An Open Letter to HP: Don't Dump Your PC Business

By Daniel de Grandpre, dealnews CEO

Last Thursday, HP released a statement that announced it was discontinuing webOS devices, including the TouchPad and webOS phones. In that same document, the brand declared that it's also "exploring strategic alternatives for [the] Personal Systems Group," which many speculate means that the tech giant is considering ditching its PC business all together.

This prompted the dealnews CEO, Daniel de Grandpre, to write an open letter to HP, advising the brand against this potential development:

A Plea for HP

Dear HP: Word on the street is, you're thinking of dumping your PC business.

HP, please read this. Read this now.

Look, you and I have had a long, long relationship. I'm familiar with your victories — I replaced my Macs' LaserWriter with a LaserJet in the '80s. I'm familiar with your failures, especially on M&A — I once had a Compaq desktop, connected to a DEC CRT, syncing my PalmPilot. More recently, of course, I've bought your Pavilion PCs, and I'm on my umpteenth Color LaserJet. You and I have known each other for a long, long time.

You're potentially about to make the biggest mistake in your 72-year-old life. Right now, you're stuck selling PCs — a commodity product — at commodity prices. The way you run your business, your PCs should be traded on an exchange along with pork bellies and concentrated orange juice. No wonder you want to exit the PC business while there's still some runway ahead of you.

But you're missing something big. Like, huge. HP, you've got the world's best tech brand. Yes, your brand is potentially even more valuable than Apple. (Bear with me on this.) And yet you've wasted your brand by playing the PC game the same way that everyone else has: driving prices, and thus profits, into the ground. That's for companies like ASUS. That's not for HP.

People criticize Apple for selling a lifestyle instead of a product, saying that its products are more expensive, and people pay extra because they want to look cool. I say, exactly. Apple stands out in a commodity market. Apple's not-so-secret asset is that it's an aspirational brand. You're cool if you use Apple.

Here's your secret asset: HP is the brand for smart people.

When I think of HP, I think of a bunch of eggheads working in a lab in white coats. A bunch of nerdy guys who have screwdrivers in their pocket protectors, standing next to nerdettes with horn-rimmed glasses and their hair up, all sitting around an oscilloscope and inventing ways to improve the PC. They're smart, dammit. They're fracking brilliant.

Being perceived as smart is way more important than being perceived as cool. Buy Apple, and you're hip. You're a hipster who just got his hipster degree. But you can tell people that when they buy an HP, they're intelligent. You just graduated from MIT with a minor in Harvard. Smart is the real cool.

Work on your marketing. Make ads that tell people that if they buy an HP, they're buying a product that comes from the same people who founded Silicon Valley and invented laser printers, pocket calculators, and WYSIWYG. They're buying the highest quality PC available on the market, a PC filled with hardware and software that makes them smarter, with a design that makes them smarter. You have all the patents, all the dependability, and all the innovators under your employ, and their mission — what keeps them up at night — is to make the consumer smarter when he buys an HP PC. Buy an HP, and you're buying the future.

Go heavy on industrial design; make your PCs look like they can solve global warming. A modern day WOPR. Make your cases transparent. Heck, maybe you should put the circuit boards on the outside. Partner with brands that have nerd cred, like LEGO and LucasArts, and smart luxury brands, like TAG and TUMI. Change your pitch. You are the Mercedes Benz of PCs, and you need to market your legacy and your position as the leader for luxury Windows PCs.

Hey, it's hard to be a leader in a highly competitive market. I know this firsthand. At dealnews, there's a lot of competition from other deal aggregators. We've succeeded by having a service that stands out on one core feature: quality. Our readers choose us because of the quality of the experience — price-checking, reliability, readability, and the ethics and high standards that come from our editorial guarantee. And if our brand can stand out, yours can too. Trust me on this.

It's ridiculous that Apple is the only luxury brand of PCs, but you're letting that happen by first chasing the bottom on PC pricing and then conceding defeat. People want a high-end brand of Windows-based PCs. They want to buy-in to something greater. You can be that brand, and run it with Apple's profit margins. Before you know it, the trolls will be saying how people should buy a competitor's PC because it's just like yours but costs less. Awesome.

