[HN Gopher] Autodesk's John Walker Explained HP and IBM in 1991 ...
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Autodesk's John Walker Explained HP and IBM in 1991 (2015)
Author : suioir
Score : 103 points
Date : 2025-10-29 11:28 UTC (4 days ago)
(HTM) web link (www.cringely.com)
(TXT) w3m dump (www.cringely.com)
| ghaff wrote:
| As Cringely himself admits, he's had something of an obsession
| with IBM; not sure of the history. And IBM has actually done
| pretty decently the past few years post-Rometty.
|
| HP, by contrast, has been somewhat adrift even after all the
| boardroom drama.
| uvaursi wrote:
| I like that HP is putting out new products like the little
| roomba floor plan printer robot. Even if it's not original
| (neither was the printer), they've got divisions that are
| ideating, improving, designing and manufacturing products. I
| haven't seen the full scope of their offerings to be fair.
| ghaff wrote:
| Fiorina had this vague-ish better together vision. But, even
| now that I'm sort of back in the industry analyst thing
| again, HP isn't really on my radar. Obviously they have
| customers but haven't been following them especially closely
| and pretty much all my connections there are long gone.
| ghaff wrote:
| Seems like a very niche market for a company at HP's scale. I
| don't really see them as a consumer printer company any
| longer. And Roomba-type things are very dependent on floor
| plans. My brother has a near-ideal layout (single level with
| no transitions) and it just works so-so for them. Wouldn't
| work for me pretty much at all even with some changes that
| eliminate level transitions.
| kragen wrote:
| Does your brother often plot floor plans on his house
| floor?
| ghaff wrote:
| No. He has a floor plan and it is what it is.
|
| A few years ago I got a broom vac and that seems to make
| the most sense.
| kamranjon wrote:
| Isn't IBM still operating through a pattern of selling service
| contracts for sub-par products that do everything in their
| power to lock their customers in? I feel like they embedded
| themselves so deeply in some of these public sector orgs that
| they can't really orient themselves in any other way than
| through a predatory business model that lacks innovation.
| ghaff wrote:
| They did buy Red Hat (for a lot of money) and seem to have
| generally gotten their AI act together although not as
| visibly as the high profile SV players. Mainframe business
| seems to hum along. There's also quantum though not a big
| revenue source yet.
|
| So, overall, seems a pretty decent business at this point
| although not something that is on a lot of HN readers'
| radars. Yes, it's oriented towards large companies and public
| sector.
| WillAdams wrote:
| Yes, but they've made some notable mis-steps:
|
| https://www.pennlive.com/news/2021/09/ibm-paid-pa-33m-to-
| set...
|
| (apparently there were enough states with this problem that
| there was talk of a class-action lawsuit?)
| georgeecollins wrote:
| Buying Red Hat is exactly the behavior John Walker is
| describing. You don't spend money on R&D, or
| infrastructure. You acquire a business line and starve it.
| forgetfulness wrote:
| Up until a few years ago, they were buying products, signing
| labor-intensive contracts, laying off people, burning out the
| ones that remain, and not investing in its products
|
| In 2021 they spun off the consultancy business and now seem
| to just sell software and hardware.
|
| The spin off, Kyndryl, is burdened with unprofitable contacts
| and is still slashing and burning its workforce.
|
| IBM doesn't seem to be making a comeback in SaaS or whatnot,
| they seem to just have split their problems down the middle
| but not solved them.
| WillAdams wrote:
| For a further analysis of this letter (in the context of CAD)
| see:
|
| https://www.shapr3d.com/history-of-cad/introduction
| rawgabbit wrote:
| Nice article that sums up the modus operandi of rudderless
| companies.
|
| Quote: This is the pit into which HP and IBM
| have fallen. They want to maintain margins to keep Wall Street
| happy, but the easiest way to do that is by cutting costs.
| Eventually this will be visible in declining sales, which IBM has
| now experienced for three straight years. Yet with a combination
| of clever accounting and bad judgement even declining sales can
| be masked... for awhile.
| embedding-shape wrote:
| Pretty ironic too, considering the stagnation of Autodesk, and
| their constant push to offer less for more.
| DANmode wrote:
| The fellow writing these things is no longer with the firm,
|
| so, far from ironic in my opinion.
