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January 16, 2015

What's ahead for the HPs of 2015?

Business-crystal-ballLast year Hewlett-Packard announced it's going to split up in 2015. Right now it's a combined entity whose stock (HPQ) represents both PC and enterprise business. But by the end of this fiscal year, it will be two companies, one called HP Inc. and another holding the classic Hewlett-Packard name. Any of the enterprise business that HP's managed to migrate from 3000s sits in that Hewlett-Packard future.

Most of time, the things that HP has done to affect your world have been easy to see coming. There's a big exception we all know about from November of 2001. But even the forthcoming split-up of the company was advocated for years by Wall Street analysts. It was a matter of when, some said, not if.

TV ad terminal shotIf can be a big word, considering it has just two letters. There was an HP ad campaign from 30 years ago that was themed What If. In things like TV commercials that included shots of HP 3000 terminals, What If sometimes proposed more radical things for its day, like a seamless integration of enterprise mail with the then-nouveau desktop computers.

What IfHP called that NewWave, and by the time it rolled out the product looked a lot like a me-too of Apple and Microsoft interfaces. But What If, rolled forward to 2015, would be genuinely radical if there were either no HP left any more, or Hewlett-Packard leveraged mergers with competitors.

What If: HP's PC and printer business was purchased by Lenovo, a chief competitor in the laptop-desktop arena? Its new CEO of the HP Inc spinoff ran Lenovo before joining HP. On the other hand, what if HP bought Lenovo?

What If: Hewlett-Packard Enterprise became a property of Oracle? That one is a much bigger If, considering that HP's built hardware in massive quantity for a decade-plus along four different product lines: Integrity, PA-RISC (still generating support revenues in HP-UX), ProLiant x86s, and its dizzying array of networking products. You could even label forthcoming dreams like The Machine, or the Moonshot systems, as hardware lines. Oracle's got just Sun systems. As 3000 customers know, hardware is not a firm stake in the ground for business futures.

If there's anything that seems certain here in January, it's that the creator of MPE, IMAGE and PA-RISC will continue to pursue enterprise business customers of its competitors. The customers of firms like IBM and Oracle (Sun) are just about all that can be nabbed by a purveyor of enterprise environments that are proprietary — the lame-duck VMS, the NonStop OS, and HP-UX.

The computer industry hasn't had an earthquake of a deal that'd register Oracle+HP tremors since HP bought EDS in 2008 for $13.9 billion. HP bought Compaq in 2002 for $25 billion. That's a lot of simoleons in a computing market that's growing. Dollar-wise, Oracle acquiring HP would've been 40 percent cheaper one year ago. HP's market capitalization today is $70 billion, and it was just $50 billion in January 2014.

That is, of course, the size of the un-divided HP. Hewlett-Packard Enterprise will be valued at half that. But if you could acquire the entire HP at $50 billion one year ago, and in 2015 that money would only buy half the company — and the part that's growing much more slowly — why do it when it costs more?

Oracle is more than twice the size of HP, though, in market capitalization. Right now Oracle is at $189 billion in market cap. Nobody learns about deals of this size between titans like these until the agreement is right under our noses. Everybody's got to convince their shareholders, too. An epic battle was waged over HP's Compaq purchase over just that circumstance. We can't tell, but your community also knows that kind of surprise is also true about lopping off business product lines — ones that are profitable and beloved, too.

01:58 PM in News Outta HP, Newsmakers | Permalink

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