Hewlett Packard Enterprise and Apple are very different companies this decade, having shifted their models from a strategic customer/innovation focus to one that’s more tactical — and tied far more closely to quarterly profit. They are hardly alone, and this speaks to why Michael Dell and Joe Tucci worked so hard to take their companies private, because this unfortunate trend is not tied to any one industry or any one country.
Both HPE and Apple increasingly are defined not by creative products but by complaining customers. Given their goals, their financial performance by most measures is worse than it was under the prior model, at least long term — though profitable spikes have allowed insider investors to realize nice returns.
Since I’ve been through this several times before with a variety of companies, I’ll share my thoughts on what’s going on and why.
As always, I’ll close with my product of the week, and I’m bringing back an old favorite: The Echo Dot, always the highest-value Echo, now sells for less than US$50.
The HPE changes became evident to me through my involvement in a long-term project interviewing IT managers who have switched vendors. A common theme has come up in the reports from HPE accounts post-split: HPE largely is not responsive to their problems; it fields relatively inexperienced support staff; and is a huge pain to work with.
This shouldn’t be a surprise:
- HPE has been laying off huge numbers of people. That tends to result in folks not wanting to take responsibility, because related problems might get them on a layoff list.
- HPE is being sued for discrimination because of a policy that replaces experienced older staff with inexperienced younger staff.
- HPE is massively siloed, which passes solution responsibility for projects that cross siloes to the customer.
Regardless of the competitor, HPE now is defined negatively, in large part, in areas critical to execution, and customers are upset with the outcome, understandably. However, many HPE accounts seem still to be locked into the firm.
That is likely for two reasons: 1) They don’t realize that other companies don’t engage in the same behavior — because they are tied to HPE they can’t see the difference in customer care between firms; and 2) When you are dedicated to one vendor, it is a real pain to switch.
I saw this play out right before IBM collapsed in the late 1980s and early 1990s. I’d reported similar issues to my management — only to have them laugh at me and point out that IBM sold air, so the customers had to deal with whatever IBM dished out.
I left shortly afterward, thinking they were idiots. They got fired shortly after that, and IBM had to undertake a massive change direction or cease to exist, and it is a very different company today. However — and this was before the Internet — about five years elapsed between the time the problematic behavior was covered up inside the company and the beginning of the huge mass of customers jumping ship. I expect that with HPE, we are talking months.
Apple’s shift started with Steve Jobs’ passing. Tim Cook moved from what was a heavily innovation- and customer-focused marketing strategy to one that was focused more tightly on top and bottom line growth. The last truly “magical” product was the iPad, and that magic, along with related sales, started going south shortly after Steve’s death.
The Apple Watch remains largely an expensive and relatively unpopular offering (compared to products like the iPod, iPad and iPhone), and the new iPhone currently is being defined by a screwy hiss and the lack of a headphone jack.
Sadly, this iPhone is arguably the best in market — thanks to the Samsung Galaxy Note7’s new feature of becoming a mini-weapon of minor destruction.
Customer complaints seem to define the products more than any messaging from Apple, and this is all due to a similar source — a focus on cost containment rather than customer excitement.
I saw this with Apple once before: In the 1990s, long after Steve Jobs was fired, Apple kept plugging away until Windows 95 launched, and it started to become clear the company was months away from going under. It took a very similar marketing and product approach to what Apple once had to cause Microsoft to flip so that customers saw it differently.
The Overriding Problem
Behind all of this is a bigger problem that goes beyond Apple and HPE: We have shifted corporate ownership form folks like you and me to large hedge funds that operate on a razor edge of legality — often drifting into insider trading) — and drive executive compensation to favor their needs over our needs as customers or investors.
These people don’t care if the company survives, or if customers or employees are happy. Their focus is on spiking the stock, up or down, in a fashion that they can anticipate in order to make profits. In effect, they are gaming the system to the detriment of pretty much everyone except the executives who, increasingly, work for them. We the consumers are getting screwed in the process.
Wells Fargo’s Scandal
You saw this at the heart of the Wells Fargo scandal. Incentives were created to create false records of success in order to make the firm look more successful than it was. The folks who got shot weren’t the ones who set up the system — they were poor saps who got tricked into playing by the rules they were given.
This eventually could end up killing Wells Fargo, but those really responsible took their profits, and most of them likely are long gone. This is the world we live in now — where the criminals run the companies. When scandals break, their unwitting minions get shot, while they simply move on to the next victim. I’m not just seeing this unfortunate behavior nationally but internationally, and its potential adverse impact on the market, jobs, customer satisfaction and the world economy is massive.
I continue to be concerned that we look at events like Wells Fargo’s fraud and act as if they are isolated. It’s kind of like looking at the Zika virus and assuming each patent is unique, and pretending it didn’t have the potential to become a pandemic. Oh wait…
Wrapping Up: So What Do You Do?
As an employee, you need to watch for this behavior in your management — and if you see it, look for a job elsewhere before you become a victim. Every time I’ve left a company in trouble, I’ve found I should have left earlier.
I’ve spoken to a ton of ex-HPE staffers who can’t believe they waited so long to leave, referring to their employment at the firm as the most painful time of their lives. As a customer, don’t lock in to any one vendor. I’d favor private firms over public at the moment, or until we solve the hedge fund ownership problem. That lets you more accurately see when your care is degrading, so you can respond accordingly.
As an Apple customer, I’m not yet suggesting you switch. Samsung showcases that the grass isn’t always greener on the other side. Still, you don’t have to buy every new product, and sometimes the product you have will be better for you — and certainly cheaper — than that brand new product.
This is ironic for me, because if I were an iPhone 6 owner, I would get the iPhone 7 — that waterproof feature alone is worth the price of admission.
Make your own choices, though, and realize that eventually — as it did in the 1990s — Apple likely will lose you as a customer. So, favor third-party apps over Apple’s, so you aren’t locked in and can move when it becomes more obvious that you need to.
In short, avoid lock-in like the plague, both in consumer and enterprise products. Things change, and you want to be able to take the best path — not the only path available to you — when that happens.
Amazon is well on the way to owning IoT for the consumer market, thanks largely to its Echo family of offerings. I was an early Echo adopter, and my favorite Echo is the Dot. It gives you speaker choice, and you can add a battery (you now can buy a nested battery for it).
Its hands-free voice features make it ideal for the pool or beach, and it is the least expensive way to get into the Echo line.
Well, it just got a ton cheaper, because Amazon has dropped the price of the second-generation Echo to $49.95. Oh, and the built-in speaker isn’t bad. I take mine and wirelessly connect it to a Bluetooth boombox, and it makes a great outdoor solution. I connect it to a Sonos bridge to allow it to control music inside my home.
Amazon has added considerable IoT functionality to the Echo, so you now can use your voice to control lights and other connected devices, and you increasingly can have conversations with it as it drifts to becoming more of a digital assistant.
At $49, the Echo Dot now makes sense for more rooms of your house, and it becomes a far more viable Christmas gift for your technology-challenged relatives.
I’ve always loved the Dot and bargains. Connect the two, and suddenly you have a great product of the week.