Apple positions its brand for the beautiful people. HP should position its PC brand for the brainiacs. Apple is for artists. HP is for people who buy art. You can stake out this position and become one of only two luxury brands in the market, by raising prices, developing savvy marketing, ramping up quality and bundling, and actually innovating instead of chasing the $200 price point. Yes, you'll see sales plummet. But profits will skyrocket. Why own an unprofitable 20% of the market when you can own 20% of the market's profits?

It's up to you. Please think about it before you waste all of your brand's consumer goodwill and become an IBM wannabe that also sells inkjet cartridges.

So, please, HP, don't give up on the PC business.

Top photo credit: Omarukai via Flickr

DealNews may be compensated by companies mentioned in this article. Please note that, although prices sometimes fluctuate or expire unexpectedly, all products and deals mentioned in this feature were available at the lowest total price we could find at the time of publication (unless otherwise specified).


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HP desktop - Overheats, problem harddrive, problem video card.  Bench repaired ( mailed in ) after multiple calls to the call center for help.  Returned with video card still bad but hard drive replaced.  Finally used that SECRET corporate resolution line.  Machine still overheated so I rarely use it.  Crashes too.

Brother bought a laptop and the video toasts.  It reads exactly like that recall on a failure on a bunch of other laptop video.  Guess what?  His model not recalled but same problem.

HP lost its quality and drive.  Yes, unfortunately a stock owner.  Need to get out too.
HP makes the worst Computers! Dell is the best for non MAC affordability!
HPQ has cheapened itself greatly.  Their products are undistinguished, and the only brains at the company are trying to figure out how to make ink pricier than silver (silver = $35/oz, ink = $40 for name brand ink).  The "beautiful people" want new and shiny - Apple, as you said.  The real brainiacs are buying Thinkpads.  HP is on a death spiral - they bought the wrong consulting company, the wrong PC company, and they should have consulted DealNews when they were shopping for software companies.  Leo, name your next project "project Death Spiral"...
HP's made their "fatal" error in the PC arena when they bought Compaq and started making PCs to Compaq's standards: cheap, undistinguished, cheap, crappy, cheap ....  But getting out of the PC biz will continue HP's death spiral.
I couldn't disagree more.  HP lost that battle 15 years ago when they turned over the calculator market to TI (I still have my HP 48SX from 20 years ago and my HP14).

I MIGHT consider purchasing an HP computer under the descriptions provided in this article, but I don't think it can be done.  I can build a computer myself that's 5-6 times as powerful for half the cost of any builder right now (HP, Dell, Gateway, etc).  Unless a major brand computer company starts building machines that are actually optimized for powerful computing (non-integrated video, high speed HDDs, SSDs, remove the bloatware, appropriate memory and CPUs), then they will never be able to do what a halfway smart person can do.  That is, build a computer optimized for what they do.

I don't want a configuration system that asks me how much HDD space I want.  I want to put in the fastest drives.  I want preconfigured SSDs with OS, browser, and Open Office, while data rests on the HDD. 

Like I said, I can get all I need, including a new high end monitor (not the random screens that are packaged with PCs from someone like HP), oversized power supply, massive cooling, all for less than $1300.  No manufacturer can come close to that number for even half the performance, even now, much less with the quality and options that it would take to get to that level.

