HP reverts to type

Analysis

HP reverts to type

By: Philip Howard, Research Director - Data Management, Bloor Research
Published: 30th May 2012
Copyright Bloor Research © 2012

Last week Mike Lynch, the founder of Autonomy, resigned from HP. We should have seen it coming. Not for nothing is HP often considered to be "the company where software goes to die", primarily because the company appears to see software as a way to sell more tin. HP did make an effort to change its ways by appointing first Mark Hurd and then Leo Apotheker as CEO but neither managed to make the company transition to anything other than a hardware vendor.

Mark Hurd introduced NeoView but that failed. The story I heard was that the warehousing specialists that Hurd brought in from Teradata were at loggerheads with the ex-Tandem people about the architecture of the product and, unfortunately, the latter won. That meant that, for example, you had a switched fabric for connecting to disk rather than direct attached storage and while a switched fabric is a great for high availability it sucks for performance. It also didn't help that HP didn't understand the market: one executive at the company asked me if NeoView should be within the hardware division! I rapidly disabused him of that notion but it's indicative of the way the company thinks.

Over the years HP has bought and effectively buried any number of companies. Where now is SeeBeyond? Or Outerbay? The only area where it has been really successful is with network management software but that's hardly surprising given its close correlation to the network hardware that HP is purveying.

The question of course is what to expect of HP's major software products now? In particular: ArcSight, Vertica and Autonomy. The reason for Mike Lynch's departure depends on who you talk to but one thing is clear, which is that sales of Autonomy have fallen off a cliff as the new CEO, Meg Whitman, eschews the software focus of her immediate predecessors. Of course the danger is that a vicious circle gets established: people get worried that products like Vertica and ArcSight don't have the future that they might be expected to have (and I admit that I am not helping the HP cause here) and therefore they choose alternative products, so sales drop, and that induces HP to reduce R&D in those products, which means that sales drop further, and then eventually the product dies.

All of this is not helped by the fact that HP has also announced that it is cutting staff numbers by 27,000. Unfortunately, as we are all too aware over the last few years, companies often make repeated announcements about job cuts, so we can't guarantee that this isn't just the tip of the iceberg. Meg Whitman has said that the company is going to be re-focusing on R&D but one suspects that the emphasis here will be on hardware and not software so I am not sanguine about the future of Vertica, Autonomy or Arcsight and I would think very carefully about introducing any of these products if there is a suitable alternative.

Reader Comments

Posted: 30th May 2012 | By me :

Unfortunate I agree with your assesment of HP not very smart and successful dealing with Software companies. On the other hand, Autonomy is a terrible company to work for, so far. Hope with new HP management this is up for the better. Check out glassdoor.com for Autonomy reviews. HP mgmt seems to change this and moving back to old HP ways such as motivated innovative people will bring profits over time.

I think HP is moving in the right direction no question on this. We might look back in just a year or two and wondering how negative people thought about this change today. HP will get better again

Posted: 30th May 2012 | By Tony Baer :

Couldn't agree more with your piece. I've recalled an old tale that HP was too incompetent to kill the one piece of software it really did have: OpenView. Nonetheless, your point about hardware companies not understanding software is a perennial, but not always inevitable theme. Think of EMC as counter example in point.

The other side of the coin is whether software companies understand hardware. Think of Oracle, which has effectively exploited Exadata but where the jury is still out regarding its stewardship of the Sun line.

One small correction: Sun, not HP, bought SeeBeyond. But even that mistake underscores your main point: Sun was another shining example of a place where software went to die.

Posted: 30th May 2012 | By Bill Hewitt :

HP has a storied history as a Brand but a checkered recent past when it comes to management. Iconic brands do not hang on the power of one person; rather the collective culture determines success or failure. IBM under first Lou Gerstner, then Sam Palmisano, provided the leadership needed to turn the ship with deft acquisitions (PwC) and strategic shifts into the software business which drives the need for more hardware but most importantly, services, which expands the "share of wallet" with each customer.
Sadly, today HP cannot make a move without everyone and their sister commenting on the stupidity of their actions. Today, they named Bill Veghte as COO and brought in a new software exec. All of these changes will take time but ultimately it will come down to a shift in culture to restore the performance - and brand - of a once great company.

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