After a string of stunning announcements yesterday, it’s fair to say Hewlett-Packard is undergoing the most dramatic changes in the company’s history. So, what can small MSPs and IT service providers learn from a $120 billion technology company’s missteps? Plenty. Here are five lessons involving distractions, focus, vision, execution and differentiation.
The lessons…
1. Distractions
Clearly, Hewlett-Packard became obsessed with Apple. Acquiring Palm for $1.2 billion (ouch) in a bid to make WebOS a viable alternative to Apple iOS and Google Android was, um, reckless.
Lesson for MSPs: Your rivals may succeed in a fast-growing market. But that doesn’t mean you should chase the same, shiny market opportunity. Don’t move into a new market unless you truly have expertise in that market. Plus, make sure you can really compete with entrenched rivals.
2. Focus
Oracle Channel Chief Judson Althoff recently told me that the secret to Oracle’s success is focus. “Each day,” Althoff said, “we wake up and think about enterprise customers. That’s it.”
- Over at HP, CEO Leo Apotheker earlier this year told partners that HP was going to launch a cloud to compete with Apple iTunes and Amazon.com, while building out a software and services business, cashing in on the consumerization of IT, and innovating in the print market.
- And over at Microsoft, CEO Steve Ballmer spends his day worried about search (Bing vs. Google), mobile (Windows Phone 7 vs. Apple, Android), games (Xbox vs Sony), enterprise (Microsoft vs. everyone).
Oracle has remained dominant for more than 20 years because CEO Larry Ellison has provided consistent focus. I’m not saying I agree with all of Ellison’s business tactics. But it’s hard to argue with the results.
Lesson for MSPs: Pick two or three things you’re really good at and bet the company on those skills or services. Scrap everything else.
3. Vision
How do you take a focus and extend it into a long-term vision? Six months ago at HP, the vision was to offer WebOS on all HP tablets and PCs, providing the world with a mobile operating system that linked into HP cloud services. Today that vision is dead; HP has killed its WebOS hardware business. Meanwhile, Apple has pieced together multiple trends (digital content, mobility, wireless, the cloud) and become dominant with the iPad, iPhone, iTunes… and maybe even iCloud.
Translation: HP’s “vision” for most of 2011 was based on market trends that Apple identified five to 10 years ago. That’s not vision; it’s reaction.
Lesson for MSPs: Again, avoid the temptation to “envy” the successful MSP down the road. Try to take three or four different market trends and weave them into a branded service that you control. An example: Hosted VoIP tied to soft phones and mobile device management.
Not sure how to spot the next trends? Take a walk over to your help desk and listen to incoming customer inquiries. They’re telling you where the market is going — and sharing business pain points — without you even asking.
4. Execution
Hewlett-Packard has been discussing a cloud strategy for almost a year now. Can anybody explain it to me? And can anybody clearly explain which cloud services HP currently offers, and which cloud services HP will soon offer?
Lesson for MSPs: Keep it simple. Tell your customers about the three to five things you’re going to do for them, and then offer measurable statistics to show you’re delivering on those promises.
5. Differentiation
HP is trying to sell off its $40 billion PC business because margins are shrinking. Yet, Lenovo just announced earnings results that beat expectations, and Apple continues to charged a premium for MacBooks and more. Question: What exactly makes HP’s PCs and laptops different? Answer: I’m not sure.
Lesson for MSPs: Anybody can sell cloud storage and remote management. But steal a page from Rackspace. What do they stand for? Sure, their cloud services are popular. But their brand is built around Fanatical Support. Find that similarly unique capability in your business. Simply reselling cloud services is similar to HP simply building PCs: You’ll never get rich from it.
Speaking About Focus…
Okay, I’ll get off my soap box now. But before I do… I have a confession: HP’s change of direction was a timely reminder for me as well. Our websites became popular because IT channel though leaders visit us to (A) read unique views and (B) contribute to an engaging conversation and (C) drive the industry forward. And on the sales side of the house, we’ve succeeded because (A) we listen to customers and (B) we rapidly respond to those needs with (C) unique offerings. That basically reinforces where Nine Lives Media Inc. will continue to focus its efforts. But sometimes writing down that information helps to keep me focused.
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that’s so on point Joe:
Translation: HP’s “vision” for most of 2011 was based on market trends that Apple identified five to 10 years ago. That’s not vision; it’s reaction.
There’s so much HP could have done if they re-focused on Enterprise – maybe work more closely on Microsoft with Win8 and Tablets, better PCs with best of breed remote management and remote imaging – also less models and consolidation of the line is needed -
We’re an HP Reseller and it’s tough to assert ourselves with new models as they come out and the dizzying amount of models. Apple pretty much sells about 5 different laptops and 4 different desktops – that’s something I can get my head around.
