Bean Bits

Looks like Leo is back from his coffee break.

HP’s new CEO, Leo Apotheker, was MIA for a while, allegedly escaping a court appearance at the hands of Oracle.  Now that the nastiness of litigation has lapsed, Leo has reappeared in rumor mills that speculate on how he might possibly change HP more so that Mark Hurd or Carly Fiorina (though the changes wrought by that pair have Bill and Dave spinning faster than disc drives in their respective graves).  A Wall Street Journal report says that Leo, the former head of software shop SAP, wants to make software HP’s new focus.

To which one former HP tech guru said “Lord help us, more HP software! Arghhh.”

HP is not a software company.  Aside from Openview, which appears to be reverse mistake, HP is not only known as a hardware company, but also as a source of software incompetency.  Even HP engineers typically remove HP software from HP issued laptops because leaving it there causes more headaches that most techies can take.  If Leo wants HP to make a buck in the software biz, he needs to change the HP culture (again), buy software companies, turn the bit twiddling part of HP’s business over to his new subsidiaries, and manage a change of HP’s brand.

A brand which, in terms of software, is of the Edsel variety.

Shortly before Leo levitated back onto the radar screen, Starbucks decided to redesign their logo and remove any mention of coffee, their core product, or the Starbucks name.  Seattle branding big wigs decided that the Starbucks twin-tailed siren logo communicated the corporate image, as does Nike’s swoosh (and not oddly enough, both Nike and Starbucks shared a brand executive in their formative years).  The core product line is not changing, and is so well established that Starbucks Coffee feels they can land customers without actually putting the words “Starbucks” and “coffee” on a sign or cup sleeve.

Let’s hope so, otherwise the 1,467,923 Starbucks outlets I saw in Las Vegas casinos last weekend will be hurting.

Between HP and Starbucks, we see one aspect of brand management.  If a company is stable, strong and has a core differentiated product, then they have a brand.  They can then be more concise and creative in communicating the brand.  Nike spent years and a lot of money establishing a brand that buyers perceived to mean “authentic athletic performance” before making the swoosh the solo logo.  Starbucks did the same, making caffeine jitters their recognized brand essence before turning a two-tailed mermaid into their primary marker.

HP is a thin-margin hardware company seeking to become a fat-margin software company, which will require some rebranding.  Granted, Leo is likely to leverage HP’s IT tentacles for his software gambit, since that is where margins are best and HP has instant inroads with both hardware (servers, networking gear, storage) and services (EDS).  Since nobody in IT thinks of HP as a software vendor, HP will need to change their perception.

A good start would be getting HP software off laptops sold to IT administrators, which currently generates a lot of bad HP branding in the minds of corporate customers.

The marketing lesson herein is that the brand is what you actually deliver.  No amount of advertising, social networking or other marketing activities can change public perception of your product.  iPhones would have flopped if they had not delivered on both ease of use and alleged coolness.  HP software will flop if they don’t create the right core products well and correct their current negative brand.  If Leo doesn’t take all these factors into account, you may soon see him serving lattes at a Starbucks in Palo Alto.


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