November 02, 2015
HP Enterprise treads out security in opener
In the World Series and on the Sunday US news shows, HP Enterprise put its best step forward with ads. The commercials which aired on US broadcast networks touted image of the new company, rather than its products like ProLiant servers and Linux that have replaced HP 3000s at migrating sites. After the first full trading day on the NY Stock Exchange, investors had bid the HPE stock down by 2 percent. HPQ, the stock for the HP Inc. side of the split, fared better, gaining 13 percent. Together the two entities added $2.5 billion in valuation.
While one day's trading is not enough for a trend, today's investors looked like they believed the higher risk of HP Enterprise plans for next-gen datacenters and security services was a less certain bet than a high-cash, low-risk collection of HP Inc. products. HP Inc.'s sexiest product is its forthcoming 3D printers. The Twitter hashtag #newHPE includes pictures of staffers celebrating day one, including this one above of a friend of the 3000, networking guru James Hofmeister.
The HP Enterprise commercials promised that the company would be "accelerating next." The 30-second spots show a collection of motion-capture video projects, medical imaging, race car design, cargo container logistics, transit mapping, and a gripping clip of an amputee walking on a digital-assisted set of legs.
"A new flexible cloud that harmonizes all operations" refers to the cloud services that remain after the shutdown of the public HP Cloud. An investment of $3 billion in R&D gets touted, perhaps because the risks to be taken to win back business are going to be costly at first. "Because no money is better spent," the copy vows in a 3-minute "HP at 75" online ad. Things are going to be different, this Hewlett Packard says, because everything in IT is changing anyway.
The era of a vendor being essential to holistic customer success is past, however. It's nothing like the HP of 1980, says one of our readers who's still managing a 3000 for fleet vehicle parts tracking. "They thought they could defeat the world by making the world's best PCs and servers," says Tim O'Neill, "but it is a tough market. Systems have largely become unbundled in recent years, but HP seems to think they can first sell services to customers, and then the customer will buy HP hardware on which to run said services."
HP reminds the world it ships a server every six seconds. During the run-time of any of those commercials, five servers left HP shipping. By the accounting from HP's reports, however, four minutes of ads would have to run before a single Integrity server is shipped.Integrity and the Business Critical Systems group is treading water at a 2 percent sales share of HP Enterprise Group business, according to the last HP quarterly report. Sales of servers and expansion of OS environment features are among the few elements that matter to a customer who's remained with HP -- unless they're able to afford HP Professional Services.
It was once very different, with the 3000 customer desperately dependent on Hewlett Packard expertise, O'Neill reminds us.
In HP's salad days customers were very reliant on HP factory support for both hardware and operating system software service. We knew nothing of how MPE worked. Early on, in the 1980s, HP came out and installed things like MPE IV or MPE V, and even came to install patches. Later, we learned how to do some ourselves, but we still had a big contract with HP at the ready to come when called.
This was offset, to some degree, by our decision to contract with competitors for hardware repair, which did cause a lot of consternation, but HP still did the software. Oh, what great days!
The independent services and development marketplace, as well as a massive reseller community, erased the advantage of those old-school days. The key deliverable from a modern company "accelerating next" vendor is research and development. Last year's HP channeled just 3 percent of its revenues for R&D. The 20th Century HP operated at a 9 percent level. The money has been re-channeled into acquisitions, until now. One investment house believes more acquisitions are the way forward, though.
The challenge for HP Enterprise is to become a vendor that once sold products to run in data centers, but now sell cloud services. A total of 96 million shares of the two HPs were traded today. HP's printer-PC group led the way. Enterprise must sell its strategy with more panache, hoping that the image-shaping of YouTube and TV broadcasts will coax investment advisors like Credit Suisse into favorable ratings. On Monday afternoon, the investment house said they expect the company to "embark on a streak of transformative mergers and acquisitions" to plug holes in the HPE product line.
As for tactical changes, Hewlett Packard Enterprise was scheduled to go online as a separate entity three months ago. A CIO World article of this summer recapped the HP split-up plans, as announced at this summer's HP Discover meeting.
HP is documenting it all, so it can share what it learns with any large companies that have to through the same thing, presumably as part of HP services engagements.
The split probably would have been more complex if it weren’t for HP’s former CIO Randy Mott, noted IDC analyst Matt Eastwood. Several years ago he consolidated HP’s infrastructure from 85 data centers to six, making Hinshaw’s job an easier one. It will retool 2,800 applications and 75,000 APIs before the company becomes Hewlett-Packard Enterprise and HP Inc. on Nov. 1.
80 percent of that retooling work was complete at the time of the HP Discover announcement. One analyst, Rob Enderle, has said the HP split was being executed as a way to offer its Enterprise operations for a merger with EMC. An article in the San Jose Mercury News reports the rogue analyst called HP a passed-over bride, since Dell announced it would acquire EMC last month.
"She's the bride at the altar," Enderle said. "The end result is that HP Enterprise is now packaged for sale, except there's nobody to buy them, except maybe Oracle."
To some observers, HP is a giant laid low, a remnant of the behemoth that once bestrode Silicon Valley.
"People looked at what it was, and want some of that back," said technology analyst Patrick Moorhead of Moor Insights and Strategy. "I think people in different parts of the world see it differently. They say, 'Yeah, they had some hard times, but they're in a heck of lot better situation now than before.' I look at it as a glass half full."
The two HPs will share one seminal icon. Bill and Dave's Palo Alto offices, maintained as a shrine that includes loose change on the desk blotter, can be accessed though entrances from both the HP Inc. and Hewlett Packard Enterprise buildings. In Palo Alto, as in the annals of the 76-year-old company's lore, the two sides of the new HP share campus space.
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