Carly Fiorina Failed At Hewlett-Packard In A Whole Other Way You Didn't Even Know About

Or maybe the CarlyPod

In what's either an excellent bit of techbiz history or the strangest possible promotional tie-in to the new Steve Jobs movie, Stephen Levy at Medium brings us a fascinating backgrounder on yet another bit of Carly Fiorina brag, during the second GOP debate, that she couldn't have been too terrible at Hewlett-Packard, since she got an encouraging phone call from Steve Jobs Himself:  

When you challenge the status quo, you make enemies. I made a few. Steve Jobs told me that when he called me the day I was fired to say, "Hey, been there, done that twice."

Heck, that's how the tech business goes. Sometimes you're just too darn visionary for a mere corporate board, and they shitcan you because they aren't visionaries like you. 

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Color Levy skeptical. Sure, Jobs called her to commiserate and say, "Yeah, I've been fired by dunderheads too, but that's what happens to those of us who Think Different, right?" Except Carly Fiorina ain't no Steve Jobs:

Unlike Jobs, however, Fiorina did not go on to start a company, buy another small company and sell it for billions, or return to the place that fired her and restore it to glory. But the point of the story was that Steve was on her side, and by aligning herself with the sainted innovator, Fiorina racked up triple-bonus debate points.

But that's not really the point, says Levy. The real point is that Steve Jobs could easily afford a kind word for Fiorina, since she'd very helpfully made him a lot of money in one of her many management debacles at HP: the sorry and forgettable "partnership" between HP and Apple that resulted in an abominable, largely forgotten technology footnote, the HP iPod. Levy knows a thing or two about that misbegotten artifact of the early Aughts, since he literally wrote the book on the iPod. Or at least, a book on it.

When the iPod was still so new and revolutionary that everyone was still gaga over it:

[Jobs and Fiorina] made a deal where HP could slap its name on Apple’s wildly successful product. Nonetheless, HP still managed to botch things. It could not have been otherwise, really, because Steve Jobs totally outsmarted the woman who now claims she can run the United States of America.

No, kids, this piece is not going to be kind to Fiorina.

Under Fiorina's direction, HP fudged almost everything it could in its iPod "partnership" with Apple, although the relationship sounds a bit more like the "partnership" of the USSR and its Cold War satellite states. Jobs pretty much dictated the terms under which HP would make and sell its version of the iPod, and he made sure that Apple had the better deal in every aspect of how it was rolled out. His biggest advantage was getting Fiorina to pre-install Apple's iTunes music service on all its new computers:

This was a hugely valuable concession. Apple had only recently begun to push this key software into the Windows world. Millions of HP/Compaq customers would instantly become part of Apple’s entertainment ecosystem.

If it were a straight deal for HP to include Apple’s software, the fee might have been hundreds of millions of dollars ... Even better, preinstalling iTunes was a way for Apple to stifle Microsoft’s competitor to the iTunes Music Store. As an Apple leader at the time puts it, “This was a highly strategic move to block HP/Compaq from installing Windows Media Store on their PCs. We wanted iTunes Music store to be a definitive winner. Steve only did this deal because of that.”

Levy ventures that because HP was barely making a profit on each PC it sold, the deal almost certainly created more value for Apple than it did for HP. And then there was the HP iPod itself, which never really competed with the Apple version because shortly after HP got its version on the market, Apple came out with the next generation of its iPod, with more storage and better bells and whistles. This left the HP version perpetually behind:

Fiorina apparently did not secure the right to sell the most current iPods in a timely fashion, and was able to deliver newer models only months after the Apple versions were widely available.

At its best, the HP version never made up more than 5 percent of iPods sold. It didn't even do well in Iran! Jobs dictated even the tiniest detail of the HP version's design:  Although Fiorina proudly showed off a pretty blue HP iPod prototype, the Apple device came only in white, and darned if the actual production models from HP weren't white, too.

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Fiorina even screwed HP beyond the end of her tenure, since her agreement with Apple committed HP to not producing a competing music player until 2006 -- well past her firing in February 2005. Even after her successor ended the iPod deal in July 2005,HP/Compaq computers came bundled with iTunes until January 2006, when HP made a deal to include the Rhapsody music service:

Rhapsody Co-chair Rob Glaser, who had observed the drama from his Seattle base, now says, “Steve and Apple fleeced HP in that deal — HP’s version of the iPod was a failure, and Apple was able to grow the iPod.”

So Fiorina made a deal to sell an HP iPod that would always be obsolete compared to Apple's and to install software that made Apple rich. Great negotiating, Donald Trump would be proud! Anything else?

Oh yes. Levy points out that when HP bought Compaq,it acquired Compaq's many patents on digital music player technology that Fiorina could have leveragedto HP's advantage in negotiating with Jobs, since "she could have credibly claimed that the iPod infringed on HP’s intellectual property" -- if she'd had any idea that her company owned the patents. Nope. Levy sums up:

In short, Fiorina’s “good friend” Steve Jobs blithely mugged her and HP’s shareholders. By getting Fiorina to adopt the iPod as HP’s music player, Jobs had effectively gotten his software installed on millions of computers for free, stifled his main competitor, and gotten a company that prided itself on invention to declare that Apple was a superior inventor. And he lost nothing, except the few minutes it took him to call Carly Fiorina and say he was sorry she got canned.

Yep, that's the brilliant business experience that Fiorina wants to bring to the Oval Office. As Levy says, it's not an especially "encouraging precedent for a person who wants to deal with Vladimir Putin."

Now we simply need to wait and see whether Donald Trump can find an old HP iPod on eBay before the next GOP debate. Might be fun for him to pull that from a jacket pocket and say, "Perhaps this will refresh your memory!"

[ Medium.com ]