The Only Way HP, Dell and RIM Can Survive

NEW YORK (TheStreet) -- Last month, I chided a lack of innovation in tech, targeting the poster child for the status quo in Meg Whitman and HP: Everything That Is Wrong With Tech.

You know you struck a chord when multiple people, independent of one another, email to say, "Thanks for having the guts to finally call out Whitman." Apparently, I am not the only one who doesn't believe the hype.

In the above-linked article, I came down on Whitman's comment that Hewlett Packard ( HPQ) just needs to be in the smartphone space. How novel.

Now comes official word that HP will take another stab at the tablet market with an enterprise version running Windows 8. TheStreet's James Rogers tells us that HP will step up efforts in the software and services area. Best of luck competing with Cisco Systems ( CSCO) and IBM ( IBM).

That's really what it comes down to. Whitman and, by association, HP have no business competing with Cisco, IBM and Apple ( AAPL). Didn't HP, and its equally-as-inept counterpart Dell ( DELL) learn anything from Research in Motion ( RIMM)?

Let's consider the lessons RIM taught us.

First, own up to getting your hind end handed to you by Apple. RIM did this -- though not explicitly -- but about two years too late. HP sort of has. In fact, Whitman came closer to doing what a company in an entirely different space did.

Domino's Pizza ( DPZ), like Whitman, told the world, in no uncertain terms, we stink. What we have been doing hasn't been working. Our customers and the general public deserve a much better effort. From there, CEO Patrick Doyle led a refreshingly honest and innovative wholesale transformation of the company. That segues into point two.

RIM taught us that after you admit defeat or, at the very least, no longer have the will to fight, you need to make major changes. Of course, RIM did not do this. It has basically decided it will chart the same strategy that failed under a new boss, who is, for all intent and purposes, same as the old boss.

While HP might be doing some things different internally, they're not doing anything that we haven't seen before or is an invigorating take on what already exists. HP did not bring in a leader who is capable of enacting such radical change.

It's a shame when a pizza company schools tech companies on how to innovate and engineer a turnaround.

Of course, I mentioned Dell initially, but did not include them in this portion of the conversation.

I'm not sure what, if anything, is going on over there. Whenever I think of Dell, an interview Maria Bartiromo did with Michael Dell back in June comes to mind. I'm sure Maria is still trying to figure out if the CEO actually answered any of her solid questions.

HP, Dell and RIM have one choice if they hope to survive: Feel the urge to merge and follow through. In fact, there's no good reason, assuming you can take the various egos out of the equation, for these three companies not to combine. You would also need each board of directors to cooperate.

Of course, a deal would have to get past both American and Canadian regulators. The Canadian government would also have to approve what would likely amount to foreign ownership of RIM. No worries on both counts.

Any good lawyer could make the case that an HP-Dell-RIM hookup increases competition. Right now, firms such as Apple, Cisco and IBM run circles around these guys. Consolidation might actually give them a fighting chance.

As for the Canadian parliament -- RIM has become such a national embarrassment that Canada should have been shopping the company around early in 2011.

If something so dramatic were to happen, pretty much all upper management at all three companies needs to get blown out. Consolidate operations in Silicon Valley, Manhattan, Austin and Waterloo. Hire a young tech hotshot. Somebody with some vision. Somebody like Marissa Mayer, but even more aggressive. Create some excitement.

Sounds crazy, I know. But it's no more crazy than telling shareholders you're going to do what's already been done and fail at it one more time. By contrast, my idea appears far more sane and logical.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.

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