by Brad Moon | November 14, 2013 2:50 pm
The past few months have seen a thinning of the ranks among consumer tech CEOs, and the heads of PC companies in particular.
The most recent casualty was BlackBerry’s (BBRY) Thorsten Heins, pushed out after less than two years at the helm. A few weeks ago it was Acer CEO J.T. Wang. In August, Microsoft (MSFT) CEO Steve Ballmer either packed up or got shoved out — opinions vary on exactly how that played out — but the net result is the same.
With the PC business on the decline, the mobile market thriving and cloud computing becoming more prevalent, the disruption of decades-old business models has left some companies wondering what happened. When attempts to adapt to the new reality (or worse, stubbornly staying the course) fail to show results, the CEOs of these beleaguered firms eventually pay the price.
Here are a three more PC industry CEOs who should be looking over their shoulders.
Whitman became CEO of Hewlett-Packard (HPQ) in September 2011. Her decision to stick to selling PCs has been unpopular in some quarters, and the company recently slipped from being the biggest computer vendor in the world to second place, losing the title to Lenovo (LNVGY).
While HPQ has since recovered, the stock hit its lowest point in a decade while under her watch. The company has undergone massive layoffs amid slowing PC sales and a corresponding hit in printer and ink cartridge revenue.
A write-down of $8.8 billion on the purchase of Autonomy hasn’t helped Whitman’s fortunes (the deal was done under another CEO, but she was a director on HP’s board when it was negotiated and followed through with it when she took over). Meanwhile, the company’s mobile strategy has been a mess.
After killing off its WebOS tablet efforts (the remnants of HPQ’s purchase of Palm), it finally released Android tablets this year. Whitman says Hewlett-Packard needs a smartphone, but there’s no sign of one yet, and the market’s awfully crowded now. If Whitman fails to steer Hewlett-Packard into being at least a presence on mobile sales charts, her time might be up.
You wouldn’t expect to see the CEO of the world’s most valuable company on a list of executives in danger, but not everyone is a fan of Apple’s (AAPL) Tim Cook.
In particular, there is growing concern that he lacks the willingness to take risks. Cautiousness and efficiency served him well when he ran Apple’s supply chain, but now that he’s calling the shots on product strategy, his conservative, stay-the-course approach is making investors impatient.
Cook’s strategy of incremental product updates (critics point out that Apple has released no new products since he became CEO) has kept sales high, but it’s losing its grip on key mobile categories. Since Cook took over the top job in August 2011, Apple’s share in the smartphone market has slipped from 14.5% to 12.9%. And while AAPL may still sell more tablets than anyone else, iPad marketshare has dropped from 61.5% of all tablets sold to just 29.6% during the same period.
Investors are increasingly pressuring Cook to light a fire and be more aggressive about new products and new markets. He’s promised new stuff to come in 2014 — the rumored iWatch smartwatch is good bet — but with Apple still 24% off last year’s $700 high, the clock is ticking for Cook. Failure to deliver something new in 2014 (and have it be a category-defining blockbuster hit) could prove fatal.
He’s only been CEO of Intel (INTC) since May, but Brian Krzanich inherited a challenge. His company is one of the PC-era’s biggest dinosaurs –the dominant supplier of the CPUs powering Windows PCs– and it’s been feeling the effect of slowing computer sales.
His predecessor failed to act on the growing importance of the mobile market, and as a result, Intel watched as companies like ARM (ARMH), Qualcomm (QCOM), Nvidia (NVDA) and Samsung (SSNLF) stepped in to power the smartphones and tablets that have been cutting into PC sales.
The company is finally beginning to make inroads in the mobile market, even outside of powering tablets running Microsoft’s Windows. A few smartphone vendors have experimented with Intel chip,s and the company’s powerful new Bay Trail CPUs will reportedly be powering a slew of upcoming Android tablets.
However, if Krzanich is able to achieve the mobile success that has eluded Intel, the victory could be a Catch-22. After all, mobile chips sell for a fraction of their PC equivalent. The Exchange’s Aaron Pressman suggests that even if Intel were to capture the entire tablet market, the revenue would basically replace the 30 million computer CPU sales Intel is expected to lose this year because of the slumping PC industry.
In other words, while Intel has the pieces in place to remain a viable technology company, slowing PC sales and an increased reliance on mobile CPUs don’t necessarily leave a lot of upside. Even if Brian Krzanich succeeds in turning Intel into a mobile contender, that’s not the same level of revenue as being a PC powerhouse.
Krzanich still has to impress investors who have waited more than a decade as INTC bounces between $20 and $30 after hitting $74 in 2000 … and that may be a tough act to pull off.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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