HP needs more style, less substance

by Steve Blum • , , , , ,

First new Chevy of the 80s.

Hewlett Packard is the latest high tech company to distance itself from reported labor practices used by some Chinese contract manufacturers. It’s telling its suppliers to limit the number of student-age workers, the type of work they do and the hours they work.

The email to HP’s suppliers follows similar measures by Apple and Samsung. Two weeks ago, Apple said that a labor contractor used by one of its Chinese suppliers was forging documents in order to hire underage workers.

It’s a common enough problem: shoddy labor practices in a low wage market are exposed, large multinationals that benefit take a hit to brand image and announce measures to ensure it doesn’t happen again.

The new rules won’t disrupt HP’s (or Samsung’s or Apple’s or anyone else’s) supply chain. They’re all more or less adopting common standards. Costs will go up, but the problems with illegal and/or unethical labor practices are a symptom, not a cause of the increase. Wage expectations in China are rising along with living standards. The problems we’re seeing with labor practices are ill considered and, ultimately, futile efforts to fight that trend. The result will be renewed focus on improving productivity, a growing move to even lower wage economies and product price increases.

But HP has even bigger problems. It’s still the world’s biggest personal computer maker, but it’s caught between a market shift towards tablets, smart phones and other trendy devices, and what seems to be an institutional inability to make attractive products.

Like Dell, HP makes bulky commodity computers. Its Chromebook entry has a form factor only an IT manager could love. The comparison that keeps coming to mind is 1980s Chevys versus Japanese imports of the time. Stodgy styling was fine for corporate fleets, but consumers wanted something with more imagination. Unlike General Motors, though, the quality of HP’s products is as good as anyone’s. Which is a good place to start.