VCE vs. HP: You Can Really See Why HP Is Losing Revenue Every Quarter

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
VCE vs. HP: You Can Really See Why HP Is Losing Revenue Every Quarter

Last week I was at EMC World and this was the 4th event where I’ve heard the same story from IT shops about HP.  They have what they call a “converged” set of products but apparently don’t provide a service to assemble them into a fully integrated solution like competitors such as VCE does.  I get a mental picture that if VCE and HP were auto  companies, the former’s customers would get a new car complete delivered to their door while the latter’s customers would bet a bunch of UPS boxes filled with parts and a good luck note with regard to assembly. 

This is a serious issue because developing winning solutions and fixing problems is how and why companies like VCE are closing deals in HP shops and likely also explains why HP is losing revenue quarter after quarter.  IT doesn’t want to buy kits; they want solutions, and HP apparently has forgotten what a solution is at least with regard to convergence.   VCE, on the other hand, is all about integrated solutions. Their fellow EMC Federation partners can certainly sell parts but if you want a complete converged solution that’s VCE’s thing.

So VCE sells and delivers solutions and HP sells solutions but delivers parts.  That’s both a problem and one hell of an opportunity.  Let’s talk about why these two entities are so different.

VCE

VCE’s purpose in life is to build turnkey solutions.  That is why the organization was formed and this is the product they sell.  Even though you can, after an initial purchase, buy additional components from VCE, each consists of a variety of already assembled and tested. As a result, like the original package, the new components can be simply connected, powered up, and put into service. 

EMC’s Federation is made up of component companies, like VCE, VMware and RSA that each have a fully qualified chief executive and are run individually. So they are able to change how they operate and do business as their industry dictates.  This allows them to capture and keep top talent from the engineers that create the product to the sales representatives and service personnel that build and maintain it. 

Selling converged solutions is VCE’’s reason for being and they are so good at it that their customers are some of the most satisfied and aggressively complementary I’ve ever heard in my three decades of being on analyst. If I were a CIO and needed a converged solution at scale, I’d start with VCE and have others bid against what they said they could do.  At the very least, I’d know I’d end up with something that would actually work and that represented far less operational or career risk. 

HP

More and more, HP is a parts house; a collection of divisions run by people who came from different companies and have been forced to operate under the same set of rules with regard to staffing, funding and execution regardless of the differences in their respective businesses.  They have been pounded into submission by a long string of cost-cutters who reveled in layoffs while having little understanding of the businesses that HP is in. 

Their latest CEO, Meg Whitman, is a failed politician (some argue she is also a failed executive) who ran eBay when the company was still basically a place where you bought Pez Dispensers.  There is no sign of corporate marketing or sales leadership at HP, so this disparate, dysfunctional family of managers is forced into competition with itself. There is no central talent with the capability, let alone with the authority, to pull the parts together in order to assure a solution.  Clearly there are matrix organizations within the company but they create solutions that are viable on paper only because no one is in position to assure the result. 

Their biggest effort isn’t to pull solutions together but to separate the company into fully independent organizations, spinning out the long successful PC/Printer division, in and of itself a kludge, and piling the full firm’s debt on it so that its survival in is doubt. That will free-up the enterprise division, led by Whitman, to lower prices while maintaining margins even though price isn’t that division’s real problem – it is management dysfunction.  In short, while HP does still make quality parts and individual products, they should only be on the short list of vendors for IT shops that want to and can build and assemble their own solutions. 

Wrapping Up: 

Contrasting HP and VCE creates a sharp contrast between company capabilities.  The latter is designed and crafted from the ground up by experienced executives to create a very unique solution, one widely hailed as the best in the industry by its customers.  The former is a once great company burdened by a repeatedly clueless boards that have saddled the firm with outsider executives who lacked the skills to run it effectively. Instead, they’ve focused on cutting the firm to death to strengthen company valuations while revenues declined quarter after quarter, year after year.  

Or, more accurately put, VCE is the standing example of an impressive set of best practices while HP is what results when leaders not only don’t know what best practices are but can’t be bothered to look at competitors to learn them.  As a result, if you want a converged solution, the choice, even for a dedicated HP shop, is surprisingly easy and it isn’t HP. 

Author