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Hewlett Packard woes

I am marveled at how incredibly blind to the consequences of actions CEOs can be. I know it's impossible to predict certain things (Qwickster's spin off backlash was to be expected but the size surprised me) but some things are really easy to see coming.

When Hewlett Packard decided to spin off it's PC business (see post here) and kill it's webOS tablet, it seems it somehow failed to realized that the PC business is synergistic with it's printer business. This strikes of such obviousness that even Homer Simpson would get it. When people buy a computer from HP they are more likely to buy a printer form HP than say Canon which makes excellent printers but not PCs. Then of course the retailers that sell HP computer are more likely to want to sell HP printers too. So with no HP PCs to sell would they give the same priority to HP printers? Of course not.

Now HP realizes this consequence. And are rethinking dropping the PC division. Honestly this feels like amateur hour at MBA cocktail bar. How could they not see that sometimes divisions in a company are there not to drive profit in that division but in a sister division? I mean really! Nobody paid attention to McDonald's?

McDonald's before being the established behemoth it is today, had a really interesting business model, I don't know where I got this but I heard this in college. McDonald's would buy multiple properties in an intersection where there was nothing. Then it would build a Mickey D's sell it to a franchise owner and just wait while the value of the land around it went up in value. Then they would sell it at a handsome profit. The actual burger shop was not generating the huge profits the land transactions were but you couldn't have one without the other.

But HP seemed to wanted to do just that. Get rid of its mildly profitable HP PC business but keep it's profitable Printer business intact. Yet one affects the other. It's kind of obvious. But I guess this is what happens when you tunnel vision into profits and don't see the big picture of the whole company.


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