HP’s Meg Whitman: Microsoft turning from partner to rival

HPChromebook11_StackedHewlett-Packard CEO Meg Whitman delivered an upbeat assessment of the company’s prospects during an address to investors and analysts this morning, saying she has “real confidence that we’re headed in the right direction and we will turn this thing around.”

However, Whitman also said she sees two of the company’s partners, Microsoft and Intel, becoming “outright competitors” of HP as they move onto its turf.

“We are seeing profound changes in the competitive landscape,” she said, according to an AllThingsD live blog from the event. “Our competitors are expanding across the IT stack. Current partners like Intel and Microsoft are turning from partners to outright competitors.”

In a tangible example of this change, HP has been getting serious about Chromebooks, just yesterday unveiling the new Chromebook 11 (at right) running the Google operating system and selling for $279.

It’s the latest example of how Microsoft’s shift into computer hardware can feel to its longtime partners like a case of stepping on their toes. Microsoft is walking a fine line with its Surface tablets, as it will be with its Lumia phones as a result of the Nokia Devices & Services acquisition.

Ideally, the move would provide an example to other hardware makers and set a standard for Windows devices. But there’s also the risk of alienating and competing with those partners instead. It looks like that’s happening with HP, and it’s all the more notable that Whitman is saying it publicly.

  • teralgoe

    Typical looser attitude, blame others for your own errors.

    HP as a company have had the time, the resources, the knowledge to create great products, but ultimately they go for the bottom line, profits.
    Then, instead to create high quality products they squeeze profit from the cheapest product you can market, that watered down the brand equity to the point that when you think HP your mental picture is a cheap printer with overpriced ink cartridges.
    Now the once proud tech company have their logo slapped in the cheapest tablets and chromebooks. If they think that can revert their fate with the marginal profit of $180 tablet or $300 chromebook, good luck.
    They could become a major player in smartphone market with webOs, but they don’t have the balls to go ahead, I only can imagine, now that blackberry is almost dead, what they could have been achieved.

    • Mark Hayden

      it is that bottom-line that actually make HP stick with MSFT for so long actually. They were so worried about angering MSFT that they had this hyper focus on commodity MSFT powered PCs and neglected the emerging mobile computing trend. They tried half heartedly to get into it with purchase of Palm but then just dropped the ball–giving up on WebOS abruptly and prematurely, then dragging their feet in releasing and Android product. This in large part because they were amongst the coziest of MSFT partners.

      But I don’t think WebOS would’ve been the most effective choice. If they moved decisively to Android much earlier they would’ve seen more success. The best of WebOS could’ve been contributed to Android to differentiate from competition, yet offer compatibility.

      • teralgoe

        The iteration of no less of 3 CEO’s in less than two years have played a major role I guess. With no clear direction they stick with the only revenue they have at the time.
        WebOs, was years ahead of android at the moment of launch, in some areas was better than iOs, with some faith it could thrive, in that time doesn’t exist yet winphone 8 the only major competitor was BB, with the BB debacle webOs could be a solid third platform.
        If only….

  • Guest

    HP started embracing non-MS platforms for PCs and phones before MS ever decided to offer Surface. I guess in Meg’s view they were meant to just let that happen? But yeah, pretty concerning to have a major partner’s CEO making public comments like that. Don’t think it helps either company or their shared customers.

  • Guest

    So OEM partners didn’t back netbooks, which were originally Linux-based? Or promote desktop Linux? Some didn’t work with Google to develop the first Chromebooks? HP didn’t buy WebOS and threaten to make that their future facing OS? And all this before MS launched Surface?

    Good to know.

    • Mark Hayden

      Well all of that happened when Microsoft was doing nothing to help the OEM partners. It was MSFT’s fault Netbooks debuted with Linux–when they came out the over-inflated Vista was too bloated and expensive to meet the requirements and MSFT was trying to block netbook vendors from installing XP by default on any machine. It was only when Vista launch catastrophically failed and people were downgrading left and right on normal PCs and netbooks were starting to get noticed that MSFT made concessions by extending XP support and allowing LOW END ONLY (ie. small displays, limited hard drive and limited mamory ONLY) have XP on them by default.

      HP didn’t buy WebOS to be “future facing OS”. They bought Palm to get into the NON-PC market, because the mainline Windows kernel did not support mobile architectures (ARM, notably), and the Windows Mobile CE kernel based OS was already a proven market failure. At that point Android wasn’t entrenched as the market leading platform so they had a couple options–but the bet on the wrong horse it seems.

      Basically MSFT and the OEM partners can both be accused of alienating each other: MSFT’s products have had been very mediocre for a long time, but as the dominant force on the desktop OEMs settled, but when new markets in mobile computing emerged where MSFT was not dominant OEMs had nothing from MSFT to make their devices saleable, so they turned to Android or tried proprietary alternatives.

