Spinning Off HP’s PC Unit – Mistake, Says Former High-Ranking Employee

Rahul Sood Believes HP Needs to Keep Personal System Group

by Anton Shilov
08/25/2011 | 01:21 PM

Rahul Sood, the founder of VoodooPC and a former employee of Hewlett-Packard, said that HP needs to keep its personal systems group (PSG) and not spin it off, as the company plans. Instead of focusing on enterprise customers or services to keep profit margins high, Mr. Sood believes that HP needs to focus on “real people” and try to improve profitability, value and user experience of its PSG unit instead.

 

Many believe that by spinning off or selling the personal computer business (which also includes smartphones, tablets and other products for personal users), HP wants to reproduce the deal made by IBM several years ago, when it sold its PC business unit to Lenovo Group back in late 2004. But Rahul Sood, who served as chief technology officer of HP’s global gaming business, believes that HP will not be able to duplicate such a deal successfully. Instead, HP is risking losing its PC biz and eventually vanishing into oblivion.

“If they choose to go ‘the IBM route’ HP risks missing the winning formula of IBM and they could end up forgetting about the consumer and focusing on the enterprise. In my opinion catering to the ‘enterprise’ is such an old school way of thinking. Companies should cater to people, and the enterprise will follow, because real people run the enterprise. RIM is having a tough time because the competitor that displaced them is catering to real people, not Wall Street, not the enterprise. […] I believe if you build beautiful products that excite your customers then shareholders will ultimately benefit. I believe if you cater to shareholders then customers will suffer,” said Rahul Sood in an interview with TechCrunch web-site.

Mr. Sood, who currently works as the general manager for system experience in the interactive entertainment business of Microsoft Corp., believes that the main problem of HP’s PSG is the lack of vision for further evolution. The problem worsens by the fact that the PC business is much more than a business for HP, but rather the face of HP that everyone can see and understand.

“I understand that sometimes to fix a disease you need to cut off a limb. Unfortunately I think they’re cutting off more than one limb, and they are missing the synergies required to successfully operate a profitable enterprise + consumer model. Though HP has separate divisions, the company is very much dependent on each other. You can’t simply cut off one head and grow another, you’ll bleed out. You can absolutely fix dysfunctional organizations without breaking them apart. Such a move requires strong leadership (empowered leaders), a believable vision, and a strategy that resonates,” wrote Rahul Sood in a blog post.

The big question is whether HP is generally capable to transform its personal systems business. HP managed to virtually kill the Voodoo brand and created a mess out of its PC products mix. While independent, Voodoo PC used to offer a broad family of various desktops as well as several laptops. But after the acquisition by HP the only Voodoo-branded systems released were Omen high-end gaming desktop as well as Envy luxurious notebook. While initially Rahul Sood believed that HP would offer significant opportunities to leverage the Voodoo technologies, eventually he admitted that the "things got a little complicated" and implied that he no longer could influence the development of advanced gaming products at HP. At present HP does not offer Voodoo products.