Hewlett-Packard: the Apotheker Vision Contents New CEO Leo Apotheker Has Laid out His Vision for HP— One That Emphasizes Cloud, Mobility and Software

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Hewlett-Packard: the Apotheker Vision Contents New CEO Leo Apotheker Has Laid out His Vision for HP— One That Emphasizes Cloud, Mobility and Software March 23, 2011 $99 Analytics.InformationWeek.com Analytics Alert Hewlett-Packard: The Apotheker Vision Contents New CEO Leo Apotheker has laid out his vision for HP— one that emphasizes cloud, mobility and software. It’s a 2 Is There Enough Software to Knit HP’s Strategy Together? grand ambition, and the company needs to bulk up in 6 HP’s Leo Apotheker Talks some areas to make it happen. Turkey (and Some Trash) 8 Apotheker Focuses on Cloud, Not Consumers 10 HP Goes All In on the Cloud 13 HP Poised to Capitalize on Apple, Amazon Lessons 16 Related Reports Apotheker Vision Analytics.InformationWeek.com Analytics Alert March 15, 2011 Is There Enough Software to Knit HP’s Strategy Together? By Doug Henschen Throughout the recent hours-long HP Summit, in which CEO Leo Apotheker and his top lieu - tenants laid out the company’s grand strategy, executives repeatedly challenged, “Who is better positioned than HP to execute on this strategy?” When it comes to software, several other com - panies come to mind. IBM and Oracle, for instance, will counter the broad - est ambitions of Hewlett-Packard’s enterprise strategy, and plenty of segment players, such as Apple, EMC and Teradata, will blunt narrower ones. And even HP’s partners might not be supportive of, say, the cloud and WebOS ecosystems it’s now building. Microsoft, for example, has its own hybrid cloud strategy, and how could it view WebOS as anything other than a threat to Windows? If HP is to be greater than the sum of its parts, as CEO Leo Apotheker vowed it would become, software will HP CEO Leo Apotheker have to knit together the pieces, which he acknowl - edged to be more like silos within the company today. HP does have software in several impor - tant areas, but on some fronts it’s overselling what it has, promising to develop or acquire what it needs, or hoping partnerships will suffice. Here’s a look at the software strengths and gaps in HP’s grand strategy. CONSUMER INNOVATION When HP executives asked “who better than HP?” they were alluding mainly to HP’s unique position of having big feet in both the consumer and enterprise worlds. The company ships two PCs and two printers every second, and four servers every minute, Todd Bradley, executive VP of HP’s Personal Systems Group, pointed out, and all HP PCs, tablets and phones will soon ship 2 March 23, 2011 © 2011 InformationWeek, Reproduction Prohibited Apotheker Vision Analytics.InformationWeek.com Analytics Alert with HP’s WebOS operating system to the tune of 100 million devices per year. Apotheker said it’s crucial to bring consumer innovation to the enterprise environment, and he also observed that “if there is a better answer than enterprise-supported solutions, [business peo - ple] will use it.” But how, exactly, will WebOS knit together HP’s consumer and enterprise busi - nesses? Is it about out-cooling Apple in the consumer domain, or is it about delivering corpo - rate-issue devices that are cool enough to also be used for more personal needs? Sexier products can’t hurt when it comes to a business or consumer hardware buying decision, but the real question is, can HP’s promised combination of the consumer app store and a cloud- based enterprise application and service catalog—the software—bridge the two domains? Asked about the WebOS “app gap” vs. Apple and Android, Apotheker said it’s not the number of applications that matters so much as their quality and impact. “One of the things we’re focus - ing on now, as we’re getting to roll out WebOS on a massive scale, is to make sure that we have the relevant enterprise applications,” Apotheker said. Relevant enterprise applications might include personal productivity apps, ERP, CRM and so on. But is Microsoft, for one, likely to port Office and SharePoint and Dynamics enterprise apps over to WebOS? (I recently wrote that Microsoft should port these apps to iPhone/iPad; and perhaps if Windows Phone 7 fails, Microsoft would swallow its pride and port to WebOS as well.) SAP will likely add a WebOS app, but what about Salesforce.com and other enterprise app vendors with no particular allegiance to HP? Bottom line: Consumer-to-enterprise synergies have yet to be proven. EMBRACING THE CLOUD HP’s plan to support hybrid cloud deployments sounds reminiscent of Microsoft’s script. In fact, HP chief strategist and CTO Shane Robison said, “We’re all in on the cloud.” Here’s where HP’s extensive portfolio of IT operations, systems management, monitoring and security software comes into play. But the current model for moving into the cloud seems to be