HP has dug their own grave.  Let them lie in it.
Spot on.  Anyone can (and actually seems to) make PCs cheaper.  We've seen the results of cheap (just think of all the cheap crappy capacitors Dell bought that resulted in dead PCs and data projectors).  HP has always been a name associated with top quality.  In the electronic testing business, HP was THE brand every engineer and tech wanted in their lab or on their bench.  None better.  Period.  There was certainly cheaper gear available, but no one who staked their reputation on their tools wanted any part of them.  HP performed flawlessly and lasted forever.  They can take their PCs to that level.   I don't care what field you're in - if you bet your business on your tools, you buy the best.  (why do you think Snap-On tools are the choice of car mechanics everywhere?  They are the most expensive, but they never let you down).  No doubt HP needs to be profitable, but they don't have to own the market.  They can focus on the quality that intelligent users want to buy. 
LOL. "You just graduated from MIT with a minor in Harvard." Although I have a HP desktop, I have to admit that the largest proportion of my fellow MIT students use Mac. Very few people use HP. The schools computer cluster only use Dell.  I bought a HP desktop simply because it was cheaper. 
Also, I think ASUS is much more capable of designing products of great quality and innovation. Eg. Transformer is way better than HP touch pad, even the latter came several month later. 
I own a HP Laptop. I was always skeptical about buying one since the price was too high but after having trouble with my Lenovo machine, I returned it for a HP which runs fine. I'm mentioning this because it is from the Compaq line that HP salvaged from a company that did not know how to make a good machine. Lenovo is in that spot right now with the IBM equipment but HP knew how to re-engineered the computer inventory that they purchased and made many a fine unit. HP most definitely knows how to make and or improve upon computer technology. After reading this and other news about the forthcoming PC abortion at HP, I thought that something had gone wrong in the computer business due to the economy but I was then told that there was a new CEO at HP.
The man may be an Idiot for doing what he has done and what he is going to do since his background is not in the computers or the computer manufacturing business. the Stockholders should step in and stop him, evaluate the situation and then proceed as necessary for If the stockholders do not stop him he'll ruin a very good computer manufacturing name that has been around for consumers for years.
I agree - dont leave us HP
Nice try, Daniel, but you're about a decade late. The HP brand is toast. It began smelling bad with Carly Superstar, got even more fowl with Mark Turd, and now Leo Knownothing is tossing it in the trash. HP used to mean a lot of things, like quality and innovation, and maybe, even smart. But that was before these reckless egomaniacs ruined things. Now it is has virtually no cache, and surely once Leo is done with it, it'll be less valued than Asus. 

And you totally misrepresent Apple to make your fairly weak point. Apple is cool because it truly, really, actually is smart. It's designed better. It works better. It's built better. It's ahead of everyone else. Always. The "cool" factor is because of this. Smart is cool in the world of Apple. 

But, despite your misbranding attempt here your heart is in the right place. HP is still a brand worth saving, and possibly, reviving. Kids nowadays don't care that it was the original innovator, that it once had a cult following almost as loyal as Apple's, or that many, many brilliant people still work there. They want stuff that's cool, smart--better. Despite the idiots at the top, the heart of HP is it's people, and given the right leadership and vision, they could make it a great company again.

I hope some of those idiots at the top do take notice of your letter and the sincerity behind it. Unfortunately, I doubt they will because, well...they are idiots.
Couldn't agree more. I own an Apple powermac pro, and love it, but i need a pc to run certain programs. There is definately a market for high-end, high quality PC's, but HP/Compaq has slipped in the quality department over the years (I have owned several and finally decided to try a Dell XPS) I love the idea of a PC company doing what Apple has done by simply focusing on high-end, high-quality products but the third piece of the puzzle is having excellent customer service...
After using an EliteBook, I've decided PC laptops shouldn't cost $500, or $400 or even $300. You should spend at least $1000 and buy something worth owning, like a laptop used to be. Dependable. Fast. Rugged. Exceeding Expectation. Now, a decent EliteBook will run you more than $1K, but you get the idea. HP could market their dominance of the laptop you should own much better.
HP use to sell computers to intelligent people back in the day when they were actually HP. There are still a lot of great people and heritage in the computer and printer divisions but those intelligent, nerdy marketing people that you described stayed with Agilent when the company split up.
I agree. Owned HP slim tower for several years - great product, never had a problem with it. It's a shame if a company like this quits making great products just because some CEO cannot afford to buy a new jet.
I'm on board with this! I would spend more on a laptop knowing I'm also getting more. (Key feature for one is battery life!) Need more high-end units. You can Do IT! ( Owned 2 HP laptops and only HP printers from college till now.)