In Las Vegas this week two large vendors were dueling it out, as HP Discover and IBM Edge fought for attention and relevance.
At one point, these two companies looked a lot like each other. But over time HP has been pummeled by a series of CEOs, while IBM has been trimmed and refined after a successful turnaround a decade ago. Now it feels like the companies are vastly different, and the advantages and disadvantages of each have become much more pronounced.
You can almost start with the names of the events to get a sense for where these two companies now are. Edge implies a competitive edge that IBM is promising to supply their customers, while Discover is more of a “look at us we are different than what you remember us to be” kind of event.
This, more than anything else, likely points to the very different place both companies find themselves. IBM is much more assured, having had a relatively consistent face over the last decade with two sequential internal CEO hires executing a very consistent strategy. On the other hand, HP has had vastly different CEOs who found it impossible to retain their jobs. And its external image varied as much as the CEOs did.
IBM went through a traditional turnaround effort. While at the start it was as diversified, maybe even more so, than HP is, currently IBM is vastly more focused.
The downside to this could be seen in the sign-up areas of Edge where ThinkPads were evident. These notebooks were stripped of Lenovo’s name, the company that currently makes the product, showcasing that IBM doesn’t touch the user anymore. In the history of IBM, this is very different.
HP does touch the user, but has been unsuccessful with current high-volume smartphone and tablet products, which offsets this potential advantage significantly. HP also has printers and related supplies, which provide a massive amount of income. But this industry is declining and has been less and less interesting to IT buyers. Still, HP dominates this industry, making an exit very difficult.
This means that HP has to spread its resources across a vastly broader base of products. And that makes it far more difficult for them to spend adequately to market or promote any one product. The declining revenues of both HP's printer and PC divisions provide a distraction that IBM doesn’t share, but they also provide future potential upsides should the company eventually embrace 3D printing or find a success in next generation mobile clients. However, neither direction is yet evident.
Right now, IBM’s focus trumps HP’s breadth—but that could change very quickly if HP can execute in one of the emerging areas. Still, with this massive breadth, the likelihood that HP can execute is substantially more remote than the likelihood of IBM’s continued success.
One area where IBM appears to have a massive advantage is in R&D. They can talk about shipping products and marketing efforts like Watson and Smarter Computing because they have maintained a massive R&D budget. At Edge they were able to demonstrate molecular storage, and they have efforts for advanced battery technology (lithium air) and neural networking that appear to be far more advanced than anyone else’s.
HP, to counter, has Project Moonshot, which could revolutionize servers, and Memristor, which could make both processors and flash memory obsolete. Neither appears as advanced as IBM’s efforts, but they appear closer to revenue and at least as strategic. HP had efforts in smartwatches, which were killed much like IBM’s market-leading efforts in smartphones were killed during IBM’s turnaround. This limits their ability to ride a more near-term wave.
While HP arguably has more irons in the fire from 3D printers to smartphones and tablets, IBM is far more focused. And IBM's CEO is far more secure because IBM isn’t currently undergoing a turnaround.
In a way, HP actually has the curse of excess: they have so many opportunities it is likely their inability to focus on a small enough number to ensure success will offset their potential. In the end, I believe the combination of focus and a massively higher sustained R&D spend given IBM the edge in this battle. Plus, IBM starts with a more mature and capable software and services capability.
One of the ironies of this battle is that HP is run by a CEO who was a politician and should understand that perception can trump reality. Yet IBM is doing a far better job of assuring IBM’s perception than HP is. I believe neither company is doing as good a job as either Steve Jobs or Louis Gerstner did, however. And with this simple change, it's possible HP could dramatically close the gap or IBM could move out of reach.
As things are, IBM clearly has the Edge that HP is trying to Discover.