to pick the application first, and then let those application providers (Salesforce, Microsoft, NetSuite, etc.) provide the infrastructure. As more pieces end up in the cloud, there’s a greater need for generic platform capabilities and 3 March 23, 2011 © 2011 InformationWeek, Reproduction Prohibited Apotheker Vision Analytics.InformationWeek.com Analytics Alert infrastructure, but here, too, vendors including Amazon, Salesforce and Microsoft are ahead of the game with EC2, Force.com, Database.com, Azure and so on. And is there really much of a hardware opportunity for HP in delivering cloud infrastructure? As CEO Marc Benioff points out, Salesforce runs only 2,000 (Dell) servers to support its 90,000- plus customers. Microsoft might use HP hardware in its data center, but that won’t be much comfort as it helps customers move Exchange, SharePoint, Dynamics CRM, and other software deployments out of separate (frequently HP-powered) data centers and into the Microsoft cloud. So what’s going to run on HP’s hybrid backbone? There’s the software still running on premis - es and software delivered more flexibly via private clouds (on premises at HQ), but then what? Bottom line: Another case where we’ll have to see what develops. IN SEARCH OF ANALYSIS HP’s lone notable software acquisition in recent months, Vertica, was heavily promoted during the HP Summit. I’d say oversold. Vertica is a modern and capable database, and it can support analy - sis of unstructured information (such as e-mail messages and social network interactions) as well as structured information. But Vertica is a platform for analytics, not an analytic software provider. HP demonstrated a real-time auto rental pricing scenario yesterday centered on a soon-to-be-HP- powered Vertica appliance, but I’d observe that you would need data integration software, like that from HP partner Informatica, to load that system. And you’d need the BI and analytics soft - ware of a MicroStrategy or SAS to do the reporting and analytics piece—that is, unless you want to start from scratch, which most customers don’t. Dynamic pricing is something SAS has had in its portfolio for years. At IBM, the mirror purchase to Vertica was Netezza, though the latter has a bigger customer base and a deeper history of supporting analytics on top of the platform. But that was a final piece for IBM; it had also acquired Cognos, SPSS, ILog, Coremetrics and Unica to back up its claim to being an analytics powerhouse. Bottom line: HP has a long way to go on the analytics front, and one hopes this will be one area where it’s prepared to acquire software (or build services if, as HP suggests, it’s going to favor cloud approaches over legacy software). 4 March 23, 2011 © 2011 InformationWeek, Reproduction Prohibited Apotheker Vision Analytics.InformationWeek.com Analytics Alert THE SERVICES PLAY The depth and breadth of HP’s services portfolio isn’t well known. Ann Livermore, executive VP of HP’s Technology Solutions Group, did a solid job of laying out the company’s impressive capabilities in healthcare, transportation, public sector and financial services, all of which came out of the EDS acquisition. Communications and media is another vertical area, but this one is tied to HP’s printing and imaging roots (an area that stood out as a software-rich and highly profitable area on its own, but it was difficult to identify crucial dots to the rest of HP—beyond a shared cloud platform and app store). Livermore stated very clearly that HP is particularly interested in acquiring intellectual property (which I take to mean high-margin software) to support these vertical industries. The good news is that HP can probably buy a lot of specialized software without alienating partners like SAP and Microsoft. But I have to wonder just how little broad enterprise software such as ERP, CRM, supply chain, data integration, BI, analytics and so on HP can own and still be the obvious choice for customers as an integration and services provider. Or, to ask it another way, what’s the balance of partner software to internally owned software HP can strike while still delivering the kind of high-margin, pull-through sales Livermore promised? Apotheker said very clearly that he’s not interested in buying anything like a “legacy” ERP com - pany, his former time at SAP, where he had risen to CEO, notwithstanding. Bottom line: Vertical industry and printing IP is safe ground for adding software. The company also pointed toward a future rich in cloud computing possibilities, but it didn’t get close to pin - ning down the sorts of services it might provide beyond infrastructure. Again, we’ll have to see what it can deliver. HP NEEDS FRIENDS In closing the recent event, Tom Hogan, executive VP of sales, marketing and strategy, said HP wants to be viewed as the partner of choice for enterprise technology.
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