10 years ago, HP began its descent as Apple began its ascent

[Crossposted at SpreadingScience]

by jurvetson

HP’s Decade-Long Departure
[Via HarvardBusiness.org]

HP’s sudden departure from a business model that has sustained the company since inception is symptomatic of the passing of an era. Yesterday HP announced that it would exit the PC and tablet computer business, focusing on higher-margin “strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets.” In other words, HP is fleeing upmarket, away from a core that it will abandon to device makers.

HP management conceded that the disruptive impact of the iPad forced their hand but that hand was already quite weak from a decade of over-serving the market. The last decade offered plenty of opportunities for incumbent PC companies to adjust to the realities of mobility. However only one computer maker made the transition.

Why is that?

Consider how HP and Apple faced the changes in the PC market almost exactly a decade ago.

•On September 3, 2001, HP announced that they would acquire Compaq.
•On October 23, 2001, Apple announced the iPod.

The rest, as they say, is history.

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In his classic 1996 paper, Increasing Returns and the New World of Business, – published the same year Apple bought NeXt and started its drive to success – Arthur discussed the difference between decreasing returns seen in 20th Century companies and the increasing returns seen for the newer companies. I’ll talk more about this paper later but here we have a perfect example of a company living by diminishing returns and one living by increasing returns.

He ends the paper with a series of  questions for managers. Think about how Apple answered these questions versus how HP answered them and you will get an idea of why Apple succeeded and HP failed based on where they were 10 years ago.

Do I understand the feedbacks in my market? Which ecologies am I in? Do I have the resources to play? What games are coming next?

HP failed at properly answering each of these questions, believing it was operating as a 20th Century company in a 21st century Market. HP never really presented a compelling case for why its technology was better than a competitor’s. They provided commodities for people to buy.

Apple created the iMac, an all-in-one computer like no others that provided integration of new technologies like no other –  it got rid of the floopy drive and added USB, something HP, or any other PC maker, would not do for years.

Apple created the iPod, an MP3 player like no others that provided integration of new technologies like no other – it created an ecosystem of a computer and Apple’s iTunes, something HP, or any other high tech company, have been able to recreate.

Apple created the iPhone, a smartphone like no others that provided integration of new technologies like no other – it created an ecosystem of a computer, Apple’s iTunes and the App store, something HP, or any other high tech company, have been able to recreate.

Apple created the iPad, a tablet like no others that provided integration of new technologies like no other – it created an ecosystem of a computer, Apple’s iTunes and the App store combined with a novel used design, something HP, or any other high tech company, have been able to recreate.

Apple took 5 years before the first real product of its strategy arrived. HP canned its ‘strategy’ after a year.

Apple works to provide the best experience for its customers and will take years to really get it right. Everyone else just seems to push out stuff and hope. Thus why HP is throwing in the towel and Samsung is seeing its products given away.

Microsoft and Google both look for hardware makers to create their own ecosystems of mobile devices and software.

See a pattern here. Apple deeply understood the feedbacks; it not only knew which ecology it was in, it went so far as to create new ones; it hoarded its resources until it had enough strength to play; and it has been on top of what is coming next, riding the bleeding edge of high tech as it focusses on what the market wants.

The rest of each industry – HP, Samsung, Google, Microsoft, HTC, etc. – have been reacting to Apple. They have not been driving their own vision of the future. They have failed to answer the critical questions.

They do not understand how much things have changed. The asteroid has his the planet but the dinosaurs do not realize yet that they are doomed.

Apple working on its third iteration of the tablet while competitors give theirs away

by leoncillo sabino

Apple nears trial production of high-res iPad 3 coming in early 2012
[Via AppleInsider]

Apple is aligning with its far eastern component suppliers and manufacturers for a trial production of a high-resolution, third-generation iPad ahead of a planned launch in 2012, as the electronic maker looks to continue to outpace would-be rivals in the high-stakes tablet space, according to the Wall Street Journal.

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Samsung’s tablet is now being used as a loss leader for HDTVs. Meanwhile Apple is getting ready to push even further with its third version while its competitors are4 having a hard time selling their copies of Apple’s first.

Not looking good for innovation outside of Apple.

So good they have to give it away

Best Buy to give away Galaxy Tabs as Apple seeks ban across all of EU
[Via AppleInsider]

Best Buy this weekend will kick-off an aggressive promo that offers a free Galaxy Tab 10.1 to buyers of certain HDTVs, possibly hinting that yet another iPad rival is in need of a stimulus to combat poor sales, assuming Samsung can keep it on the market.

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This is not really a good business plan – increase market penetration by giving the product away. Perhaps Samsung will be  retreating from the tablet market soon.

Animals are acknowledging that the world is warming

Rushing for Relief from Warming Climate
[Via AAAS News - RSS Feed]

Science: Species’ Ranges Are Shifting Faster Than Expected in Warming Climate

To beat the heat, many species have started moving up in elevation and away from the equator much faster than researchers had predicted, according to a new study in Science.

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I guess it is good news that the migrations are happening 2-3 times faster than scientists had expected. But they are not stampeding, moving about 10 miles oer decade.

I wonder if there will be a ring around the equator where little life exists? Nah but it will be interesting to see if the new data alters the modeling of these migrations.

Human crap killing coral

Bacteria From Human Feces is Behind Deadly Disease in Coral
[Via 80beats]

Elkhorn coral infected with white pox.

What’s the News: Over the past decade, diseases, pollution, and warming waters have put coral populations across the globe in a dramatic decline. In an extreme case, the population of elkhorn coral, considered one of the most important reef-building corals in the Caribbean, has decreased by 90–95 percent since 1980, partly due to a disease called white pox.

Now, scientists have traced this lethal disease back to humans. Human feces, which seep into the Florida Keys and the Caribbean from leaky septic tanks, transmit a white pox-causing bacterium to elkhorn coral, researchers report in the journal PLoS ONE. “It is the first time ever that a human disease has been shown to kill an invertebrate,” ecologist James Porter told Livescience. “This is unusual because we humans usually get disease from wildlife, and this is the other way around.”

What’s the Context:

Serratia marcescens is a bacterium found in the intestines of humans and many other animals. Resistant to many types of antibiotics, S. marcescens is known to cause respiratory problems and urinary tract infections in people. The bacteria can also infect coral—in 2002, Porter and his colleagues learned …

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Not very often you hear about a  bacteria from humans causing a disease in an invertebrate. It can also infect insects.