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Yahoo, HP Enterprise, Dell, Mozilla: The one reason they're all in trouble

Bill Snyder | Dec. 17, 2015
Chances are strong that no one and no strategy can save these companies, so mired in the past

It didn't take long for Yahoo's Marissa Mayer to fall off her perch as Silicon Valley's glamour-girl CEO and become the blogosphere's piñata du jour. (In fact, I've beaten on that piñata myself.) Her real sin, though, wasn't wasting billions of dollars on ill-conceived acquisitions or bungling the company's mobile strategy or managing like a martinet -- it was that she simply couldn't pivot.

Mayer is hardly alone in that failing. Hewlett-Packard Enterprise's Meg Whitman, Dell's Michael Dell, and Mozilla's Charles Roberts haven't been able to pivot, either, despite serious attempts to do so. And their companies all risk fading into irrelevancy.

True, it's easier for a nimble little startup to pivot -- Silicon Valley lingo for radically shifting a business plan or product focus -- but very hard for an established, multi-billion-dollar enterprise to pivot. Major technology innovations -- notably the cloud, the proliferation of powerful smartphones, and the availability of broadband -- have shifted the ground under all those companies so much that likely no CEO could keep his or her footing.

Apple and IBM are examples of companies that have successfully pivoted, and Microsoft seems to be doing so now, but that doesn't mean Yahoo, HP Enterprise, Dell, and Mozilla can.

I've previously explored the struggles at Yahoo and at Hewlett-Packard, so I won't repeat that here.

Dell: Clobbered by the cloud

Perhaps because she's facing a similar existential threat (andsplit her company into two as a result), Hewlett-Packard Enterprise chairwoman Meg Whitman has a succinct analysis of exactly what's wrong with the Dell-EMC merger: "They're getting bigger, leveraging up, and doubling down mostly on legacy technology," she said during HP's last earnings call.

Big tech mega-mergers almost never work, and this one has unsettling echoes of the disastrous unions that started with Compaq's acquisition of Digital Equipment and ended with Compaq's sale to HP. Those mergers failed because they represented a doubling down on old technology -- and, worse, at a very high price.

Michael Dell is nothing like HP's self-aggrandizing Carly Fiorina, the architect ofHP's disastrous Compaq merger, and I give Dell credit for taking his company private, an attempt to pivot away from the past. But Dell, his company, and EMC are competing with a trend they can neither join nor defeat: the cloud.

As Cade Metz pointed out in a scathing piece in Wired, Internet giants Google,, and Facebook built businesses so large that they couldn't satisfy their computing and storage needs by buying commodity products from HP, Dell, and EMC or networking gear from Cisco. Instead, they built their own.

Amazon of course, realized it could rent out space and computing time on that hardware -- in what became Amazon Web Services, the behemoth public cloud today. And because bandwidth is cheap, working in the cloud makes nothing but sense. As a result, companies large and small stopped buying servers and storage space from Dell and EMC.


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