| I like to pick on HP more than most people, so it is odd I | | | | primarily to standardization, which kicked a key |
| now must praise them. | | | | differentiator out from under Dell. Take away the need |
| Back when I was on the other side of the B2B | | | | for mass customization, and you remove mass sales. |
| technology exchange, I was primarily an HP customer. I | | | | About the time this market shift occurred, HP installed |
| ran shops with multiple minis of varying HP operating | | | | Todd Bradley at the helm of their Personal Systems |
| system flavors (RTE, MPE, HPUX) and thus had a | | | | Group, that included oversight of PCs. Todd came |
| deep love/hate relationship with the company. To this | | | | from Palm, an outfit that had both good direct sales |
| day I keep a number of HP executives in my virtual | | | | and retail sales of consumer products. Todd |
| Rolodex and hound them when necessary or | | | | understood that PCs were now over configured for |
| advantageous. | | | | the average user, meaning that most users didn't |
| For a long time it appeared that HP's PC business was | | | | require customization or many feature tradeoffs. |
| going to go the way of IBM's, namely "out the door." | | | | Consumers needed competitive prices and instant |
| Sales were weak, and the fatter margins promised by | | | | gratification, which can only be had at a retail outlet. |
| the Compaq merger were not evident. HP went | | | | Soon thereafter the shelves of every office supply |
| toe-to-toe with Dell, attempting to clone their success | | | | and computer store were filled with HP hardware. The |
| without ever coming close. Mass customization was | | | | prices were low, the features competitively rich, and |
| not something HP was going to be good at, and like all | | | | you could take it home today. |
| things Carley inspired, was heading for the technology | | | | IBM never saw this opportunity because IBM is IBM, |
| sewer. | | | | and makes it's money selling expensive gear to |
| Two things happened at about the same time that | | | | enterprises. Today HP is happily schizophrenic, selling |
| changed HP's PC fortunes. First the market changed. | | | | both enterprise and consumer technology goods. It |
| Dell was the PC king when mass customization was | | | | took time, and it took getting consumer marketers like |
| demanded by the market. Keep in mind that Dell grew | | | | Bradley into the mix. Recent news shows Dell playing |
| during the period when PCs were fragile, components | | | | catch-up and elbowing their way onto retail shelves, |
| were expensive, and building system to order allowed | | | | sadly by fishing on the bottom of the lake by peddling |
| consumers to get what they wanted without | | | | through Wal*Mart ("Hey, honey, fetch me a 12-pack of |
| overspending. Michael Dell saw the weakness in the | | | | BVDs, some shotgun shells, and a Dell Core Duo" ). |
| market (incompatible system, limited store selection, | | | | Though not abandoning their direct sales model, they |
| and high prices) and made a business out of eliminating | | | | have a bit to learn about resurrecting a brand that suits |
| those problems for the consumer. | | | | retail sales, as well as manufacturing to meet the |
| But the market changed, to which HP responded and | | | | perpetual feature/price crush of the PC market. I |
| Dell did not. First, components became more | | | | would bet they do well, but HP now has the |
| standardized and the price of components fell through | | | | commanding lead and Dell has an uphill battle ahead. |
| the floor. My bookkeeping system reports that I gave | | | | The marketing take-away is this: markets change, and |
| Dell $3,500 back in 1998 for well loaded desktop. | | | | complacency kills. Recognizing a shift in your market, |
| Today a server grade desktop with a quad processor | | | | and acting on that shift is essential to staying alive. No |
| costs around $2,000 at CompUSA. This is due | | | | market is static, and neither are your competitors. |