Also Lenove and Acer are much more involved with the channel on their hardware products – offering demo equipment and sales support. HP on the other hand has been going down for years. If they had re-engaged the channel and seriously slimmed down their consumer offerings – they would be doing a whole lot better with their PSG division. I think this is all clearly the fault of their leadership.
Gerson,
Thanks for sharing your real-world experiences. Sometimes IT vendors over-think there product portfolios. As you point out, Apple has a very simple, strongly-branded notebook lineup — MacBook, MacBook Air, MacBook Pro. Notice the lack of model numbers. The lack of consumer vs. corporate. Just beginner, advanced and ultra mobile.
Simple.
On the channel side, I don’t have a feel for how local HP, Lenovo and Acer channel reps treat their partners. But I do know this: When I went to the Lenovo Partner Conference this year the message was clear and concise. Lenovo said:
1. We will innovate — and I agree, I think their products are innovative.
2. We will never buy a big IT services organization because we don’t want to compete with the channel.
In stark contrast, I think HP does a lot of great things for the channel but the message changes constantly.
1. At the 2010 HP partner conference, Mark Hurd told partners to sell more PCs faster.
2. At the 2011 HP partner conference, Leo Apotheker told partners that WebOS would be strategic to the mobile cloud. And he said HP would compete against iTunes and Amazon Web Services.
What will HP possibly say to offer a consistent message at the 2012 partner conference? Again, I know HP has its strengths. The company has worked hard to find SMB solutions (example: Axcient storage) for its channel partners.
But the message from HP’s CEO office needs consistency. You can’t change direction every 12 months…
-jp
Joe:
As always your points are on the mark and give your readers something to not only think about, but act upon. In particular, your points of focus and envy are critical. Working with a number of companies over the years, I think focus has always been a major problem and I never could really understand why, but you helped me understand, that the problem comes from the distraction of the success we see other companies having. We think that if they can do it, we can too. When what we should be thinking is how can we do what we do better for our customers.
Mitchell Cipriano
http://www.demandbydesign.com
Mitchell,
Thanks for your continued readership, and all the insights you always share. Yes, envy can be dangerous. Sorry if this sounds sinful, but it can also be a great motivator.
For instance: I used to envy bloggers when I worked for print magazines. But I ultimately dove head-first into blogging. The big thing people forget: If you’re going to try and master a new skill, can you do it in a unique way?
For instance: I envied All About Microsoft Blogger Mary Jo Foley. She’s the best in the business. But I didn’t launch a Microsoft blog… Instead, I found a business partner who built brands around IT channel blogs…
Sorry for the rant. But a lot of what I blog about has personal meaning to me.
Best
-jp
Great article. I’m going to link it to my blog, Amy Wohl’s Opinions, http://amys.typepad.com/amy_wohls_opinions_on_saa/2011/08/what-is-hp-thinking.html
where we wrote about HP yesterday.
What especially intrigues me is that you honed in on distractions and focus which is often the undoing of much smaller firms. Big companies think they can (and should) do everything. HP is proving them wrong.
Excellent advice, Joe. Mspmentor.net is the one blog that is custom tailored for our business.
Marco Alcala
http://www.alcalaconsulting.com
Am I the only one who wonders why Judson Althoff, Channel Chief at Oracle is quoted as focusing solely on the customers OUTSIDE the channel?
Amy@5: Thanks for your link; I’ll check out your blog.
Marco@6: Thanks for your thoughts on MSPmentor.net. We’ve got strong followings on TheVARguy.com and TalkinCloud.com as well; hope you find them of value. And if not we’re always open to constructive criticism and ideas for improvement, joe [at] NineLivesMediaInc [dot] com.
JoJo@7: I welcome the constructive criticism. That quote was part of an extensive interview about the Oracle PartnerNetwork Specialized partner program (OPN Specialized). Details on our sister site, TheVARguy.com
-jp
Exactly how we operate and we have great success. We focus on a few things instead of trying to do everything, like most IT companies. We use to do everything. Do one thing excellent instead of many things average.
I have a comment related to point 2)
I would say that what Judson Althoff said is supported by Oracle actions especially.Look what they have done in database area and nnot only – ADF , Identity Management, they also have some results with VMs
and so on
Hayden@9: Yes, definitely achieve excellence in one area. But you also need to somehow hedge your bets in case profits in that one area dry up. For instance, look at the TomTom GPS system — great solution but their market is shrinking because of GPS built into smart phones, etc.
Silviu@10: Oracle announced some key virtualization moves in recent hours; update soon on our sister site, The VAR Guy.
-jp