The iPod maker seems to be streaming misfortune these days, while the business of tech's "Boy Scouts" could hardly be better
For darn near half-a-decade, no company has been able to touch the folks in Cupertino, Calif., in terms of sheer corporate karma. Everything Apple did seemed smarter and cooler than what anyone else did. Think of the media frenzy surrounding the release of every update to the iconic iPod music player or each new version of its resurgent Mac line. It didn't hurt that Apple's stock has risen more than eightfold in the past five years, due not only to its beautifully crafted products, but also to its rock-solid operational performance and terrific marketing. Halo effect, indeed.
But now look. In recent weeks, Apple (AAPL
) has been dealing with questions over how it issued options (see BusinessWeek.com, 8/17/06, "Apple's Options Overdose") and allegations that its iPods are manufactured under poor working conditions (see BusinessWeek.com, 8/21/06, "Apple Answers 'Sweatshop' Claims").
Just last week, Apple had to fork over $100 million to iPod rival Creative Technologies (CREAF
) to settle a patent dispute. Now comes a big battery recall (see BusinessWeek.com, 8/25/06, "The Assault on Apple's Battery"). That feels like a blast straight out of the depressing 1990s, when the PowerBook 5300 had to be recalled after a few models burst into flames.
GOOFUS & GALLANT. HP (HPQ
), on the other hand, can seem to do no wrong at the moment. Its stock has been red-hot, its financial performance seems to be the yin to Dell's downward yang (see BusinessWeek, 8/24/06, "Darks Days at Dell"), and HP hasn't given any whiff of the options-related shenanigans that have gotten some of its peers into hot water with regulators and the feds (indeed, nobody blinked when HP shelled out $4.5 billion for Mercury Interactive, a poster child for the scandal [see BusinessWeek.com, 7/29/06, "Mercury's Star Rises"]). As for the battery issue, multiple HP insiders tell me the company's engineers deemed the battery in question unreliable and unqualified for use in HP products.
HP has also been earning a reputation for good corporate citizenship. While Apple's brand has always stood for a kind of progressive enlightenment, HP seems lately to have taken the lead on many feel-good initiatives. It's got a truly gigantic recycling operation and has taken a vocal position in favor of government e-waste policies, opposed by Apple and others, that require tech companies to foot some of the bill for keeping old gear out of landfills (see BusinessWeek, 4/10/06, "HP Wants Your Old PCs Back").
And I wrote a story a few months back about HPer Bonnie Nixon-Gardiner, who was instrumental in creating an industry alliance to prevent sweatshop conditions in tech (see BusinessWeek, 6/19/06, "Stalking High-Tech Sweatshops"). Indeed, Apple quietly announced it had joined the group when it announced the results of its investigation of iPod manufacturer FoxConn Electronics the other day.
SCOUTS' TIME. Of course, HP will never have the sheer panache or intense loyalty that Apple has. Try as it might, HP's products come nowhere close to Apple's in terms of style, elegance, or newsworthiness. There will never be scores of HP rumor sites, and HP World will never become the must-see event that Macworld is. And HP's gains are by no means Apple's losses.
Most any company would kill for Apple's performance, whether measured by the power of its brand or its revenue growth, stock price, or plain impact on society. And here's a big caveat to my argument: In the time it takes for Steve Jobs to introduce a new product (see BusinessWeek.com, 8/24/06, "Apple's iPod Season Looms"), Apple can regain the title for techie with the biggest Mo.
Nonetheless, while HP may be staid by comparison (after all, it is on track to pass IBM to become tech's biggest player this year), don't discount its ability to get on a helluva tear. This is the company once dubbed "Boy Scouts on a Rampage," and for good reason. And HP CEO Mark Hurd has rekindled something in the HP DNA that made it one of the world's most consistent high-fliers for five straight decades.
As for the respective CEOs, Hurd will never match Jobs in terms of his ability to build companies, up-end industries, set technology trends, or affect our digital culture. But I did hear one investor refer to him the other day as "Boy Wonder." If that's not a sign of the times, I don't know what is.
Burrows is BusinessWeek's Computers editor in the Silicon Valley bureau
