Time to reread The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton Christensen.
The profits from laser printers supported HP for many years, and now look likely to outlast it. Xerox’s unsolicited bid for HP Inc this week, if successful, will finally bring the curtain down on a company that long defined Silicon Valley’s unique approach to innovation — though HP’s printers will go on throwing off cash, this time to help support the huge debt load Xerox plans to take on to buy its much bigger rival.
HP’s phenomenal printer business is instructive for today’s tech leaders. A single hit product or service, if managed well, can turn into an annuity lasting far longer than its creators have a right to expect. But fail to use the profits from today’s cash cow to find the next big thing, and even these have their limits.
Back in the early days of internet search, Yahoo in some ways seemed a better bet than Google. It looked like remaining a close second in search, and also had a substantial online display advertising business, giving it far more options to offer to advertisers. But Google’s one-trick pony carried the day.
This does not mean that there is not still huge pressure to find the next big thing. Today’s big tech companies, after dabbling for years in side-bets that mostly failed to turn into significant money-earners, have now arrived at the point where this issue has assumed a matter of urgency. There are plenty of failed bets from Silicon Valley’s past to learn from.
Profits from HP’s cash cow, for instance, supported a surprising number of attempts at reinvention, all of them ultimately unsuccessful. They included Carly Fiorina’s decision to become a consolidator in a fast-commoditising hardware industry with the $25bn for Compaq Computer, Mark Hurd’s $13.9bn purchase of IT services company EDS, and Léo Apotheker’s disastrous $9bn acquisition of software Autonomy.
I’m surprised this wasn’t already in the Stock universe. Highly recognisable consumer brand with a long history.
HP’s services business, referenced above, was spun out and merged with CSC to form DXC in 2017. It also is not available on Freetrade.
I don’t expect any US stocks to make it into the app until the Christmas list is implemented. Then I’m expecting an avalanche.