A Dramatic 16 Years for 4 Tech Titans
Mar 28, 2016 12:44 PM PT
Following Apple's announcement last week, I noticed a number of reports on how disappointed customers were that there was nothing they wanted to wait in line for hours to buy. I personally thought they should have been excited about that, because I hate to stand in lines. I've never really figured out an Apple fanatic's penchant for pain.
Still, it is very clear that today's Apple is a very different company than it was just six years ago. That got me thinking. Dell, HP and Lenovo also are very different. They all have nearly completely different personalities -- and only Dell is run by the same guy (and almost wasn't).
I'll point out the big changes -- some that I think are kind of insane -- and close with my product of the week: a little gadget that can make your car smart (well, smarter anyway).
2000: The Decade It All Changed
It was apparent, soon after Steve Jobs' return to Apple, that he'd not only studied Louis Gerstner's turnaround at IBM, but also had decided to go one better. He set what is now the gold standard in turnarounds. Jobs did that by cutting Apple to the bone, massively simplifying its product lines, and convincing Bill Gates to invest in Apple (which had to be incredibly painful for him).
Dell, on the other hand, appeared to be at the top of its game, tied at the hip to Microsoft and doing very well. All was not well under the covers, however. Michael Dell wanted to retire, and Microsoft was well into making what likely was its biggest mistake: pivoting from a focus on users to a focus on companies. Microsoft also was reeling from an antitrust action. On top of that, and likely because of it, Bill Gates wanted out.
HP was sick, in need of fresh blood, and basically treading water. It wasn't clear if it knew who its customers were. It was in far too many businesses, with little resources to fully fund any of the efforts. It looked a lot like IBM did before it collapsed in the 1980s, and if one word could have summed up the firm, it might have been "geriatric."
Lenovo largely was unknown in North America. It was a powerful company in China, but China had yet to become a true world power in technology -- and like most Chinese companies, Lenovo was having trouble breaking out of the region. It desperately needed an edge, but it wasn't clear where it could get one, and few outside of China took the company seriously.
2010: The Decade It All Changed Again
This decade found Apple as the most valuable company in the world and Steve Jobs the CEO of the decade. He had done something amazing at least twice -- first in seeing the opportunity of the iPod and pivoting the entire company to it, and next in cannibalizing the iPod for the iPhone.
He nearly singlehandedly created the impression the PC was dead, which is kind of interesting since Apple really launched the modern PC.
Dell had been through a number of changes and was in the midst of a major transformation. There were doubts that Dell would survive. Its attempts to follow Apple in both MP3 players and smartphones had failed spectacularly, leading some to doubt the firm had long to live.
There wasn't a death watch, as there had been with Apple, but Dell was in trouble -- largely because Microsoft had lost its way, and its pivot from users to enterprises had gone very badly for the PC business.
HP, which was headquartered near Apple and followed IBM closely, had observed both successful turnarounds -- but it ignored everything it learned. It seemed there was no mistake it didn't want to repeat.
Then it brought in an industry expert, Mark Hurd, and he was making solid progress. HP seemed to be out of the weeds, and it even bought Palm and had a solid plan on how to pivot the company to compete better with Apple. Everything was looking pretty good.
After acquiring IBM's PC business, Lenovo had become a force to be reckoned with. It reversed a bad decision to divest phones and was back in that business, but still mostly in China. It was the only company heavily in the PC business, other than Apple, that could showcase success in phones as well.
Lenovo was making it clear that a Chinese company could execute out of China. Its headwinds increased animosity between the U.S. and Chinese governments, which created a drag on business but not execution.
2016 Status Report
Apple is weakening, but it's far from being in trouble. It doesn't seem able to lead anymore, however. Rather than following Steve Jobs' model of focused, simple products, it now offers products that are starting to look like the industry standard. They are relatively difficult to use (compared to earlier Apple offerings), and there's an increasing number of products to choose from.
Tablets are in decline, smartwatches have yet to take off, and the company's risky pivot to cars has yet to materialize. The move away from phone subsidies appears to be killing its unusually high market share for a premium product (it's typically closer to 10 percent than the near 50 percent it once enjoyed) and forcing it to bring out cheaper phones. Instead of leading, it appears to be following -- at least with tablets.
Dell did the impossible and went private, realizing that a big part of the problem with every company in this segment is the forced focus on quarterly results and expensive efforts to prop up valuations.
For once, Apple seems to be following it into business with a tablet line (iPad Pro). However, Dell still lacks any smartphone presence, and that is likely its biggest client exposure.
Microsoft has a subject matter expert running the firm, and it appears to be recovering as a result, though its move into hardware with the Surface line has introduced a new exposure for Dell.
Dell currently is in the process of buying EMC -- and if successful, that could make it the most powerful company in enterprise technology, with a blend of software, services and hardware that could be unmatched. That potential has yet to be realized, though, because the merger isn't complete.
Having seen the Apple turnaround, the IBM turnaround, Lenovo's growth after buying the PC business, Sun's failure to pivot to software, and Mark Hurd's success, HP came up with a new plan.
