Photo - courtesy iLounge
As reported by MacMinute:
HP to stop selling iPods July 29, 2005 - The Wall Street Journal today reported that Hewlett-Packard has decided to stop selling its branded iPods. Apple spokeswoman Katie Cotton said, "They've decided that reselling iPods doesn't fit with their company's current digital media strategy.". HP will phase out its iPod sales immediately.
Since the shakeup at Hewlett Packard over Carly Fiorina's resignation, a lot of restructuring has been going on.
- First, there were the layoffs. I can say with almost 100% certainty this was very closely related to the immense payoff Fiorina received from HP. A restructuring of the marketing department was going on just before Fiorina's departure, but I am inclined to believe, she was already on her way out. The layoffs and restructuring prior to her departure were simply precursory. [A LITTLE OFF TOPIC] I would like to add my two cents worth. Almost all of Corporate America is bloated at the moment. They are inundated with the slacking workers that average about 60% of a day's work - that workers use to produce. There's personal email, extended lunch breaks, tardiness, leaving early, and a number of other factors contributing the the decay of the corporate giants at the moment.
- Second, there has been a good bit of restructuring of HP's camera and printing units. Thank goodness. Companies are wise to diversify, but some companies try too much to be "everything" companies - in a corporate environment this can really draw the company out of touch with its buyers - as there is too broad of a demographic to appeal to.
- Third, HP has dropped the iPod. I'm not so sure what motivated this move; but I can provide a few details behind it:
- HP had almost zero R&D costs or channel distribution costs.
- The iPod DID fit quite nicely into the "HP strategy" - it provided them a chance to tie the most successful product IN HISTORY to their own - something no other PC maker can claim.
- It also brought people to the channels where HP products were sold. The iPod is the hottest, most visible retail product EVER - having the iPod at Walmart, Radio Shack, and other HP channels was a huge traffic draw.
- HP had a 5% marketshare of all iPods sold. That may seem small. However, in the last quarter iPods sold 6.1 million units - that equals 305,000 units and $9.15 MILLION in profits! I seriously doubt HP makes this kind of profit on all it's lines.
- The HP iPod, in a small way, added confirmation of the iPod's PC compatibility and support. A number of people thought the Apple logo meant Apple compatible only. (You'd be surprised!)
Of course this is contrary to Paul Thurrott's expert opinion:
How bad was the deal? According to the AP, part of the agreement states that HP can't sell a competing MP3 player until August 2006. It was virtually impossible for HP to make any money on iPod sales, because of the deal structure that Fiorina agreed to. And HP was (and still is) responsible for honoring the warranties of those iPods it sold ... even though it never made any money on them. The net result is that HP will lose money on the iPod deal. You may also recall that Fiorina held aloft a blue iPod during the January 2004 announcement. There is little doubt that even Fiorina believed, at the time, that HP would be able to do more customizing with the iPod that it was really able to. When the HP iPod shipped months later, it was identical to the Apple version, adding only a laser-engraved HP logo on the back, below the Apple logo. HP instead created iPod tatoos, allowing it to both save face and involve its crucial printer business.
[NOTE: Paul Thurrott is often compared to the likes of Bill Palmer & John C. Dvorak concerning his opinions in the Macintosh Universe.]
HP produced the last of the Apple's branded serial printers - the 4100 & 4500. After these printers were produced; HP only created one more serial printer for the Apple market over the next 2 years - the 895CSE.
HP picked up support again for Apple products with Steve Jobs return and the advent of USB on iMacs.
Up until 10.3, not all HP printers had Macintosh drivers. (Such as low end laser printers)
It's pretty much the same story with scanners - following the same early 90's partnership with SCSI based scanners, mid 90's break, late 90's partnership with USB scanners and now almost full seamless product lines comingling with macs and PCs alike.
The real benefit to the Apple HP partnership was Apple's loyal fan base. I think the iPod relationship may have had some small meaning to Apple user's perception of HP as a partner. With high double digit growth and significant gains in Apple market share - does HP really want a half hearted relationship with Apple?
The Macrumors forum about this topic brought up the possibility of HP iPods being collectible.
I guess I'll have a collectors item in about 5 years now.
Jackwhispers response:
This is exactly what I was thinking. I've also thought the 1st gen iPods would be collectible one day.
This is going to make the HP shuffle an INSTANT collectible - go get em now at SAM'S.
I don't think this is a big deal to distribution as Walmart AND Radio Shack have both picked up Apple branded iPods.
I think it would be disasterous for HP to pick up selling PCs with Mac OS X and then drop them as if they were a passing trend or the day of contract end .
[UPDATE] There is a great commentary from a former HP Rep in the comments. Please take a look!
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