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July 27, 2016

Did PCs hold Hewlett-Packard off the pace?

HPE-vs.-HPQ-Stock-2016Stock activity is the best-quantified way to assess the strength and prospects for a vendor. Few of the HP 3000 vendors ever reported stock pricing, so we always swung our spotlight on the system creator's stock. The results became entertaining after HP stopped making 3000s—but rarely entertaining in a good way. 

Now it appears that shedding its New Money products has pushed Hewlett-Packard Enterprise's stock into fresh territory. HPE hit the low $20s of share price this week. That's a 52-week high, and even higher if factoring in the fact the stock was chopped in two last fall.

Operating systems, software and hardware are only part of the story at HPE. Services were brought across in November, but their performance has skidded. As the break-off firm that reclaimed the HP Old Money business computing that drove enterprises, however, HPE has had a better time since the splitup. HPQ, making a living off the PCs and printers, remained under $14 a share today. The companies started out with equal assets and stock prices. What Enterprise has changed is the company's focus. The vendor is no longer trying to be everything to everybody.

Earlier this summer HPE announced it was getting even leaner. The enterprise services business, which bulked up HP's headcount and revenues as a result of acquiring 144,000 employees from EDS, will now be a separate entity. The move pushes HP closer to the business target it pursued while it was making the HP 3000 soar: sales to IT enterprises of software and hardware. This time around, they want to sell cloud computing too. But the old Apps on Tap program for the 3000 in the late '90s was a lot like that, too.

The extra systems focus, coupled with the stagnant action on the PC-printer side, suggests that straying from enterprise computing was a boat-anchor move. Hewlett-Packard Enterprise has put a new-era spin on the box-and-software pursuit, though. The CEO says putting Services on a separate course makes HPE a company with 100 percent of its revenues channel partner-driven. In effect it means all deals need a third party. This is the course the old HP could never adopt, much to the consternation of 3000 vendors.

What does it look like when HPE says it's an all-channel vendor? CEO Meg Whitman explained the enthusiasm in an article for Computer Reseller News.

"The message for the partner community around this spinoff is we now are even more enthusiastic about the partner community -- if that is even possible -- because we are pretty enthusiastic," said Whitman in an interview with CRN at June's Discover conference. "We have got to partner even more aggressively with our partner community to deliver software, to deliver converged infrastructure, to deliver hyper-converged. We have no business now that doesn't go through partners."

The convergence of software vendors with a system vendor got a short-circuit in the 1990s. HP adopted printer-style distribution and reseller strategies for its enterprise products. What was once a company-led salesforce became fractured. Software companies that built their business around an HP they knew and partnered with saw the company's focus tilt away from fine-tuned environments like MPE. Commodity computing ruled and the march toward Somebody Else's OS accelerated.

In the new Hewlett-Packard, commodity belongs on the HP Inc. side of the split-up vendor. All of those bodies selling and providing services will now be part of a mega-support corporation HPE is spinning off to Computer Sciences Corporation. Less commodity, less headcount-driven business—it makes the new entity feel more like the old company of the HP Way. Long gone, but apparently not forgotten at the executive level.

04:47 PM in News Outta HP, Newsmakers | Permalink

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