Carly Fiorina Says HP Needs To Invest More To Catch Up

Former CEO of Hewlett-Packard Carly Fiorina believes that if Hewlett-Packard wants to be the number one computer vendor in the world, they should start by putting their money where their mouth is.

HP is racing to build a portfolio of tablets in its quest to shift resources from the declining PC market to the profitable tablet and smartphone market.  But they have a long way to go to catch up with the likes of Apple.  In fact, Apple is selling more computers than HP, if you include iPad sales.  Fiorina believes HP could do it, but they need to start investing.

“HP has been the number one computer vendor in the world, so there’s no reason they shouldn’t be able to do it, but time will tell,” Fiorina told me at the Harvey Nash Leadership Conference Wednesday.  “It all depends upon the choices they make now, but it will require ongoing, a very substantial investment in both innovation and marketing–things that prior to Meg Whitman’s tenure were slashed too much.”

Fiorina is, of course, referring to the days of Mark Hurd and Leo Apotheker.  Hurd, who was named CEO of HP in 2005 after Carly Fiorina was forced to resign, had a reputation of aggressive cost-cutting.  Hurd laid off ten percent of the workforce shortly after becoming CEO.  He also reduced the IT department by more than half and cut the number of software applications that HP used from 6,000 to 1,500.  Apotheker, who was CEO of HP for less than a year after Mark Hurd’s resignation, didn’t do much to help the company develop.  During his tenure, the company lost more than $30 billion in market capitalization after a series of strategic missteps, leading to his resignation.

The cuts may have been too much for HP, which has been slow to compete in the successful mobile market of smartphones and tablets.  Current HP CEO Meg Whitman is in the midst of slashing jobs as part of a $3 billion restructuring plan.  However, she is trying manage the consumer’s rapid transition to mobile by introducing a slew of Windows and Android-based tablets to the market, including the HP Slate 7.

But while HP is racing to catch up to the rest of the market, the declining PC market proved to be too much for Dell.  Dell recently announced its plans to go private, and Fiorina believes it was a smart move.

“I actually think Dell’s move to go private makes a lot of sense because it gives the company time to regroup– to reengineer away from the level of expectation of the public market,” Fiorina said.  “I think it creates some interesting new possibilities in the PC space, I mean maturing industries need to consolidate.  All of a sudden you have this private entity that maybe can attract some consolidation, so I think it was a smart move.”

The PC market has been consolidating for years, so it will be interesting to see who is left that would even be interested in teaming up with Dell.  But Fiorina thinks Dell needs to make a decision about its future pretty quickly.  Is it going to be a device company like Apple or a services company like IBM?

“They either have to get less into the device market or they have to follow the trends in the device market,” Fiorina said.  “They have to go one way or another.”

It may be too late for Dell, but is it too late for HP?  As Fiorina said, “time will tell.”  I think HP may be too far behind the 8-ball to catch up.  Who knows?  Maybe they will be the next one to go private.