Monday, January 28, 2002

HP vs. HP The family fued between Hewlett Jr and Carly is essentially an argument over how to deal with PC commoditization. Microsoft (and Intel) have made PCs utterly interchangable, with profits only available to lowest cost assemblers (like Dell). Hewlett Jr's strategy is to drop this business like the dog it is, while Carly wants to hang onto value by betting on Microsoft IIS related services. The former doesn't destroy value, but doesn't deliver growth either. The latter will probably do neither. If HP is interested in services, it needs to abandon a platform strategy (which IIS emphatically is) and become like IBM. If it wants to stay a tech leader, it needs to commoditize complementary products (like operating systems) and keep economic rent in hardware, not give all profits over to Redmond.


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