James Governor's Monkchips

On The Hurd Instinct and the Gertsner playbook

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When Mark Hurd took over the reins as HP’s chief executive it was clear there was an obvious playbook to pick up and run with: Louis Gerstner’s. Like IBM, HP is an elephant, and recently it has not been so twinkle-toed. So how to get it tripping the light fantastic?

The situation at HP in early 2005 was nowhere near as bad as it was for IBM in early 1993 but some of the challenges faced were similar. Both companies, for example, were on course for major divestments before “the new man” took over. IBM was going to be split up into a number of different operating companies, while investors had been aggressively calling for HP to spin off its PC and printer businesses. Accountability was not high on the corporate agendas of either company. Perhaps most importantly – morale was low. There was a sense of drift.

Initial indicators are that Hurd is going to be good for HP though. 

When reading businessweek’s article, HP says Goodbye To Drama, one particular Hurd quote jumped out at me:

We need to temper the idea that this company has to have some earthshaking event every 15 minutes. I’m not sure how it got that way — and to be very frank, I really don’t care. Our job is to execute.

Here was Gerstner giving his first major interview in 1993 as he began the greatest turnaround in the IT business:

There has been a lot of speculation as to when I’m going to deliver a vision of IBM, and what I’d like to say to all of you is the last thing IBM needs right now is a vision.

The parallels are obvious. Time to dump your Dell stock?

Finally I would like to float an acquisition rumor.

HP could go in for NCR, in order to get its hands on Teradata. Randy Mott, HP’s CIO, worked at both Dell and Walmart, both of which rely on Teradata for business operations. The move would give HP a credible high high end business intelligence and transformation play, without competing head to head with HP partner Oracle. Teradata would potentially HP to compete with IBM Global Services though in areas such as fraud detection.

NCR has a printer consumables business (something HP knows a little about), and the eponymous Point of Sale and ATM business. Why should ATM and POS interest HP? Simple: we are at the first stages of a major infrastructure refresh in banking and retail branch operations. IBM’s OS/2 has finally been declared dead, while its proprietary 4690 retail platform is on the way out. The replacements for these systems will be either Linux or Windows-based. We know what IBM will pitch. But HP can play on either side.

Of course many would argue HP has made more than enough systems company acquisitions in recent times. But such a deal would have some internal logic. And nobody knows NCR better than Hurd.

One comment

  1. The NCR thought is a good one. It’s a consolidating industry; the leaders will consolidate it further. While Mr. Hurd has a lot on his plate right now…but get a few things a little better in gear, and who knows. Of course, Oracle would shriek “traitor!”–but given how often and loudly Oracle has talked up Dell in recent years, that turnaround would be no more than fair play.

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