Analyst Rob Enderle’s HP Apple CEO article deconstructed

Mar 26, 2012
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While it's not our job to fight stupid on the internet, in this case, SlashGear felt the need to step in. Rob Enderle is presently a columnist for TechNewsWorld and owns Enderle Group, a tech consultancy for personal gadgets and trends. This week he wrote an article entitled "Meg Whitman vs. Tim Cook by the Numbers" which we'll be dissecting here piece by piece.

Rob Enderle's article decidedly touts the good deeds of HP's relatively new CEO Meg Whitman while criticizing the CEO doings of the also relatively new to the post Tim Cook of Apple. What follows is a set of fact-checks as well as common sense-checks on the article as it appears today on 3/26/2012 4PM CST. The article in question can be found at the following address: http://www.technewsworld.com/edpick/74694.html

Enderle has a history of predicting that Apple will do badly and that Apple's competitors are doing extremely well in contrast. In the case we're looking at today, it's important to note that, as MacDailyNews notes, Rob's Enderle Group mentions the following:

"There may also be organizations where we have a personal, vested interest. These relationships will be disclosed directly in any written or verbal communications where the relationship becomes material. For example, if an employee sits on the board of an organization that is being discussed or written about, it will be disclosed.” - Enderle Group

This rule is not followed for the TechNewsWorld article as at this time it does not have any note about Ron Enderle's current position with HP as Advisory Council. This is a clear conflict of interests for readers who are unaware of Enderle's position with HP as he writes as a 3rd party spectator.

The CEO article we're speaking about in this post begins with:

"While Apple is outperforming HP, Whitman is clearly a bigger asset to HP than Cook is to Apple. She is clearly improving the mess she started with, while Cook appears to still be doing the job he did at Apple while Jobs was alive and leaving Jobs' unique duties unstaffed. Momentum will only carry Apple so far. If people don't get a premium experience, the lines to buy their products will get ever shorter."

Meg Whitman was named CEO and President of HP in late September, 2011 after the August drop of webOS hardware, 20% share slide, and "dysfunctional mess" during the hire of CEO Apotheker. Since then HP has pushed their Printers into PCs, former Palm CEO Jon Rubinstein was let go, and profit has fallen 44% in their first fiscal quarter (reported this February) year-over-year.

Mac shipments meanwhile rose 20.7% year-over-year in the 4th quarter of 2011 while HP's share in the same market fell 26.1% year-over-year. Cook presided over the iPhone 4S launch which sold out stock in one day, including 1 million pre-orders, and helped set sales records for carriers such as AT&T in Q4. The 3rd generation 2012 iPad was also launched under Tim Cook, this device also setting activation records and destroying previous records with 3 million units sold over its first weekend of sales.

"Last week was an interesting week. Apple (Nasdaq: AAPL) announced what appears to be a penis iron in the new iPad, and folks are burning through their monthly 4G data plans in a few hours. Tim's having his first Antennagate moment, and Steve Jobs he isn't."

The iPad 3rd Gen has been shown to be extremely similar to comparable tablets in heat tests and 4G LTE data limits are exactly the same as they were before the new iPad was released.

"On the other hand, Meg Whitman announced her first major restructuring since taking over HP (NYSE: HPQ), and on paper it not only looks impressive, but also is reminiscent of what Carly Fiorina attempted to do in a lot of ways. Fiorina was considered a strong visionary -- she just wasn't good with people and couldn't execute. Whitman appears to have Fiorina's vision and can execute, which bodes well for HP."

The major restructuring referred to must be the merging of HP's Printer and PC groups, the PC group also known as PSG Personal Systems Group, the printer division also known as IPG Imaging and Printing Group. As Rue Liu notes, "The products between the two groups also correlate and are sold to the same consumers and businesses, which makes more sense in selling them together." Carly Fiorina was CEO of HP from mid-1999 until early-2005, the stock price on 12/31/1998 for HP (according to HP) was $26.66 with a volume of 3,859,833 units and split adjustment factor of 2.5628:1, while the stock price (again according to HP) on 12/31/04 was $20.97 with a volume of 5,418,300 and split adjustment factor of 1:1. Fiorina oversaw the merger of HP with their then-rival Compaq.

"Ironically, the stock market continues to reward Apple and punish HP, which suggests the market remains consistently out of step with reality.

I'll talk go deeper into that and close with my product of the week: another book on Apple by Carmine Gallo. The Apple Experience reveals the secrets of building insanely great customer loyalty. You might want to read this book fast. The way Cook is going, that fierce loyalty could soon become history."

