Raising the Bar...Creating Wealth in CE
Iomega, among the top wealth creators on the 10-year chart, sits near the bottom on the one-year chart, with a negative total annual return of over -49 percent. That's -69 percent relative to the S&P 500. Innovative products like the ZIP drive can produce great returns, but these returns can be quickly eroded by competition and faster, cheaper and/or different products like CDs or virtual memory banks on the Internet.
Hewlett-Packard (like Microsoft) appeared near the top quintile in all three time frames. We chose HP as our example for best practices because of this consistent performance during the last 20 years. Best practices at HP are known as The HP Way and are summarized here.
A great new product can help launch a company and its stock, like Iomega or like relative newcomers EchoStar and Gemstar. However, to build a long lasting, multi-billion dollar company, it takes more than a great product. HP takes pride in being an organization that can invent new products that customers will value. For HP, the organization and HP Way best practices have allowed it to expand beyond audio oscillators and measuring devices into computers, computer printers and, more recently, into lower-margin PCs. By one measure, HP products represent approximately 10 percent of shelf space of many CE retailers profiled in January.