On the continuing search for new definitions of ?obscene,? HP division….Word is out today on the long-awaited Hewlett-Packard layoff plan: 14,500 jobs cut, or 10 percent of the workforce. My friend and colleague JP writes:

?This is one of those days when I think business really stinks…HP gives Carly millions in severance ? for doing a lousy job ? and then today cuts 14,500 jobs to try and fix the goddamn mess. 14,500 livelihoods!?

Indeed, this is another example of how the rank and file pays the price of management derelictions and blunders, while the guilty get off scot-free.

To place JP?s allusions in perspective, HP?s ex-CEO, Carly Fiorina, resigned in February after a few rather checkered years as the company?s boss. She left with a severance package of $21 million, including a bonus (!) of $7 million, and another $23.5 million in pension and other benefit payouts.

The Fiorina reign was a hard one for HP, although, to be fair, conditions weren?t all her fault. Her response, however, was fairly consistently underwhelming. It included the merger with Compaq ? combining one big PC company facing a vicious contraction in PC margins with another big PC company facing a vicious contraction in PC margins. Between July 1999, when she took over, and February 2005, when she left, the company?s stock price was cut roughly in half.

CEOs keep claiming that they deserve their big bucks because they?re on the firing line when things go south, but if part of the deal in getting fired is that they keep the big bucks, this argument begins to look a teensy bit threadbare.

For further perspective, here is a portion of what I wrote in my Los Angeles Times column (reg., alas, req, but isn’t it worth it?) upon Carly?s defenestration:

I was contemplating last week’s ouster of Carly Fiorina as chairman and chief executive of Hewlett-Packard Co., while my HP desktop personal computer booted up and my HP laptop recharged from the wall socket, and the following thought occurred to me: Why is HP still in the PC business?

This is not an idle question. The profit margin on HP’s personal computers is close to zero despite its ranking as No. 2 in sales, after Dell Inc. The main reason is that its PCs are, inside the box, virtually identical to everyone else’s. Consumers today choose a PC by price, the same way they pick a private-label cola. (I certainly did.)

The commoditization of computing has only picked up speed with the spread of broadband Internet connections because much more of what we do with computers is driven by the network, not by the resources inside the desktop box.


Fiorina was intent on building up (or rather, shoring up) HP’s personal computer business because she felt that consumers and businesses would be miserable unless each piece of their information technology network bore the same nameplate.

As modern strategies go, this one-stop shopping is very 1960s. Back then, every component of a technology system had to be the same brand because every individual provider designed their hardware and software as a closed system, incompatible with anyone else’s products.

But broadly speaking, that hasn’t been the case for at least two decades, ever since the integrated circuit and IBM Corp.’s PC brought standardization to computing. Huge corporate clients may still prefer to deal with a single vendor because they value consistent servicing, but most other enterprises and consumers are looking for price and performance, the nameplate be damned.

One would think that this lesson had become ingrained in HP’s DNA, for it inherited two companies that had been overrun by the trend. Digital Equipment Corp., which once dominated the minicomputer business, couldn’t adjust to the PC age and got acquired for its technology by Compaq Computer Corp. in 1998. Compaq merged with HP in 2002.

Fiorina boasted of HP’s superior innovation, even though that’s an empty claim in a technologically mature industry. “If you are a technology company, you must innovate,” she told my colleague Terrill Yue Jones last month, thus proving she had completed her transformation from master salesperson to smoke-blowing machine.

Fiorina’s big consumer idea was a hybrid computer/home-theater-in-a-box. But it looks like a showcase of everyone else’s innovation ? not HP’s. The operating system of the z545 Digital Entertainment Center is the Windows XP media center edition, a product of Microsoft Corp.; it uses a Pentium chip, a product of Intel Corp.; and its music file storage and retrieval platform is iTunes, a product of Apple.

Beyond those elements, the z545 bundles together a TiVo-style personal video recorder, a DVD/CD recorder and player, two TV tuners (“Record up to two TV channels simultaneously!”), two hard drives totaling 360 gigabytes in capacity and some other hardware.

Out of curiosity, I spent a few minutes on the Web to see what I’d pay for all these components separately, without the assistance of HP’s innovative brain trust. The bill came to a little more than $900. HP sells the thing for $1,899.99, which puts the implicit value of having one remote control to operate a “sleek, black brushed aluminum” housing that “blends with your home theater equipment” at $1,000.

Etc., etc.

The question facing HP today is still: What now?