October 8, 2014: It was all over the news this week that Hewlett Packard CEO Meg Whitman will be splitting the company in two, with Whitman leading Hewlett-Packard Enterprise in selling business IT. The other company, HP Inc., will focus on PCs and printers. (Each will have revenue of more than $55 billion.)
Whitman went on to explain that the H-P Enterprise company will be dedicated to helping companies "get from traditional IT -- and by the way, run that traditional IT better -- but to get from there to the new style of IT characterized by cloud and security and big data and mobility." Whitman said the four main parts of the enterprise business are infrastructure ("the foundation for the new style of IT"), services, software, and the cloud.
As Chris Murphy pointed out in InformationWeek, "HP is adapting to a world where the data center matters more than ever as an engine for business growth, but the individual pieces of that data center matter less."
Many Incarnations
Hewlett-Packard has been through many, many incarnations. It got its legendary start in Palo Alto in the single-car garage of William Hewlett along with his partner David Packard in January 1939. They both got electrical engineering degrees from Stanford in 1935 and established their company with an initial investment of $538. It was incorporated in 1947 and went public ten years later.
According to Wikipedia, "Of the many projects they worked on, their very first financially successful product was a precision audio oscillator, the ModelHP200A. Their innovation was the use of a small incandescent light bulb (known as a "pilot light") as a temperature dependent resistor in a critical portion of the circuit, the negative feedback loop which stabilized the amplitude of the output sinusoidal waveform. This allowed them to sell the Model 200A for $54.40 when competitors were selling less stable oscillators for over $200.... One of the company's earliest customers was Walt Disney Productions which bought eight Model 200B oscillators (at $71.50 each) for use in certifying the Fantasound surround sound systems installed in theaters for the movie Fantasia" in the 1950s."
In the 1960s they specialized in electronic test equipment: signal generators, voltmeters, oscilloscopes, frequency counters, thermometers, wave analyzers, and so on, most of which which were more sensitive, accurate, and precise than other comparable equipment.
Hewlett-Packard's HP Associates division, established around 1960, developed semiconductor devices primarily for use in test instruments and calculators. Some of these scientific calculators were extremely sophisticated and purpose-built. I still have an HP-12C Financial Calculator in its original packaging, designed for finance, real, and banking applications, programmable up 99 steps on 20 storage registers, "RPN logic" to reduce keystrokes, do bond management functions, calculate depreciation, and do statistical analysis (mean, standard deviation, linear regression, and correlation coefficient). It was a gift to me from HP when I paid them a visit in the 1980s, and I have the original packaging because I can barely understand what it does, let alone how it works!
Computers
HP got into the computer market in 1966 with the HP 2100/HP 1000 series of minicomputers. These had a simple accumulator-based design, with registers very similar to those used in the Intel x86 architecture.
"Wired" magazine called HP the producer of the world's first device to be called a "personal computer," the Hewlett-Packard 9100A, introduced in 1968. The company called it a desktop calculator because Bill Hewlett said, "If we had called it a computer, it would have been rejected by our customers' computer gurus because it didn't look like an IBM. We therefore decided to call it a calculator, and all such nonsense disappeared." An engineering triumph, the logic circuit had no integrated circuits; the CPU was made of discrete components. With a CRT display, magnetic-card storage, and a printer, the price was around $5,000. The machine's keyboard was a cross between a scientific calculator and an adding machine and had no alphabetic keys.
The HP3000
This is where it gets interesting, and close to home. The HP 3000 series is a family of minicomputers released by Hewlett-Packard in 1972. It was designed to be the first minicomputer with a full-featured operating system with time-sharing (for access by multiple users simultaneously). The first model of the 3000 was withdrawn in 1973 until speed improvements and OS stability could be achieved. When reintroduced in 1974, it became known as a reliable and powerful business system that regularly won HP business from companies using IBM's mainframes. Hewlett-Packard initially called it the System/3000, then changed that to the HP3000.
It was a "workhorse," a rugged and powerful machine that was extremely popular in a wide variety of business environments. The Energizer Bunny of computers, it refused to die and was not withdrawn from support by HP until Dec. 31, 2010(!).
The Sales Phenomenon
The reason I wanted to write this blog post is that I became personally acquainted with this very important part of HP's corporate culture in the mid-1980s, when I began a 30-year career consulting with direct marketing and catalog companies (now also eCommerce companies, of course) to help them select a system to manage their business. There were a couple of dozen systems designed specifically to manage that kind of enterprise at that period of time, and one of the most aggressively marketed of these ran on the HP3000.
This was no accident. And this is the key thing here. HP hired a very professional sales force of field sales reps who had a simple but nearly fool-proof approach to getting the job done. Their success in the catalog field will serve as an example of their methodology.
The HP rep in New Jersey was contacted by the Musical Heritage Society (MHS), a company in Ocean, NJ, near Asbury Park, that sold LP records by mail on a club basis, much like a book club (one of their most popular records included Pachelbel's famous and much-loved Canon in D.) Since MHS mailed millions of packages of club offers and LPs each month, it needed a powerful computer system that would help it manage these activities more efficiently, and better yet, analyze the results of their mailings.
The person who contacted HP was a fellow by the name of Will Smith, their in-house programmer who had already developed his system, tailored specifically for MHS, and discussed migrating it to the HP3000. Very shortly thereafter, Smith, sensing a major opportunity, decided to leave MHS and set up a software company with a partner, Gary Brooks. The company was called Brooksmith Associates, and the catalog management system they brought to market was called "Prophit."
