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HP's Happy Talk: Enough Already

The next two to five years will be difficult for HP, as it tries to transform itself into a consulting and high-end services business like IBM.

HP stole the headlines Thursday with its plans to divest its personal systems business and its intent to acquire enterprise content management and search vendor Autonomy. HP also revealed that it's giving up on webOS, the fruit of its $1.2 billion Palm acquisition last year, after fielding only one device that runs on the latest version of the operating system. All of this news came along with its fourth-quarter financial results, which, while not terrible, were below HP's guidance and just met market expectations.

Ever since IBM's masterstroke sale of its PC business to Lenovo in 2004, there has been a drumbeat that HP should do the same. But as recently as March 14, HP and its new CEO, Leo Apotheker, were touting the benefits of being the only major vendor that could offer a soup-to-nuts set of systems, from end user devices up through the data center. HP wasn't going to sell the PC division; it was going to double down on it. The reason to be in that business, at least according to HP in March, was to get its newest crown jewel—WebOS--into the hands of 100 million users.

Whereas the March presentation was delivered at an event, held in San Francisco and intended to show an energized HP ready to take on the world, yesterday's news came on a simple earnings call, somber and without video. A reassuring Apotheker spoke in a monotonous yet comforting voice, seemingly calibrated to show that HP is in good hands. He took turns speaking with HP's veteran CFO, Catherine Lesjak, who laid out the numbers for each division and stated where HP made and missed its targets. From Lesjak's point of view, the fault lay mostly in a bad world economy, tsunamis in Japan, and a range of other issues mostly out of HP's control.

As I took a few minutes to digest the performance, the emotion I most felt was anger. How is it possible that HP had gotten things so wrong in March? Then, the most important thing was how webOS would let the company build an HP cloud that would include its own app store tuned to users' needs, so that one device--a webOS device--could satisfy business and personal requirements alike. No one, said Apotheker in March, knew both the personal and business needs of individuals like HP did.

And then Thursday, there he was--just six months later and after fielding just one WebOS device in July--calling it quits on the platform. Was HP even serious in March? Or was that presentation, which also underscored HP's intent to beef up its software, security, and management products, nothing more than an attempt to put a happy face on the pile of goods former CEO Mark Hurd had left behind?

In discussions on Friday with HP, the claim is that many of the ideas presented in March are still driving the company. While webOS tied to a hardware platform is dead, webOS as piece of software still has value, according to HP, letting the company make good on its March claim that there's value in knowing both consumers and businesses. How HP will make that happen without the full backing of its personal hardware business is hard to see. And while HP says the vision it presented in March is still valid, aspects of it have changed dramatically. The rationale for the about face is far from clear.

Surely, shareholders and customers deserve more honesty. This is particularly true with regard to the audacious webOS claims that, frankly, no one believed HP could live up to--a fact reflected in the company's share price, which has been on a slide since then, from $49 a share down to $29.50 at the time of announcement and down another 25% on Friday.

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I wrote in August 2010 that there was no chance for webOS. Bracketed on three sides by Windows, iOS, and Android, webOS was the fourth dog in a three-dog race; it would never make it out of the blocks. Now, a year later, it appears that Apotheker (who started at HP a month later) and other top company planners thought the same thing. So why the happy words back in March?

Imagine the poor IT pro who liked the technology, trusted HP, and bought some TouchPads for his company. Or the programmer who spent time learning the development system. Or the investor who thought HP might be onto something with its end-to-end story and looked forward to seeing the strategy unfold, but who instead saw the grand plan scrapped after a month in the marketplace.

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