HP, cameras, and Web 2.0

Hewlett-Packard has never done as much as it could to use its servers, PCs, printers, software, and the like to cross-leverage and complement each other.

One need only look to Apple to see how this sort of thing can work. The iPod would arguably not have succeeded without the Mac home base to build from, and the Mac has clearly piggybacked on the iPod's success. With even more assets, such as servers and services, HP had still more opportunities. But it largely paid lip service to connecting them. Indeed, at present, HP seems to be headed back to a more decentralized organization reminiscent of former CEO Lew Platt's tenure than the more centralized, top-down structure it adopted under Carly Fiorina.

However, at least outside its strictly business-oriented Technology and Solutions Group (where ProLiant and Integrity servers live, alongside HP's software and services businesses), there have been some cross-fertilization and synergies. HP combined its Imaging and Printing Group (cameras, printers, scanners) with the Personal Systems Group (PCs) in 2005. Although HP clearly favored the printing side of the equation, it also had products like cameras, scanners, and tablets that covered multiple points of digitization from image creation to hard-copy output.

Now comes the announcement that HP will stop designing its own cameras. Among the reasons given is enabling "HP to accelerate its investment in Print 2.0 initiatives," according to the company statement.

My initial reaction was that HP had become a bit too enamored of the margins associated with ink. And, as a result, it was backing away from products and technologies that are not, in themselves, as lucrative as printing but that clearly cross-support and leverage it in the same manner as the Mac and the iPod.

Print 2.0 relates, in no small part, to the mass Web 2.0 digitization of content. But HP sometimes seems too anxious to skip over anything that doesn't involve printing something out right now. For example, HP was actually fairly early to the online photo storage thing with Cartogra (now called Snapfish). But it was largely usurped by the more social-oriented sites such as Flickr. The difference can be striking; Snapfish periodically sends me e-mails threatening to delete my account unless I get something printed soon. Flickr is now augmenting its own printing services and can leverage a user base that dwarfs that of Snapfish.

To be sure, HP profits from many online services. HP Indigo printers are the output device of choice for many of the online book publishers such as Blurb. But by essentially taking on the role of arms merchant, rather than something more customer-facing, it cedes a lot of visibility and control of its destiny.

That said, it's hard to argue with HP's exit from the camera business.

For one thing, it largely reflects current reality. HP is already outsourcing much of its camera design work. Past digital camera-related R&D in HP Labs and its product groups notwithstanding, HP was already largely out of the camera business. Maybe HP coulda', woulda', shoulda' done better by its early digicam development, but it didn't--and there's not a lot of point wishing things were different.

Cameras are also a special class of device with their own long history and well-entrenched suppliers. Canon, for example, has been in the photo business since 1933 and has managed to not just maintain a presence in the camera market, but to actually accelerate its relative stature as a camera maker in the Digital Age.

Nikon hasn’t done badly either, although its greatest strengths are arguably in more traditional camera technologies such as optical design, whereas Canon has a clear lead in electronics design and manufacturing. Other manufacturers, such as Sony, Olympus, and Pentax are also in a better position than HP.

In short, HP is in such a laggardly position when it comes to cameras that it has effectively no hope of coming close to market leadership. Better to fold the tent and perhaps seek partnerships with companies that might be more amenable to such than if HP were an aggressive competitor.