The news that HP is cutting more than 1100 of its UK workforce is tragic for all involved, coming as it does just before Christmas. But how has one of the world's most recognisable companies found itself in this situation? I've been looking at HP's history and the past 10 years of the personal computer to explain why HP is cutting 1124 jobs in the UK.
Why is HP cutting 1124 jobs in the UK? The history
Hewlett Packard is one of the originators of Silicon Valley. A scion of innovation in the tech world that inspired the likes of Steve Jobs and Bill Gates. It's a huge and historically successful company. But the recent past hasn't been pretty.
Rewind back to the beginning of 2010 and we find a charasmatic tech industry leader on stage hyping a tablet PC in front of an audience of industry types. Three months later Steve Jobs launched the iPad. That was in April, and it was in January that Steve Ballmer of Microsoft had showed off the HP Slate PC. The Slate PC never made it to market in the UK, and limped out in the US only after the iPad had conquered all and destroyed any chance HP ever had of owning the nascent tablet market.
That same year of 2010 HP bought Palm, threw aside its own failing iPaq and Compaq brands and put its weight behind WebOS and a focus on smartphones and tablets. It seems like a million years ago now, but WebOS was actually really good. Unfortunately the timing wasn't and as Apple continued to dominate the WebOS and the HP TouchPad failed badly. That was the signal for the first upheval in the HP boardroom. When the music stopped Léo Apotheker was CEO of HP, and a new strategy was announced.
Apotheker said that HP was going to sell off its personal computing division and concentrate on managed services. HP was going to do an IBM. Okay. Good plan.
In the blink of an eye later HP announced that it wasn't in fact going to sell off the PCs and laptops bit. Perhaps unsurprisingly, Apotheker left and a new CEO came in. That was and is Meg Whitman. (See: HP makes U turn on selling off PC division.)
In 2012 Whitman announced that HP would merge the personal computer division with its printer business and once again refocus on the consumer business. Are you keeping up? HP wasn't, and the job losses that are now hitting the UK began that year, and are continuing.
Why is HP cutting 1124 jobs in the UK? Industry trends
That's what has happened. But why, apart from C-level ineptitude, has this happened?
The sad fact is that HP was close to getting it right. When Ballmer hyped the HP Slate PC the world was ripe for the tablet revolution: we know because of the subsequent success of the iPad. And the focus on smartphones that followed the Palm aquisition was a smart call, just executed too late and too poorly. But the time WebOS hit the market most smartphone users and - crucially - app makers had settled on iPhone, Android or both. There just wasn't room for another platform that - unlike Windows Phone 8 - didn't have a desktop user base to fall back on. HP is now back in the tablet market with Android devices. But it is very late in the day.
So HP wasted a lot of time and money chasing chimeras. And then when it made the potentially smart but truly difficult decision to exit the personal computer business, for whatever reason it wasn't able to follow through. It's possible a managed services model would have suited HP. What definitely hasn't worked is the attempt to compete in the increasingly cut throat personal computing business.
HP makes PCs, laptops, servers and printers. People are printing a lot less: that's one problem. Cloud storage is eating into the server business. Most critically of all the PC and laptop market has slowed down. A lot. Smartphones and tablets don't replace PCs and laptops, but they do mean that you don't use your PC or laptop quite so much, which means you will hold on to an older one for longer. Meanwhile PCs and laptops themselves are now sufficiently fast, so you will only upgrade when the old one breaks.
How then does HP drive sales of PCs and laptops? It is a much-respected brand, but people don't hang out for an HP PC any more than they demand Lenovo, or Dell. The PC market has become commoditised, and HP is just one more respected builder of the commodity. The only way to stand out is to cut prices, and that means reducing profits and creating efficiencies. Either way jobs have to go.
Why is HP cutting 1124 jobs in the UK? The verdict
Sadly for a company with its legacy of innovation HP hasn't done enough to stand out from the competition in the declining PC, laptop and printer markets. Meanwhile its ham-fisted attempts to break into the smartphone and tablet markets have been expensive failures (and this despite a rich history in the PDA space). Throw in a dose of boardroom instability, and a lack of clear vision, and today's sad news is inevitable. Terribly sad, and terrible for the UK. But inevitable nonetheless.