'Is HP the New Apple?'
By David Kirkpatrick
FORTUNE.COM
Wednesday, August 13, 2003 Posted: 1:31 PM EDT (1731 GMT)
(FORTUNE.COM) -- It's a comparison HP is happy for consumers to make. With its massive new product rollout, the company is challenging competitors to keep up. In an interview with Fortune.com, HP CEO Carly Fiorina says the company's aim is not the next killer app -- but making tech work better for its customers.
"Is HP the new Apple?" Omar Wasow leaned over and asked me during the company's massive product launch in New York Monday. He is NBC's tech impresario who advises Oprah and directs BlackPlanet.com. I told him I had only minutes before written in my notebook, "HP moving to become the Apple of the PC world."
It's a comparison HP willingly invited as it introduced 158 new products all at once -- from printers to PCs to cameras to inexpensive photo paper. Apple of course has led the way toward a vision of integrated digital consumer devices and software for imaging, music, and video. But HP, said CEO Carly Fiorina onstage, didn't merely want to "think different," in an allusion to Apple's marketing slogan, but to "rethink everything."
That was overstatement, but many of HP's new products really were innovative -- like the PC that had a built-in camera holder. Slip your HP digital camera into it, press one button, and pictures are on your PC. Press another button and they're printed (if your printer is hooked up right). CEO Carly Fiorina bragged onstage that this represented the fulfillment of HP's promise in January 2002 to reduce the steps required for taking and printing digital images from 58 to 3. I'm sure they were generous in their initial count, but regardless, they have made things easier. Another cool technology is what they call "adaptive lighting." It compensates on the camera for underlit or overlit portions of a photo so that the resulting picture is properly exposed throughout. HP also launched a scanner that is basically two pieces of glass surrounded by plastic. Hold it up to anything and it will scan it into your PC—almost like a camera.
Technology for the masses
"Simple integrated technology not for the geeks -- for the masses." That's how Fiorina described the mission of Hewlett-Packard in my interview with her shortly after the company's presentation. She argued that this giant consumer launch, to be supported by a $300 million marketing campaign this fall, fits in clearly with an overall company strategy. "In September 2001 when we announced our merger with Compaq, I said customers aren't interested in stand-alone boxes or killer apps anymore," she said. "They want it all to work better." She said yesterday's announcement was about making it all work better in the home, just as HP's "adaptive enterprise" strategy for business customers aims to make tech work together better there. "The theme of simplifying and integrating is common in every market we serve."
Monday was certainly a stake in the ground for a fundamentally new approach. And HP clearly has advantages, aside from its dazzlingly impressive CEO, who seems more confident every day. Its overwhelming dominance in printers is beginning to seem a more significant competitive advantage over rivals than most of us had previously realized. Of course that business garners and protects precious shelf space, but as more and more printing moves into the home (will magazines be next?) owning the printer franchise becomes strategic, partly because more and more devices have to work with the printer. And who of HP's competitors deploys a comparable range of products? Fiorina challenged me to name one, and I couldn't. Apple and Sony, the two companies that have the most similar strategic vision for how consumers will use technology, don't sell printers or many of the other products in HP's printer-and-PC-centric lineup.
Apple is just plain tiny compared to HP, and of course marches to its own technological drummer. In general I like that beat -- I'm writing this on a 17-inch iMac. However, I've had big problems with Apple's iPhoto software. When I upgraded to the most recent version it hid all my photo albums and I still haven't been able to retrieve them properly. It just shows how hard integration can be. And listen to Fiorina on Sony: "It's a great company, but they lack imaging expertise, software expertise, networking expertise, and computing expertise. And those are big things that count."
HP doesn't get the credit it deserves for being the largest "consumer digital product company" in the world, as Fiorina calls it. Nobody touches HP in overall consumer computing-related revenues -- not Sony, not Dell.
Fine line
Vyomesh Joshi, or VJ as he's known, runs HP's imaging and printing group, and is the brains behind much of yesterday's fireworks. He bragged that after last year's "Big Bang," when he first made his impressive managerial presence felt with a complete makeover of consumer printers, HP boosted its revenues 22% even as the overall market declined 20%.
In some ways HP is Bill Gates' dreams come true -- a company devoting huge energy and money to integrating consumer experiences based on industry-standard Windows computers. But my friend Aaron Goldberg, a longtime PC industry expert and consultant at Ziff-Davis, says HP is walking a fine line as it seeks to integrate more and more different kinds of consumer devices around the Windows standard. "You don't want to be called incompatible," he said. "But on the other hand if you rely on the industry standards alone it won't be very compelling from an ease-of-use perspective, because the standards don't support enough integration to take away the customer's pain." He thinks HP will have to eventually move to systems that don't work well -- or at all -- with computers from Dell or Gateway. That could look more and more like the Apple model writ large.
I wrote an unflattering column in May entitled, "What is HP Today?" A big part of my point was that Dell and IBM both have clearer corporate identities. I think I overstated the case. In a subsequent conversation, Jeff Clarke, who runs HP operations, argued that Dell has only succeeded in a big way with products that require unique customer configurations, like PCs. Dell has targeted printers, in partnership with Lexmark, but Clarke says printers don't require configuration and thus aren't likely to be a big success for Dell. (And he says Dell's printer business has had no discernible impact on HP's market.) Carly elaborated further in my conversation with her yesterday: "Dell's a distribution company—a great distribution company, but that's what they are. The only way they can get the growth they need is to move as many things through that distribution chain as they can. But because they're not a technology company and they can't innovate, all they can do is follow."
The battle for PC leadership continues to seesaw between Dell and HP, but HP's global presence, its increasingly-wide range of consumer products, and its growing ability to innovate and integrate, suggest that that battle could be long, interesting, and hard-fought.
