2 Emerging Markets HP Should Enter to Turn Itself Around

Last week, I looked at the methods of Louis Gerstner (with massive help from Jerry York) and Steve Jobs used to turn around IBM and Apple, respectively, and applied them to Hewlett-Packard in 3 Steps HP Should Take to Turn Itself Around.

But there is another process, and it isn’t mutually exclusive. Jobs did it after completing the first phase of Apple’s comeback, and Thomas Watson did it when he redefined IBM in the 1950s–and it resulted in both Apple and IBM dominating their respective eras.

“It” is taking the company and focusing its efforts on owning the next technology wave. For IBM, that was mainframes. For Apple, it’s personal electronics. Right now, two waves appear ready to break. Both are pulling a lot of ink, but neither has yet created a company of IBM’s scale or Apple’s potential yet. HP is aligned with both trends—though far mare aligned with the one that is potentially more disruptive to the current world order.

The First Wave: Personal Robotics

The robot wave actually involves two phases: Low-cost assembly-line robots followed by personal robots. The invention of Baxter, which is part of the first phase, presents the opportunity for an industry-focused IBM-like solution to revolutionize manufacturing—and, critically, for that revolution to occur in the United States.

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Baxter creates massive problems for countries such as Taiwan, China and India. While each possesses the engineering know-how to build it, using robots to replace manufacturing jobs would massively increase unemployment, which would likely result in revolt. This suggests that these governments, rather than funding and supporting the effort, would resist it.

On the other hand, plenty of manufacturing job have already left the United States. Building the robots—and the highly automated manufacturing plants that they’d require—would thus be a more acceptable proposition for the U.S. government. If Capitol Hill can shake off its inability to make fiscal decisions and provide incentives for such investments, the end result could be that the robots are built here, not to mention many (if not most) of the plants that use them. That, in turn, would add jobs and increase the resulting companies’ taxable income.

The mechanical structures of HP’s printing division are actually close to those used in robotics. (If you think about it, a printer and a PC are essentially a robot that can replace a typist, secretary or stenographer.) HP combined its PC and printer divisions in March. Put its in-house designers to work and this could form the core of an integrated robotic system.

Commentary: How HP (and Dell) Can Avoid Being Dragged Down by PCs

Given that robotics at this scale is new, having something near at hand should give HP a faster ramp to market than any other existing technology company—and a mitigating edge over the automotive companies that have been working on this problem. Personal robots would also give HP a product that could leverage its printer and PC units, further validating their merger.

The Second Wave: 3-D Printing

At the moment, 3-D printing is attracting more interest than personal robots. I find this ironic, because to me 3-D printing is both more complex and further from market than robots. However, 3-D printing has interim steps of viable products, and most fall within HP’s capabilities, so I think it’s a better option for the company.

The obvious first connection is that HP dominates the printing business, so anything related to printing would seem to be a natural extension of who HP is. That said, while 3-D printing happens today on a small scale, it hasn’t yet reached the industrial scale of a company such as HP. Put another way, it’s pretty much where PCs were before Apple came along.

Right now, the savings that 3-D printers demonstrate are in line with the savings that were associated initially with printers. For instance, fabricating a part can cost anywhere from $1,000 to $20,000. Using a 3-D printer for the same task often costs under $200. The issue is that the fabricated part can be used in a full production test, while the printed part can only be used in a mockup.

Recently, though, there was a breakthrough in printing more complex parts. This video, for example, shows a working, usable crescent wrench coming from a 3-D printer that appears to have an HP print head for color. Think about that the next time you need an obscure tool or car part.

The interim goal of providing ever cheaper 3-D printers for prototyping is a fraction of the potential market: putting 3-D printers in homes to replace trips to the hardware store, which we’re close to being able to do. (We’re at least 20 years from being able to print an iPod, though.)

Commentary: 3-D Printing Among 7 Most Important Tech Trends Of 2012

Think of the market for parts for discontinued appliances, specialized tools, cars, furniture or other items, and couple that with the market for folks who want to easily create their own ideas in 3-D spaces (including the many of us who are closet artists). The potential 3-D printing market, then, is in line with today’s iPad market—that is, hundreds of millions, assuming the right product at the right price.

In the end, this is likely the most compelling second act for HP. Initially, it would link the workstation and PC products on the creation side as well. In addition, there would clearly be a viable, and likely protectable, supply business for the printers. Getting what is printed to have the right attributes of strength, flexibility, resistance to heat and finish would likely require a variety of materials that HP could sell, much like the ink it sells today.

HP Must Think Outside the Box

These two ideas are hardly exclusive, and there will be other breakthroughs that I’ll likely miss. That said, HP’s best chance isn’t struggling to catch IBM or Oracle, which is unlikely unless either company stumbles badly. It’s finding another market that’s where database and mainframes were before IBM and Oracle helped create and ride their respective waves to power. If HP wants to be truly great, it needs to find a wave it can call its own and ride it into that better future.

HP can do this. The company desperately needs a stronger future story, and I think it would be cool to have either an HP personal robot or 3-D printer. In the end, to succeed, HP has to think itself out of the box that a stream of poorly selected CEOs and a bunch of powerful, focused competitors have placed it in. This could be the path to doing exactly that.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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