Are You Listening, Hewlett-Packard?
On Aug. 19, Hewlett-Packard (NYS: HPQ) dropped a bombshell and blew up its stock price: Then-CEO Leo Apotheker decided it was too hard to earn a decent profit margin selling personal computers. So instead of trying, instead of leveraging his greater scale of operations to beat back Dell's (NAS: DELL) challenge, and drive Apple and its iMacs into the sea, he ... gave up.
Snatching defeat from the jaws of victory from the skull of defeat
In the course of doing so -- entirely by accident and not at all to his credit -- Apotheker stumbled upon a discovery: People loved the TouchPad at the new price. By some reports, the company moved 350,000 units within just a few hours.
Which brings us to Netflix (NAS: NFLX) .
As you've probably heard by now, Netflix CEO Reed Hastings made an HP-sized error when he announced a split into two companies last month: a streaming business under the old moniker, and a comically -- nay, pathetically -- named DVD rental operation called Qwikster. Outcry against the move was immediate, and not at all complimentary. More importantly, though, it was noticed. This morning, Hastings transmitted a "10-4" to his customers, promising to reverse his mistake and keep the DVD business in-house. "This means no change: one website, one account, one password ... in other words, no Qwikster," Hastings said.
What H-P can learn from Netflix
Having recently joined the diaspora of Netflix refugees who canceled our accounts in protest against Hastings' split-the-baby business decision, I now find myself reconsidering. Clearly, Hastings is the kind of CEO who listens to his customers. Clearly, he's not afraid to admit a mistake -- and fix it. Can HP do likewise?
Two months ago, hundreds of thousands of HP fans rushed to buy the new TouchPad at $99 a pop. One month ago, they swarmed the ramparts again, when a small cache of TouchPads was discovered at Office Depot (NYS: ODP) -- at $150 apiece. To this day, the tablet PC remains a hot seller in the resale market on eBay (NAS: EBAY) , where it fetches prices of $200 and up.
Take a page from the Netflix playbook, HP. Don't cancel the TouchPad. Build more! If you build it, we will come.
At the time this article was published Fool contributorRich Smithowns no shares of any company named above. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 302 out of more than 180,000 members. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Dell, Netflix, eBay, and Apple, creating a bull call spread position in Apple, and creating a bear put spread position in Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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