For many many years in analyst circles, it was almost obligatory when talking about IT vendors to say well of course, HP makes all its profit from ink. I remember looking, year after year, at marching rows of red figures as HP focused in on the performance of its software division in particular. It was kind of uncomfortable for everyone involved—lots of shuffling in seats was done.

I know I'm a bit late (the results were announced in mid-August), but I've recently had an update briefing on HP's software business, and HP's acquisitions are doing some good. Like IBM, HP has made a strategic move to acquire higher-margin businesses in an attempt to avoid the commodity trap. Mercury, Opsware, SPI Dynamics—they're not all that huge, but they are all in high-growth areas (compared to network and systems management tools, where HP used to be centred, at least ;-).

The result is that in Q3 this year, HP's software business brought the highest operating profit (as a percentage) across all of HP's business units. It's not just about ink any more. In this light, it's pretty difficult to see HP as not serious about software (something that it's competitors have regularly said to customers). Alongside one of the companies HP competes regularly against, BMC, the 14.6% operating profit within HP's software business looks pretty decent (if my maths is right, BMC's operating profit is currently running somewhere around 13% of revenues).

That said, of course, when you compare HP's results against Microsoft's 36%–odd operating profit, things take on a different colour...