And here's where the story really takes off. The HP rep in New Jersey, now in league with Brooksmith Associates, had rocket fuel in his engines. He approached a major, very well known company, Edmund Scientific in Barrington, 12 miles southeast of Philadelphia, with a compelling but simple sales pitch: "I have a system designed specifically for catalog companies that happens to run on the HP3000, one of the most durable and reliable hardware platforms available." I don't know for sure, but I'm quite certain the lead time on this sale was extremely short. An in-depth demo or two, plus the knowledge that Edmund Scientific would be the first "showcase" user of the Prophit system and would have Prophit tailored specifically to meet their needs, would almost certainly have sealed the deal. I doubt there was much in the way of a discount on the system cost, but the modifications to meet Edmund Scientific's requirements could have been done at a reduced price, or some such similar deal (maybe a few years of free "support" fees).
In any case, it worked like a charm. Goldberg's Marine (another catalog company, now in NYC but I believe at that time in New Jersey) bought it shortly after Edmund Scientific.
The system was a huge success for the following reasons: (1) it worked! That was more than could be said of many competing catalog management systems in those days. (2) It was being used by two very well known direct marketing companies, MHS and Ed Sci. (3) It ran on an undisputed workhorse of a computer that was already widely acknowledged as a rock-solid machine. (4) It had the HP sales force as a ready-made sales behemoth to sell the system nationwide, although Will Smith was a very effective salesman in his own right and always liked to brag that whenever a Prophit user needed to upgrade his hardware Will would sell him "more disk." And disks in those days were plenty expensive!
The National Roll-Out
That chemistry is the critical piece of this entire puzzle. The New Jersey rep from HP was not a lone wolf. He was just like a dozen or so other HP reps in other territories across the country. BSA could focus mostly on software development and system implementation and configuration, while HP was almost completely in charge of sales and marketing, which they did very well, indeed, working in league with BSA's very solid systems sales team.
This was a "marriage made in heaven." And it depended on the very strong, exceptionally tenacious sales skills of the HP3000 sales reps. This was an elite team, and they had a powerful weapon in Prophit that they employed with world-class success.
Hewlett-Packard in those days was exactly that kind of company, very well-tuned to selling hardware with a software solution tailored to both the HP3000 platform and to what we now call "the vertical market" that the software would be used by.
Not long afterward, Gary Brooks cashed out and Will Smith partnered with Allan Gardner to form Smith Gardner & Associates, Inc. They renamed Prophit as "Ecometry," and in the mid-'90s relocated from New Jersey to Florida, did an IPO in 1999, and then in 2004 sold the company to a partnership consisting of equity firm Golden Gate Capital and a group of Ecometry executives led by then-CEO John Marrah. Via Golden Gate they also brought the Blue Martini eCommerce platform into the fold. When John Marrah took over, Smith and Gardner cashed in their chips, leaving behind one of the single largest groups of HP 3000 application customers in the world.
At about the same time under Golden Gate Capital, Ecometry merged with a company called GERS Retail on the West Coast to become “Escalate Retail,” developing an “open” version of the system running on either SQL/Server or Oracle on Windows or UNIX boxes. They were actually ahead of the game in supporting mCommerce apps. The company was acquired by software giant Red Prairie in 2011, then in late 2013 it was sold to global powerhouse JDA, with Escalate Retail rechristened “JDA Direct Commerce," which is how things stand today.
The Moral of the Story
HP has long since abandoned its aggressive hardware field sales force and its software-leading strategy, at least as far as I know and at least in the terms described above. To the best of my knowledge, it has gone through quite a few "incarnations" since the 1980s when BSA and Prophit got off the ground on the strength of HP's sales chops.
But obviously the company continues to evolve. The whole point of this blog post is to demonstrate that what HP just did in splitting itself in two is not a break with the past but rather a continuation of a tradition that goes back to the founders, emphasizing technical innovation, corporate refabrication and reincarnation, and redefining the state of the art in systems management.
P.S.
I remember in either the late '80s or the early '90s when HP starting pushing its newly developed laser printers (which quickly became the most popular printer for awhile), there was a rather public cadre of "purists" both inside and outside the company who complained that this was a "distraction" from their primary corporate mission. It was anything but, and is another example of HP's being a step or two ahead of the market.
P.P.S.
In that same general category, HP also has a line of major digital presses and label/package printing presses. These are industrial grade and industrial size. They've also got an entire line of other digital printing services. Although not generally known outside of professional printing circles, it is definitely a major player in that space, and I suspect an innovative one, as well. [A small footnote: before I was Editor of Target Marketing from 1981 to 1983, I was an Assoc. Editor of Printing Impressions for about six months. The same company published both trade journals in Philadelphia.]
P3S Consistent with all of the above, HP has often been at the forefront of handheld computing devices. Back in the late 90s/early 00s I absolutely loved my Jornada, like the one pictured below. It had a touch screen and a stylus (the silver bar on the right front base is the end of it that you pushed it out from), and of course Web connectivity. I used it partly for Web surfing but mostly for checking and writing email and as a PDA for note taking. Having the keyboard was a pleasure! I once left it on a plane in the seat pocket and realized it just as I deboarded. When the attendant I spoke to about it saw the frantic look on my face, she kindly let me back on to retrieve it. Probably against the rules, but all's well that ends well.
I think it had 16 MB of RAM, a 6.5 inch screen, and weighed about three pounds, by no means light but not a total brick, either. It fit nicely in my briefcase, and could be used virtually anywhere, even in sunlight. It ran on Windows CE, which detractors liked to call "Wince," but I never had any problems with it. Everything was searchable, file structure was standard Windows, it had versions of Word and Excel, and the battery life was quite long. I don't remember ever worrying about charging it, which meant it was efficient, as well. It connected to my PC to synchronize files, if I wished. For the truly geeky or curious, here is a link to the manual for a model virtually identical to mine.
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