Is Hewlett-Packard Co just another over-ambitious major over-reaching itself, or is the slowdown in its business it reported last week a harbinger of a general malaise to come? The answer is that, in the past, even more than nominal market bellwether IBM Corp, Hewlett has been regarded as a trend leader going first into and out of slowdowns and recessions. Hesh Wiener of Technology News of America Co recalls that back in the 1970s, Hewlett-Packard’s numbers were actually used by trade magazines to shape their budgeting because when the company ran into a bad patch, it was prudent to assume it would be harder to sell advertising about six months later when everyone else caught up with the same problems in the market – and when Hewlett’s figures started looking chirpy again, even if everyone else was still plunged in gloom, magazines could assume that their pagination would be up in about six months’ time. Hewlett-Packard has been the most successful old line computer company in keeping up with all the trends that have made life so impossible for the likes of IBM and Unisys Corp, making it highly likely that its experience is just as much an indicator of things to come as it ever was – although the time-scales may be rather shorter since cycles in the personal computer business are so short these days. The market gorged on personal computers last year, but the big corporate rush to Windows95 never happened, and now looks as if it is not going to happen, and so long as users don’t have a compelling reason to take the entire company to Windows NT, they will stick with Windows 3.1. There is also the threat of Cairo coming closer – with that product, which is billed as the common successor to Windows95 and Windows NT promised for a year or so from now, why go through all the hassle of converting from Windows 3.1 to one of the interim products rather than go direct to the next big one when it arrives?
Chuckling grimly
Another factor that threatens to slow the market is the year 2000 problem. If users fear they are going to have to spend a lot of money to make their software compliant, they are going to be disinclined to spend on anything new so long as they can just about get by with what they already have – so the reliability and durability of Hewlett-Packard’s printers mean that the company will have to look to toner and inkjet cartridges for the ballast of its printer business – not too great a hardship because the supplies budget is far more flexible than the data processing budget in most companies, and supplies are where printer companies make most of their money. But the company – and Lexmark International Group Inc – will be chuckling grimly to themselves at IBM re-entering the printer business just as it hits choppy water. Hewlett says that its server business has been slack for six months, and that it is hoping that new products will prod it into life – but the prospects are not excess ively rosy. Hesh Wiener points out that another reason Hewlett’s figures have traditionally been a lead indicator is that its users are generally more progressive than IBM customers, particularly IBM mainframe and AS/400 customers, but once the first flush of CMOS 390s and RISC AS/400s are in, it is likely that many users will postpone any further major buying decisions until they get to grips with the new systems. All the signs seem to be set at proceed with caution.
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