One CES Lesson: HP's Apotheker Had It Right
TV manufacturers want to make your company's laptops, tablets, and phones too. Don't swim against this tide.
The buzz at the Consumer Electronics Show last week was mostly about the long-term viability of the show, but the real sea change has to do with which companies at CES were driving consumer-level innovation--and that change is going to be critical to your IT department's strategy.
U.S. and to some extent Japanese companies are taking a backseat to Korean and Chinese manufacturers. Dell and Hewlett-Packard didn't exhibit (though HP was seen around Las Vegas), while Microsoft says this is its last year at CES. And of course, Apple doesn't participate, even though literally hundreds of exhibitors were showing wares that somehow extend Apple products.
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The bottom line: Your back office equipment vendor isn't likely to be the same one that provides your end user systems. Those old associations are all but demolished, and that should make you rethink how your users get their technology gear.
[What gadget makers shined at CES 2012? See CES 2012 Gadget Wrap-Up: Cool To Crazy. ]
The energy at the show was around exhibitors such LG and Samsung, both of which thrive by making important evolutionary improvements to products, but not revolutionary ones. They've taken Apple's smartphone and tablet concepts and produced as good or better versions running Android. To a large degree, it's the PC story all over again, with a timeline accelerated by the higher stakes and better skills of the players.
As the PC industry grew up, Apple made advances; IBM made reference designs; and Compaq, Dell, and a pile of others made the money by offering incremental improvements and running the licensed operating system of the day.
The same is true for ultrabooks, the ultrathin laptop-like devices that were all the rage at CES. Intel offered the reference design, and the Asian manufactures ran with it. Samsung, Asus, LG, Toshiba, Sony, and Lenovo are all cranking out multiple variations of the ultrabook, while HP unveiled just one model in Vegas and Dell trotted out a poor contender in the XPS 13. Dell's version is too thick and heavy, the resolution's too low, and the processor's too slow. (Other than that, how was the play, Mrs. Lincoln?)
After spending a week at CES, I'm convinced that along with Apple--which could be relegated to much smaller market shares based on its price premium--the winners in phones, tablets, and now ultrabooks will be the Korean and Chinese vendors. Costs in the U.S. and Japan are just too high for most manufacturers there to compete, and as companies such as HP and Dell size up the profit margins on those products, they'll choose to spend their intellectual and R&D capital where they can make some real money: in back-office systems.
For the most part, former HP CEO Leo Apotheker, ousted in September, had it right in wanting to spin off the company's personal systems group, a decision his successor, Meg Whitman, has since reversed. If Apotheker hadn't botched that effort, showing all the finesse of a (drunken) bull in a china shop, the result probably would have been a positive one for HP. Now it'll have to get there through attrition.
If Asus, Lenovo, LG, and Samsung (not to mention Vizio, Acer…you get the idea) can make MacBook Air-like ultrabooks that sell in the $600 to $700 range, it will pretty much be game over in the personal systems market for HP and Dell. Apple will be challenged too.
Compare HP and Samsung as an illustration. Both companies offer top-of-the-line ultrabooks for $1,399; the specs are similar, except that the case for HP's machine is made of Gorilla Glass, while Samsung's is aluminum. The HP version looks cool, but it weighs 50% more than the Samsung model. And Samsung is already offering a number of less expensive ultrabook versions, while HP has just this one. That fact alone should make you wonder how committed HP is to competing in this sector. [[ Editor's note: HP contacted us after this story published, to note that it also offers the Folio 13, which it considers a business ultrabook (and thus did not bring to CES to demo.) The Folio 13 is similar to Dell’s XPS 13, but weighs a half pound more and sports a bigger battery. ]]
So, the trend is clear, in a few years it’ll be about as unlikely that you’ll be buying end user gear from traditional IT vendors as it is that you’d buy a TV or digital camera from one of them. That certainly will be the case for tablets.
You can get comfortable with these new vendors as your suppliers, or you can take matters a step further and leave the decision about end user hardware to your end users. A nod to the latter notion came at CES from none other than VMware, which showed its virtualization software running on an LG phone--the idea being that users would buy the phone and carve out a virtualized corner of it for their work environment.
It's still early in the game, but as your company's ranks fill up with employees who've grown up with technology, they'll be less and less willing to use the locked-down systems IT wants to provide. It's time to embrace this new direction.