isen.blog

Francis McInerney is an analyst with a penchant for getting it right. In a recent client letter on the Fiorina firing at HP he writes:

Napoleon arrived at Austerlitz on November 21, 1803, nearly two weeks before the Austrian and Russian allies whom he chose to fight there. Outnumbered two to one in men and artillery and three to one in cavalry, he had plenty of time to survey the battlefield. He carefully ceded the high ground, which, when they finally arrived in early December, the Allies rushed after with glee.

Just like H-P and Compaq rushing after market share, this was a big mistake.

Impossibly outnumbered like Napoleon, Dell’s high cash and capital velocities gave Dell far more time to survey the market battlefield and make more judicious choices than his much larger competitors.

From their "high ground" at Austerlitz, the Allies thought they saw a weakness on Napoleon's right, and marched their main forces off to attack him there, expecting to rid Europe of Napoleon forever. Once the Allies had lumbered off, Napoleon attacked their now depleted center, overran it, and destroyed the remaining allied divisions in detail.

So it is with Dell today. Fiorina rushed off to merge H-P with Compaq, thinking that this was the winning direction in which to throw their combined weight. Dell waited until this unwieldy move was well under way, then launched his main move on H-P’s profitable “center”, its printers. Carly Fiorina [had] marched straight into Michael Dell’s Austerlitz.

Pretty cool the way strategy works in genuine competitive markets, huh?