HP has announced a plan to shed 10 percent of its employees from its cubicles around the world, starting this summer and continuing through 2006. Summertime already has a history as the season for HP to do this housecleaning, a coarse word to describe one of the sharpest of events in someone's life: being laid off. A few years back in 2002 HP did this just at the cusp of an HP World conference in LA. The timing back then left professionals searching their voicemail for a notice that they didn't need to worry about what was going undone back at their HP cubicles while they were away.
Of course, with the sudden demise of HP World, there's no chance that scenario will replay itself. HP gave its side of the layoffs story in a press release issued July 19. The vendor has not been shy about this round of layoffs; the notice was posted on the front page of the HP Web site. In years past, the old Hewlett-Packard was so circumspect about layoffs they didn’t even want to call them that. People were being “excessed” in the late 1980s.
There are worse ways to lose a job. HP was giving the world warnings about its layoffs for weeks. Interex closed its doors with scant notice in the week before HP’s cuts arrived. After Interex shut itself off, the 3000 market waited to see if, for a second straight week, any further part of its HP ecosystem would begin die off.
HP says the 14,500 HP layoffs are necessary to focus the company on its priorities. This sounds like an invitation to watch where the cuts take place. Enterprise Storage and Servers, the HP unit that creates HP's 3000 alternatives such as HP-UX and Windows servers, has been under pressure in the past few quarters to maintain a profit. But HP insists this round of layoffs is not about profitability or shedding expenses.
While some analysts claim that the engineers are back in charge at HP, the company also cancelled four R&D projects in the same week as the layoffs. One project, led by HP Fellow Alan Kay, was starting on the work to create “an operating system for the Internet.” That’s the kind of idea that led to the MPE operating system for the HP 3000, albeit on a grander scale. HP really doesn’t want much to do with creating OS software these days. Kay, by the way, is leaving HP. The company continues to create technology for cutting-edge circuit design that could replace the need for transistors, though. A hardware approach has often been the vendor’s strong suit.
The HP layoffs might jeopardize projects much closer to HP 3000 customers’ hearts. There's been a lot of work done for this customer, in the form of promises and intentions and even HP plans, by people working in what's been called Virtual CSY (vCSY), the HP group caretaking the remains of its 3000 business. A round of layoffs that ripples through vCSY could wash out many of those intentions. It might also reinforce vCSY business decisions that can still make a difference to the 3000 customer.
A Standard & Poors Equity Research Report anticipates layoffs will come in HP’s enterprise systems division, where margins have been lower than in other divisions such as printing and imaging products. But a New York Times has an article with a quote from an analyst that says this layoff season isn't about the bottom line. To echo that, HP's language in its release suggests that the company will be paring down its infrastructure:
“ The majority of staff reductions will come in support functions, such as information technology, human resources and finance,” HP said in its press release. “The remainder will be made inside business units, in areas where work can be reduced by improving processes and re-prioritizing existing tasks. To facilitate these reductions, HP will offer a voluntary retirement program to longer-serving staff based in the United States.
That voluntary retirement can be a way for HP 3000 advocates who remain inside HP to step off the big corporation treadmill. A few years back at that LA HP World conference, one of the most prominent vCSY players in the Transition Era said he thought of his next career move more often. A job teaching math sounded pretty good some days, he said. Voluntary retirement is a way to make second-career dreams a reality.
It might be easier to justify a retirement move given the rest of HP’s benefit reductions in July. The company said it won’t be contributing to employee pensions after Jan. 1. HP’s been one of the last old-line tech firms to keep chipping into employee pension pots; Intel and IBM don’t have pension plans anymore. HP 3000 customers who want help from Hewlett-Packard in the Transition Era — a period set to end at HP the same time the layoffs are complete next year — have to hope the vCSY faithful can hang on.