| embedding-shape wrote:
| At 1991 he was still with the firm AFAIK.
| DANmode wrote:
| "Constant" didn't feel like 1991.
|
| Apologies!
| kragen wrote:
| (02015) but both HP and IBM seem to be alive and well 10 years
| later, even if their products are dog vomit.
|
| This phrase "confusing the scoreboard with the game" is golden!
|
| IL14 is a lot better than Cringely's commentary on it:
| https://www.fourmilab.ch/autofile/www/chapter2_86.html
| DonHopkins wrote:
| Hey, how dare you besmirch my favorite variety of slime mold by
| implying it's like HP and IBM products!
|
| https://en.wikipedia.org/wiki/Fuligo_septica
|
| Harvesting, cooking and eating Dog Vomit Slime Mold:
|
| https://www.youtube.com/watch?v=KfbLSl_4o78
| kragen wrote:
| No, those are beautiful! I meant actual vomit, from dogs.
| varjag wrote:
| HP is dead for soon three decades. There is a company with its
| name nowadays that makes shitty computers and some printers.
| kragen wrote:
| That's the one Cringely was saying was headed for trouble 10
| years ago.
| gopher_space wrote:
| You'll never buy a HP printer again once you experience their
| latest software. Every bad idea and dark pattern from the
| last decade or two rolled into a single package.
| yodon wrote:
| I love the article, and love the genuinely appropriate
| intellectual outrage, but isn't this just the market telling
| AutoDesk that it was paying too much for its enterprise sales
| function, and that it should be able to run sales more
| efficiently ($375/seat cost of sales rather than $500/seat cost
| of sales), when the sale is happening at the enterprise scale
| where lots of seats are involved?
|
| Given that your largest customers are generally your most
| profitable, the market was simply telling AutoDesk at the time
| that it was spending more than its peers selling to large
| enterprises and matching per-seat SMB sales costs shouldn't be
| their benchmark for enterprise sales costs.
|
| By shifting the target from $500 to $375/seat cost of sales,
| AutoDesk would have kept their margins but doubled their returns.
| Alternatively, AutoDesk could keep the cost of sales unchanged
| ($500) and bump up the enterprise price from $1,000 to a little
| over $1,125, and achieve the same goal. The market doesn't care
| which approach AutoDesk takes, but it knows the company was
| giving away too much margin on enterprise sales. Most modern SaaS
| companies today take the later approach, except they would charge
| enterprises $2,500/seat instead of a little over $1,125/seat.
|
| AutoDesk has had some very forward thinking senior leadership at
| different points in its history, but it's also made some
| missteps. Writing a wonderful assault on the accounting industry
| instead of realizing that enterprises will pay $2,500 for the
| same thing SMB's are buying for $1,000 is an example of one of
| those missteps (and yes, AutoDesk eventually figured how to screw
| over customers with pricing, but that's another misstep,
| explaining why I no longer own any AutoDesk products).
| TheOtherHobbes wrote:
| The point is accounting doesn't just report numbers, it drives
| the default strategy of "This is too expensive and costs should
| be cut."
|
| Management should know there are alternative strategies, and
| ideally should know which of those is best.
|
| But accounting policies bake strategic implications into their
| reporting.
|
| Which is why we are where we are - on the verge of a
| catastrophic crash, because genius Wall St analysts are chasing
| the gilded AI bubble, while the rest of the economy is starved
| of consumer spending.
|
| With much more to come.
| le-mark wrote:
| Casual observers may not know that pundits have been calling
| for a catastrophic collapse in the markets for as long as
| I've been watching (early 80s). There have been a lot of dips
| and a few recessions in that time obviously, but beware the
| "it's different this time" doom sayers.
| computator wrote:
| > _But oh what a difference it makes in the accounting! In the
| first case, where Autodesk sold the copy of AutoCAD to the
| dealer, that was the whole transaction; whatever happened to the
| copy of AutoCAD after the dealer paid for it has no effect on
| Autodesk's books. Autodesk sells, dealer pays, end of story. But
| in the second case, when Autodesk sells to Spacely Sprockets,
| that appears on Autodesk's ledger as a sale of AutoCAD for $1000.
| The instant the $1000 shows up, however, we immediately cut a
| check for the commission, $500, and mail it to the
| representative, leaving the same $500 we'd get from the dealer.
