Hewlett-Packard Finds Renewal Is Hard to Do May 18, 1999 was a great day for Hewlett-Packard (NYSE:HPQ). Six months after a major internal reorganization, media and analysts were packed into an auditorium on the Palo Alto, California, campus. The crowd was so large that there wasn't even a seat for Bill Russell, then COO and executive vice president of HP's systems and software group. He was reduced to leaning against a wall along with the other stragglers. This standing-room-only crowd was there to hear HP's plans to redefine itself for the future. What was learned was an ambitious strategy to transform HP from a value-added hardware vendor into a strategic Internet player, with an emphasis on software technologies far removed from what HP was known for. The e-services initiative, as it was dubbed, would transform HP. Almost immediately, every product in HP's portfolio was given an electronic services twist. Within a month, Carly Fiorina was chosen to replace Lew Platt as CEO, and HP stock rose to over $135 per share by mid-July. Instead of using all of its momentum, however, HP stalled. Talent slipped through its doors, partners dropped out and market share slipped away. And the envied share price? It currently trades at around $30, just half its split-adjusted value in July 1999. Then there are electronic services. To date, the more forward-thinking concepts outlined at HP's coming out - online brokering, wireless services, and the ability for any company to transform its IT infrastructure into an externally facing source of revenue - have yet to become reality. What has happened to HP since it began reinventing itself in the spring of 1999? Some argue that the problem begins with electronic services themselves. Others say the company just needs some time. “E-Services is a strategy and vision for the next generation of the Internet,” says Doug McGowan, general manager of HP's e-Services solutions organization. "Some pieces of that vision will come from us and [others from] our competitors. I think we're making tremendous progress. But it was never intended to be a six-month project." Fair enough, but where's the meat, some wonder. “Most people liked HP's official spokesperson, former senior vice president and marketing director of HP's corporate and commercial division, Nick Earle, because he embraced HP's vision,” says Joe Clabby, group vice president of the Aberdeen Group with based in Boston. Patricia Seybold and a few other consultants helped HP create the e-services message, and she and her friends were brilliant. They took advantage of HP's previous strengths in middleware development and high-availability system development and created a wonderful message.