After being proven right in deciding that keeping PCs was a good idea, it first decided to pivot to software with a new CEO who didn't even last a year. Then it brought in a CEO who had even less industry experience than Carly Fiorina had, and she decided to ignore everything -- most recently spinning off the PC and printer business.
What remains are two companies -- both now far better focused, but also with reduced economies of scale. HP Inc. has the stronger management team, but it is saddled with both massive debt and printers. HP Enterprise is relatively debt-free, but it lacks experienced leadership.
HP's last 16 years -- with the partial exception of Mark Hurd's time there (he did showcase why office affairs are dangerous) -- provide a strong example of what not to do.
Lenovo is now a world power, on paper. Having recently acquired both Motorola and IBM's server business, it now is the only company with credible presence not only in every major market, but also in every major computing arena.
It has a significant world presence in smartphones, tablets, PCs and servers. It is light on software, preferring partnering to owning, and it is light on services. However, in terms of computing hardware breadth, it is unmatched.
Lenovo currently is experiencing financial pain as a result of two huge simultaneous mergers, but it actually appears to be pulling the move off, and it has been making major staffing realignments to finish the process.
Apple appears to be pivoting from consumer to enterprise, and it likely should take a look at how that screwed up Microsoft to see what not to do. Its choice to partner with IBM and Cisco rather than do it all is a good indicator that it actually may avoid repeating some of Microsoft's mistakes.
However, tight partnerships aren't Apple's strength, and the firms will need to become closely coupled -- at least with regard to their joint business efforts -- in order to work. Still, the market hasn't adjusted to looking at Apple the way it is rather than the way it was. When it does that, the result could be economically painful. Still, I expect that will leave Apple in a better place with more reasonable expectations.
Dell has to complete the EMC merger and address, either through product or partnering, its lack of presence with handheld devices. It could pivot the market, like Apple did, but it can't continue to act as if smartphones don't exist.
However, once it completes the EMC merger and both firms are private, it will have a flexibility that no other firm in its segment has, as well as resources that match or exceed all other players. If it plays its cards right, Dell has the best chance to emerge at the end of 2020 as the most powerful U.S. tech company. Whether it is the most powerful in the world likely will depend on what happens between the U.S. and China.
HP... well, HP as we knew it effectively is gone. It has been replaced by two smaller, more focused companies. The PC firm is back where Dell was in 2000 but with printers. The enterprise firm is a weak clone of IBM.
Focusing on the PC side, HP needs some kind of an iPod breakout product. 3D printing could be it, and it could flip printing from a liability to an asset again. I actually see some good things out of the printer unit in product and marketing execution, and it has a strong leadership team. However, I'm seeing more folks angling to get out of both companies than I'm seeing at any other firms in technology, and that makes HP's future less certain.
Lenovo has to lock down the Motorola and IBM server mergers, and it appears to be nearing the end of that process. Once done, it has to be able to show some kind of end-to-end synergy for the market to truly get excited about the result.
It remains the only firm trying to replicate Steve Jobs with Ashton Kutcher, a strategy that still has unmet potential. It also has one of the strongest product marketing people (David Roman) I've ever met.
Lenovo is now the strongest technology company in China, and it has a shot at becoming the strongest technology company in the world in 2020. That depends on what happens between the U.S. and China. Lenovo is more of a multinational, though, and that may give it a unique edge.
Now there are a number of other major and fringe players that could disrupt the hell out of all of this. Amazon in particular, with its heavy focus on cloud services -- even though it bounced with smartphones -- could be the tech company to watch.
Samsung, LG, Huawei, Alibaba, and others from overseas also could disrupt this entire process by the decade's end. That's not even considering the impacts of war or massive natural or manmade disasters that could change dramatically what people buy.
Finally, robotics, 3D printing and artificial intelligence could change the tech landscape massively by decade's end. As a result, the only thing we can be sure of is that 2020 will be very different from 2016.
Unless it's a Tesla, my advice on the cusp of the era of self-driving cars is to not buy a new car right now. The reason is that I'm told that once self-driving cars hit critical mass, insurance companies will change fees dramatically, and cars that aren't self-driving will become too expensive to own.
That said, a lot of the smart connected stuff is just arriving on new cars, and some of it is pretty cool.
Automatic is the best tool to bring some of this smart technology into an older car that I've yet seen.
Its big value is that if you get into an accident, it automatically will use your phone to call for help. Also, it will give you Fitbit-like reports on your driving, helping you to drive more safely and economically. It will connect to an increasing number of third-party apps to provide other functions connected to your smartphone.
What makes Automatic nice is that it costs just US$99, and there is no subscription. It will give you a feeling for what is coming without buying a new car (it worked fine with my 2008 Audi A3), and it is very easy to install.
Be aware that it pulls power, so you don't want to leave it attached if you are away from your car for a long time.
Because Automatic makes a dumb car a tad smarter -- oh, and it works with Amazon Echo -- it is my product of the week.