Gather ’round, I have an informative story to tell you, one and all…
Once upon a time there was a great engineering kingdom whose palace was built upon a simple precept: if you want to sell great products, build them for yourself. The founders, princes named Bill and Dave from the shire of Stanford, codified this as their “next bench syndrome”, and it didn’t take long for them to expand beyond the confines of their cosy Palo Alto hut and into a real palace.
Many years passed and this company grew and grew, fueled by calculators, computers, and computer peripherals. It was a long and exciting journey from the first oscilloscopes that they’d built for an unknown businessman named Walt Disney…
All kingdoms and the world that they inhabit change as time passes, however, and this kingdom of Hewlett-Packard found that while it was still considered a wonderful engineering firm, it just couldn’t pull itself out of the dreaded not invented here syndrome, and kept shipping clunker products. From PCs with touchscreens when everyone wanted a mouse to Unix workstations with a networking protocol that refused to play nice with other vendors, things just didn’t look that great for the company for quite a few years.
Then one sunny spring morning some of the workers in the counting house noticed that a dull and uninspiring peripheral that stood firmly in the way of the mythical paperless office was producing veritable mountains of gold. Unlike computers and even outsource services, these HP printers had that magic quality that all wise men and women love to find: a recurring revenue stream. Whether their printers were three months or three years old, people kept buying toner cartridges and ink for them!
And so the kingdom got back on firm footing after all, until one memorable day when a terrible fight over the throne tore the kingdom asunder. The heirs to the throne were banished and the queen of a kingdom called Lucent ending up holding the royal scepter and leading the new kingdom of HP.
But Queen Fiorina didn’t really know how to lead the magical kingdom of Hewlett-Packard, and many of the knights and advisors left the kingdom that first year. She kept stumbling, missing royal tournaments, shying away from the knights of the round table, and pushing around the pawns on her royal chessboard, changing, restructuring, and reinventing her entire kingdom time and again. Throughout those five long years, some of her subjects sang the praises of the Queen, while others slipped away in the night to neighboring kingdoms, hoping to find their fortune.
Sometimes the royal accountants would smile and say “we’ve beat our numbers and the Gods will be pleased with us, your majesty”, but other times, they would shake their heads and retreat silently back into the monastery, saying nothing that could draw the ire of the Queen.
And so it came to pass that one day the Queen looked upon the printer division and said “It is good! It continues to rescue us!” and she wed it to the PC division, a division that had dim hopes for the future, and precious few suitors after the misguided adoption of an odd child named Compaq a few years earlier. “Let us let the printer division save our unprofitable personal computer division!” she exclaimed, and it was so. On that very day, Hewlett-Packard merged their profitable printer division with the clunker of their PC division, hoping beyond all hope that it could somehow stop the inevitable tide of commoditized computers that were tearing the kingdom apart.
Meanwhile, however, the powerful king of the kingdom to the East, known as IBM, sold off its unprofitable personal computers division in an ingenious arrangement to a Far Eastern palace, managing to maintain all of the benefits while finally staunching the hemorrhaging of their spreadsheets.
Time will tell which kingdom has the smarter strategy, but your humble narrator, for one, certainly wouldn’t bet my head on being able to exercise the last year of a multi-year service contract with an HP or Compaq branded personal computer…
And so, a great lesson was learned by all. And to all, a good night.