HP Strategy Faces Immense Challenges, Oracle, IBM

 
 
By Nicholas Kolakowski  |  Posted 2011-08-21 Email Print this article Print
 
 
 
 
 
 
 

Hewlett-Packard's new services-and-software strategy will place it on a collision course with Oracle, IBM, Microsoft and other heavy hitters.

Hewlett-Packard's shocking one-two punch-that it would discontinue making its webOS mobile devices, and look to shed its PC business-is the sort of thing that business schools will be analyzing for years to come.

Certainly HP's decision to embrace software and services, and abandon a sizable but relatively low-margin PC business, is indicative of where companies are finding their money these days. IBM did something similar in 2005 when it sold its PC division to Lenovo in favor of enterprise IT. Oracle and SAP are major competitors in the services area, and Microsoft clearly wants a bigger piece of that pie with its business-centric "all in" cloud strategy.

Now HP's hurling itself into that mix, pinning its hopes on a reconfigured company that leverages Big Data for enterprises. Key to that will be its acquisition of Autonomy, Europe's second-largest software company behind SAP.

"If the rumors are true [about Autonomy], then HP stands to add a substantial software company to complement Vertica and 3PAR," Charles King, primary analyst at Pund-IT, told eWEEK. "They can provide the search analytics at the big data-type software layer that HP lacks right now."

But HP will also have to bulk up its software-and-services muscle despite what will surely be vigorous opposition from the likes of Oracle and IBM, which aren't exactly known for being easygoing opponents.

Meanwhile, some analysts are seeing HP's move away from PCs as part of a seismic shift for the industry as a whole.

"HP just abdicated playing a role in the mobility revolution except from the air-conditioned comfort of the cloud data center. This move makes Google's acquisition of Motorola look prescient," Yankee Group analyst Carl Howe wrote in an Aug. 19 research note. "We are witnessing the final collapse of the Silicon Valley PC era."

Even as its PC business suffered, HP had a hard time breaking into mobility with its new tablets and smartphones. Placed head-to-head against Apple's bestselling iPad, the HP TouchPad's app ecosystem seemed paltry, and the device wasn't helped by early reviews that damned its slow user interface. PC sales have been softening of late-even forcing a reduction in Microsoft's Windows revenue last quarter-but it's difficult to tell whether this is due to the cannibalizing influence of tablets, or more a factor of an anemic economy.

"HP is reforming as much more of a broad software company more like Microsoft/Oracle than even IBM," Rob Enderle, principal analyst of the Enderle Group, wrote in an Aug. 18 email to eWEEK. "In effect, they are repeating what IBM did with Palmisano and what Apple did with Jobs in that the new HP will be optimized for their new CEO."

As with IBM and Apple during the early period of their respective transitions, though, the hurdles facing HP are immense.

Follow Nicholas Kolakowski on Twitter

 
 
 
 
 
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
 
 
 
 
 
 
 

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