| Same difference, right? Not if you're an accountant! In the first
| case, Autodesk made a sale for $500 and ended up, after expenses
| and taxes, with $125, and therefore is operating with a 25%
| margin (125 /500). In the Spacely sale, however, the books show
| we sold the product for $1000, yet wound up only with the same
| $125. So now our margins are a mere 12.5% (125/1000)._
|
| I'd like to know how an accountant would respond to the above.
| Based on his two examples, it seems like accounting rules really
| distort the financial picture of a company.
| Foobar8568 wrote:
| Profitability is all lies, you report what you want, the goal
| is to ensure whatever numbers you want to communicate raises
| nicely quarter over quarter.
| MichaelZuo wrote:
| Yeah the advice I've heard is that if a company refuses to
| provided audited GAAP numbers, just run away, no point at all
| in engaging beyond that.
|
| And even if they do provide those numbers, you still need to
| scrutinize the cash flow statement and balance sheet.
| Foobar8568 wrote:
| Even that...I can't comment but companies play with CAPEX,
| OPEX, what they call innovation, what they amortize etc.
|
| Amortizing CAPEX, claiming it's innovation and building on
| the future when it's done by consultancy having a 1-3y turn
| over.
|
| Oh and let's fake maintenance works under "projects".
|
| I am not accountant, so there might be some stuff missing
| but the 3 upper points are stuff I have seen in many
| companies.
| jacquesm wrote:
| By the time you understand this that particular Monthy
| Python sketch (the machine that goes 'ping') will really
| have you in stitches.
| mrandish wrote:
| > companies play with CAPEX, OPEX, what they call
| innovation, what they amortize etc.
|
| True but most public companies reporting under GAAP tend
| to play roughly similar games to roughly similar degrees.
| So these metrics alone may not reflect much objective
| reality about a particular company at a given moment but
| can be useful in benchmarking the relative performance of
| similar types of companies against each other.
| gxs wrote:
| Exactly - this is a case where consistency is more
| important than accuracy
|
| If everyone is optimizing their GAAP figures, eventually
| everyone converges on a similar number you can compare
| across companies
|
| Downside is that if you don't play the game you're sort
| of screwing yourself
| jaynate wrote:
| There are revenue recognition rules that govern what Revenue
| is on the P&L. Same with costs/expenses. But I would say if
| anything, profits are easier to manipulate than revenue.
| mlyle wrote:
| I think the accountant would retort that it's way better to get
| $125 of profit from $500 of revenue than from $1000 of revenue,
| overall. In the former case, you have a lot of padding for
| conditions to change, and in the latter case you don't.
|
| And, if there's some outside dealer that can make a profit
| taking their $500 cut, but you need to pay all of the $500
| out-- it seems like your sales function is less efficient--
| less efficient than the rest of Autodesk and less efficient
| than the outside dealer.
|
| Margins aren't everything. Absent outside judgment, I think I'd
| rather make, say, $175 profit from $1k of revenue than $125
| from $500. But I wouldn't trade $125 on $500 for $126 on
| $1,000.
|
| And, of course, there's always the strategic concerns. Control
| of accounts, opportunities to upsell or cross-sell, etc, etc.
| Financial reporting can't tell the whole story, because you
| can't boil down the whole story of a company to a few numbers.
| It's the triumph of GAAP that it's a _pretty dang good start_
| to understanding most companies.
| rawgabbit wrote:
| He is talking about the effect on stock price. The second
| scenario results in lower margins. Stock market analysts look
| unfavorably on this.
| jaynate wrote:
| Depending on what you're optimizing for could be revenue
| (high growth) or Net income per share (lower growth).
|
| Reality is once you've established a baseline it's difficult
| to move from one to the other or have substantial changes to
| the negative for either.
| lotsofpulp wrote:
| Any investor with half a brain is not solely looking at one
| specific margin to analyze an investment. That is why you
| compare profit margin and operating margin and revenue and
| other measures to build a more accurate picture.
| akgoel wrote:
| We have something similar with tariffs. We pass them through to
| the client, and they show up as revenue and expenses like this
| Autodesk example.. But, we immediately deduct the tariff
| expense from the tariff revenue above the gross revenue line,
| so Gross Revenue is not affected.