      Conversely OEMs were also comfortable in their mediocrity. Now that MSFT finally has something more elegant and refined to offer the OEMs had nothing to put it on to match. Thus, MSFT decided to light a fire under their butts and show them what do do.

      Ultimately both MSFT and some of its traditional OEM partners have been trying to emulate apple, and dictate terms of design on both hardware and software, but this causes the relationship to break down. MSFT gets conflicting demands from OEMs, and OEMs do not want MSFT to dictate their designs because it removes differentiation (if all Windows tablets must look mostly like a Surface 2, then what is the point of buying a Dell, HP, Lenovo or Acer tablet–how do they stand out?).

      That breakdown means Windows will fail to ever achieve leading market share in next gen mobile computing. The market will be led by Andriod and other open, interoperable platforms in the future, because hardware builders don’t have to build an OS from scratch, and apps will be compatible between vendors. Yes MSFT might make something fantastic, but if it goes the Apple route it will be destined to have apple-like market shares (ie. 20% or less, which is where all apple products end up in the end–with iPhone falling below 20% share this year and iPad around 30% of tablet sales this year and continuing to fall).

      “Betamax” might be easier on the eyes, but “VHS” is what sells. MSFT is forgetting that, Android recognises this.

  • eibon666

    What HP, Acer & Friends seem to forget, is that they did this first to Microsoft by using Android for tablets and making Chromebooks. In addition, HP used their own WebOS as a tablet OS instead of Windows. What they’re seeing now is that MS has a real attention to detail with the Surface products, and that they’re (now) very good. Gizmodo said: “We’ve been hands on with the Surface 2 and the Surface 2 Pro, and they’re amazing.” http://www.gizmodo.com.au/2013/10/surface-2-australian-hands-on-the-people-spoke-and-microsoft-heard-them/

    This is what worries HP… MS beat HP’s product quality on their first try. Stop whining and make good products without copying spple *cough* HP Envy *cough*.

  • William Sanchez

    If it wasn’t for Microsoft Surface (2 and 2 Pro), there would hardly be nice options for tablets! There are some, and the Surface’s also don’t meet all user’s needs (a Surface mini would be a nice addition to the portfolio), but since last year up until now, you have not heard of a Windows tablet taking the market by storm.
    The Surface Pro from last year, very popular. RT was not, and I think that was mostly because MS did not get the message as to how the full potential and how it could be used, i.e. marketing was awful! The other reason is that the general mind share about the Windows ecosystem is that it lacks “apps, apps apps” (because MS doesn’t have 1,000 flashlight apps like iOS and Android – exaggeration, but you get the point)
    But Surface now has > 100,000 apps. I have everything that I need, and more, except for a Shutterfly app. Otherwise I have News: CNN, NBC, Weave. I have social: Twitter, Social NV (for facebook), MetroTube (for youtube) and Foursquare. I have Xbox games and Music. I have a Fotor and PhotoFunia for picture editing. I have: Skype, food apps, government apps, a calendar, a mail app, a people app to help me manage contacts, and a full-fledged Internet browser where I can go to Facebook to get the FULL facebook experience without the compromises that apps, many times, have to make. I can say the same about a Pandora app, and Spotify app (If those companies don’t want to make one, fine, I’ll access the full website). So apps, not a problem for me, and the Store does keep increasing.
    (btw, all the apps I mentioned above…freeee! :)
    What HP, Dell, and other OEMs need is to make a Surface-like effort: make a premium piece of hardware at a low price point. I see a lot of people on comment boards for Surface articles saying they are jumping ship from the iPad and back onto Windows. There’s definitely a market, but not enough quality products.
    Your turn, HP.

    • William Sanchez

      moral: don’t blame Microsoft for doing something for its consumers (of Windows) that its OEM “partners” should have been doing
      Microsoft is making great hardware, great software (and great apps thanks to the army of developers!), providing great services, and packaging it together. The consumers win here, and so does MS because of their great Surface products.
      Again, your turn, Megan

  • http://www.facebook.com/people/Robert-Roeder/1278288580 Robert Roeder

    Over the last few years, well maybe longer, HP has transformed Hewlett-Packard, to High Price, not to just HyPe. The downfall occurred during the type of the purchase of ComPac computers. I have been purchasing less and less HP products. The quality is no longer there.

  • Andrew

    The only reason why MS got into tablet business is that after more than 10 years of trying with various hardware partners to release a decent tablet, they all failed in face of an iPad. And kept on failing (HP Slate anyone?) and failing and failing again. Was it so hard to come up with something simple and beautiful as an iPad? Was it really that impossibly hard to do, HP? You’re slow bureaucratic losers, and this is the price you will pay!

    And I predict that Chromebooks will be even bigger disaster than Windows 8.