Paris – june 7th 2013 - Last tuesday, as part of an ongoing investigation exploring internet censorship and monitoring in Iran and in Syria, Reflets.info uncovered Hewlett Packard’s link with TCI, Iran’s state-own ISP – controling all Iranian internet traffic -, where HP technology is used to update its filtering and surveillance capabilities, paired with Chinese ZTE appliances.
The way Hewlett Packard technology was assembled and integrated on TCI’s infrastructure shows HP as a central building block of Iran’s « halalnet », its heavily filtered internet, « nationwide surveillance » enabled.
Communication disruption ?
Those revelations could become a major disruption in HP’s day to day communication and marketing activities, and could generate significant losses in terms of sales and marketshare, especialy in a declining domestic PC market, already facing a crisis. One must note that the reasonnable first step in such crisis management sequence usualy consist in putting on hold all ongoing communication and marketing operations.
Beside a TV ad currently airing throughout the world for its flagship B2C product, the HP Envy 4 TouchSmart Ultrabook, featuring stars such as magician Dan White and DJ Robbie Wilde,, Hewlett Packard is currently ongoing a brand-oriented TV ad campaign sharing « brand values » that are totaly inconsistant with its involvment in Iran, where HP technology is used to oppress human rights.
The US embargo controls can be easily circumvented, just like local tax regulations, but by helping violating human right in Iran, Hewlett Packard is facing more than legal responsability. In the coming transparent world, HP is facing accountability. It must now account for its activities, accept responsibility for them, and disclose the results in a transparent manner.
Strong Sell (NYSE:HPQ)
Hewlett Packard is – as of today – among the world’s most valued brand on the market (see interbrand classification and valuation), and this revelation could have some serious impact on its stock value in the coming days and weeks.
For a B2C company, its brand can represent a significant part of its market valuation, and Reflets.info’ investigation, revealing HP’s key role in the Iranian censorship and surveillance infrastructure, is sure to severely affect HP’s reputation and brand.
Those of you willing to learn more about brand’s marketplace valuation should refer to Vijay Govindrajan Professor of International Business at Dartmouth College, who established in a detailled study published in sept. 2011, HP’s brand valuation at +23B$ (source). Interbrand estimates today’s HP brand value at 26B$ for a total +47B$ market valuation. The brand accounts for more than half of HP’s value.
For the very first time in its editorial life, Reflets.info is going to issue a stock market recommendation. We strongly advise NYSE:HPQ stock holders to sell. Investment funds wishing to profit from this ongoing investigation by Reflets.info should Short Sell HP’s stock.
It must be noted that as strange as it might sound, Reflets.info is also a well respected publication in the finance/trading industry. This specific editorial mix – IT investigations, hack-journalism, finance & trading that can be found on Reflets.info is due to the professional background of one of Reflets.info cofounder, french internet veteran and hacker-journalist Antoine Champagne, a.k.a. Kitetoa.
Beside being Reflets.info cofounder alongside with Bluetouff, Kitetoa has a 20 year experience as a journalist for newspapers such as the Canard Enchaîné, Le Monde, Transfert, etc. He has a strong background in financial investigation.
As a sidenote, those technologies are responsible for the recent flash crash that took place when the Syrian Electronic Army took control of AP’s twitter account and published a fake newsflash announcing terrorist attack on the White House.
A momentum for Brand Management in the Age of Transparency ?
Brand management has been surpassing marketing as a communication doctrine for several decades now. Its approach basicaly consist in storytelling allegedly « brand values » to influence the general public by creating an emotional state around a company and its products, in order to shape the relationship between a consumer and a brand.
Apple, ranked #2 brand by Interbrand with a 76B$ valuation, relies on company core values, that sadly do not contradict its business practices revealed by the Foxconn scandal, but Hewlett Packard is in a very different situation.
Many brands, including HP, have been built not on the company’s values, but on nice-to-have keywords, choosen in order to please the general public.
A brand exists only because of its commitment to its internal values.
Without that it is just glorified product name.
Vijay Govindrajan – Interbrand HP brand valuation report – sept 2011
In its latest branding TV ad, Hewlett Packard showcases a set of values that today appears in total contradiction with its business practice. The HP brand now appears as built on a lie.
This raises serious questions concerning HP’s brand valuation, brand valuation methodology, (especialy when it comes to expected earnings, i.e. brand as a secured asset) and to brand management as a whole in the age of transparency.
Brands like HP must now make a choice between a serious update to their branding strategy in order to preserve some of its value, or applying its alleged brand values to its business practices. Moreover, now a central part of Iran’s censorship and surveillance regime, Hewlett Packard, like many other IT Brands, plays a political partition in a tensed political landscape. It can therefore be held as accountable, just like any political stakeholder, in the eyes of the general public – consumers being just a small subset of these – not to mention numerous NGOs being on the loose when it comes to the surveillance industry.
Google and Facebook already faced such situations during the Arab Spring, and are now recognized as detaining real political power. But being on the wrong side of the « Axis of Evil » is a difficult positioning strategy for Hewlett Packard, creating some value out of it is definitely a risky business.