| Spooky23 wrote:
| You should see the accounting bullshittery around data centers!
| teach wrote:
| (2015)
| B1FF_PSUVM wrote:
| Also, Cringely's site last piece is from 2023.
|
| Someone asked for news of him recently here,
| https://news.ycombinator.com/item?id=44739987 , but there were
| no actual answers...
| thevillagechief wrote:
| > _Ginni Rometty and Meg Whitman appear to be more interested in
| keeping their jobs than in saving their companies_
|
| I think this is why I have so much respect for Pat Gelsinger. He
| really was trying to save Intel, so much so that it cost him his
| job.
| zkmon wrote:
| The way businesses or empires had success was by dancing to the
| tune of the time. The tune changes with time. The wind changes,
| tides change direction, the overall context changes. So it
| doesn't help to much to study what business have done or what
| empires have done or what leaders have done. They were a
| minuscule part of the overall climate and context, which was
| overlooked by historians.
|
| Foreground is a product of the background.
| pavlov wrote:
| John Walker passed away last year.
|
| His "Autodesk File" is an interesting read because it's not the
| usual "just so" kind of startup memoir that tries to explain how
| success was preordained by the founder's genius, but instead a
| collection of actual documents like memos in chronological order:
|
| https://www.fourmilab.ch/autofile/
| jacquesm wrote:
| I've had a bunch of interaction with John over the years,
| mostly around 'SpeakFreely', which he generously allowed us to
| use for the audio component of the webcam software.
|
| It took a while before I had mentally linked the 'Autodesk'
| founder to the person I was interacting with and I think he had
| a quiet chuckle or two when I finally found out. What is so
| interesting to me is that instead of clinging to power at
| Autodesk he managed to let go of it and enjoy his (way too
| short) time afterwards.
|
| We never met, unfortunately.
| kragen wrote:
| I believe he dedicated Speak Freely to the public domain so
| that anyone can use it for anything. Even more generous than
| you imply.
| znpy wrote:
| John Walker is the kind of guy that would (successfully) apply
| the engineering approach to non-engineering issues.
|
| I was amused by his book "the hacker's diet":
| https://www.fourmilab.ch/hackdiet/
| jaynate wrote:
| Had me hooked right up to this point: "When we get the check, we
| pay a commission to this representative. Assume the commission is
| $500."
|
| I've never seen a software company pay 50% commissions on a
| software sale. I know it's and example but the percentages are
| wrong even for the perpetually licensed days. Should be closer to
| 8-15%.
|
| Totally sales and marketing spend could indeed be higher in this
| model because autodesk moved to direct positioning with end
| buyers rather than distributors.
| jdswain wrote:
| Commissions were different back then. I worked part time
| selling computers around 1990 and a little earlier, margin on
| computers was moving down, but was as high as 50%, I recall it
| moving down to 30% and stabilising there for a while. I don't
| remember software margins, but it could have been about the
| same. I used to get 50% of the margin as commission.
| xoxxala wrote:
| When I sold Windows 2.1 at Egghead Software, my spiff was an
| extra 30% for the first month as a promo. I always assumed
| that was a loss leader by Microsoft to push extra copies on
| release.
| WillAdams wrote:
| A further consideration here is that this wasn't just
| commission, but also a payment towards providing support to the
| customer.
| kragen wrote:
| I'm pretty sure this is a roughly accurate breakdown of
| AutoCAD's cost structure 34 years ago. How long have you been
| in the business, and what was the highest-sticker-price
| software you were selling?
| nobodyknowsme wrote:
| I met John Walker in Second Life shortly after the pandemic
| started.
|
| We both used the name "Acme" in our gadget names and he came by
| to see what I was building. He was wearing a Wile E. Coyote
| avatar.
|
| It wasn't until after he left that I noticed he was one of the
| original authors of AutoCAD.
|
| He was very prolific at writing code in Second Life from the
| beginning of the pandemic until shortly before his death.
|
| He was very thorough in writing documentation for all the free
| code he wrote, and even included detailed diaries of his
| development of his neat gadgets.
|
| His products were all removed from the Second Life store after
| his death, but I'm trying to get it all back up for people to
| enjoy. The code is still on github, but I'm trying to recreate
| some of the 3d objects needed for that code to work.
| kragen wrote:
| Why were they removed?
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