HP's current stock (March 26, 2012) sits at $23.89 with a volume of 23,852,849 while Apple (same date) sits at $606.98 with a volume of 21,261,536.

"Both CEOs are new to their roles, and their companies are in vastly different places. Steve Jobs left Apple at the top of its game but also pretty solidly connected to Steve, who played three critical roles in the company. He balanced the different interests (engineering, design, finance); he was the super user who assured no product went out that wasn't acceptable to customers; and he was the primary pitch man.

Meg Whitman stepped into an HP mess as Mark Hurd had so aggressively cut the company there was little more than a shell left in some places. In addition, there was an internal top executive (Todd Bradley) who was actively and publicly lobbying for her job, and Leo Apotheker, the interim CEO, had just completed making several catastrophic mistakes, killing off (granted, he may have been set up) the US$1.2 billion Palm acquisition and possibly overpaying massively for several additional acquisitions."

See above links re: HP switch to Whitman and Palm dealings.

"While Cook should have been able to hit the ground running, his position at Apple was to do the things Steve didn't want to do and to never be a threat to Steve, which means he likely is everything Steve isn't -- yet he is trying to fit into a spot custom designed for Steve. Talk about your round peg in a square hole. Whitman jumped into a train wreck in progress and immediately had to move to triage in order to stabilize the patient.

This isn't to say both roles aren't difficult. Tim may have been set up to fail even though the company was operating at a very high level of competence, while Whitman had to figure out who to trust and where the bodies were buried before she could even move."

Cook had been CEO of Apple several times while Steve Jobs took leaves of absence in 2004, 2009, and early 2011. See our post Apple is Safe with Tim Cook to see the full line of Tim Cook's accolades and how he was called "custom fit" for the CEO position years before Steve Jobs considered moving out of that same role. Also see Tim Cook's response to a very similar line of questioning back in February of this year.

"So what we saw last week from Whitman was by the numbers. Like Carly, she has consolidated HP's voice under people she can trust so she can craft a consistent impression of the company. This takes most marketing and communications responsibilities to the corporate level and should result in a vastly more consistent public image for the company. …

Now those two units are merged under Bradley's leadership. This new organization will be far easier to spin out, should Whitman need to eliminate all of these problems in one pass. And the complexity of the new entity should keep Bradley out of her hair for the foreseeable future, regardless. Elegantly played."

Again note that Rob Enderle is currently a member of HP's Advisory Council.

Cook has been increasingly compared to Jobs and found wanting. His last two product launches weren't very exciting, and the new iPad appears to have serious problems. People have been writing to tell me they are returning theirs.

The iPad 3rd Gen is the quickest selling iPad thus far with 3 million units sold in its first weekend (see link above), while the iPhone 4S sold over 4 million in its first three days, this number more than any other phone in history and more than twice as much as the iPhone 4 sold in its first three days.

"The problems range from poor WiFi reception and WAN data plans that run through their monthly allocation in hours, to the very high temperature that the iPad operates at, which Consumer Reports says could cause burns if held for a long period -- like, say, if a child were playing games. Let's just say when I get an ad about a product that will make me longer and harder I'm not expecting to get an iron, yet this Apple appears to be designed to take the creases out of my private part.

In short, for a device that typically is held for hours to consume online content, it sucks at being wireless -- and it could burn you if used that way. Apple's initial, and poorly thought through, response was "it is within spec," which means that all of these problems were designed into the iPad. Maybe they are features intended to make us use the device less and get a life, but I doubt that was the intent."

The Consumer Reports study noted here did not say that the iPad could cause burns. Consumer Reports stated instead that "During our tests, I held the new iPad in my hands. When it was at its hottest, it felt very warm but not especially uncomfortable if held for a brief period."

"But back to Steve Jobs' three critical roles. One was as a proxy for the consumer, and this new iPad is heavier and has critical issues for users (connectivity and heat), which suggests someone didn't fulfill Jobs' quality-assurance role. Apple can certainly ride this out, but it does showcase that this one aspect of Jobs' execution remains missing.

We already know Cook can't present like Steve Jobs, and it is as yet unclear whether the proper balance is being maintained between design, engineering and finance. With this device alone, you could argue it is not a good balance, based on these problems (best to wait for the newer iPad)."

The 2012 iPad is on track to sell 12 million units by the end of March with no lack in supply in sight. The remainder of Enderle's article includes notes on how because Apple is currently the most successful tech company in the world, "most of its roads lead down" and that "given HP's position, most roads lead up."

Let us know what you think.


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