Like the vinyl LP, the personal computer is losing out to newer technology. Newspapers, book publishing and Kodak all have felt the pressure of progress pinching their profits. Some companies are able to adapt fast enough. Others try to evolve only after their businesses have suffered irreparable harm.
On Thursday, Hewlett-Packard will release its quarterly results. Investors want an update on its efforts to reignite the ingenuity that built the company into a global technology behemoth. Already, HP has announced thousands of job cuts and may (or may not, depending upon the anonymous sources) be considering cleaving off its traditional computer- and printer-building businesses to concentrate on the fatter margins from selling services to business customers.
Heck, it worked for IBM. In 2004, Big Blue sold its personal computer business to the Chinese. IBM was synonymous with the PC for years. Its 1981 model was officially called the IBM Personal Computer, ushering in the PC-era from a lab in Boca Raton. But by the turn of this century, Dell had exploited the direct-to-consumer computer business and HP merged with Compaq. Since IBM got out of the business it helped invent, its stock price has doubled while Hewlett Packard shareholders have lost 20 percent during the same time.
Desktop computers and printers will continue to have their place. But is that place inside a publicly traded diversified technology giant? Dell doesn’t think so. It wants to go private to buy itself time to figure out how to evolve without the quarterly pressure from stockholders. Hewlett-Packard needs to instill confidence that it can change its tune.
Tom Hudson is anchor and managing editor of Nightly Business Report . In South Florida, the show is broadcast at 7 p.m. weekdays on Channel 2. Follow him on Twitter, @HudsonNBR.