the only large IT company "that is equally good on the consumer side and on the commercial [enterprise] side.
And only HP can "get the speed of innovation, the ease of use, the accessibility, the wow factor from the consumer side" and "harden it for the enterprise" so that it meets corporate standards for security, governance, compliance and robustness.
It's this strategy that Mr Apotheker hopes will allow him to contain the rise and rise of Apple.
When I suggest that HP phones and tablet computers don't quite yet match the Apple wow factor, he grabs his assistant's HP Palm Pre phone and launches into a demonstration: "... look this is pretty cool, and [the Pre's operating system] WebOS is the only phone that can truly multi-task."
The right man for the job?
But is he the right man for the job at a time when all IT is driven from innovations in the consumer space?
After all, Mr Apotheker is a sales guy, not a technologist. And before running HP, wasn't he the chief executive of German software giant SAP, a company known for its complex enterprise software, about as far removed from consumers as one can get?
Mr Apotheker half chuckles, half sighs: "Just to make your list complete, I'm also not a hardware person."
But that doesn't matter, he argues: "People change, people learn... I'm now much better educated about the consumer market" and anyway, what counts is the quality of the team.
"My job is to pull it all together and make sure the right people do the right job at the right time. Nobody in the world could be fully across everything that a company with a range like Hewlett Packard does."
It won't be an easy job. Profit margins are razor thin, innovations cycles are accelerating, and Apple still rules the roost - not in terms of volume, but in terms of public mindshare and especially in terms of market value, currently standing at $316bn, larger than Microsoft and more than triple the size of HP.
"That bothers me," says Mr Apotheker, "we are undervalued."
"Shame on us, though. I don't think HP has been telling its story as well as it could over the past few years."
Over the next couple of months, Mr Apotheker will have to come up with a pretty convincing story. It might come in handy that he's a salesman at heart.