Fifty percent higher and 100 million more points of integration: These are the numbers Hewlett-Packard used to get the industry's attention in a presentation yesterday. Even though HP remains in the systems business, it will define system as "software and networking" over the next four years. HP calls its new strategy CloudSystem. But the fact that the plan was unveiled about a week before HP's annual shareholder meeting might show how much weight the strategy carries in HP's top offices.
First, the 50. HP announced it will be increasing its dividend from 8 cents a share to 12 cents. The 50 percent increase in dividend returns might help keep skittish institutional shareholders in HP's investment club. Many technology companies don't pay dividends on stock anymore. The investors would be happier with a company trading at IBM's record levels, or at Apple's, of course. But since HP can't do that overnight, it can at least raise dividends. (Investors sold the stock down 56 cents in day-after trading, despite the dividend boost.)
Then, there's that 100 million. It's the number of computing devices HP plans to ship each year which can use webOS, the operating system built by Palm which HP owns. HP said it will be shipping desktops and laptops, phones and tablets, as well as printers by 2012 ready for webOS. "HP ships two PCs and two printers a second. That gives us an enormous install base that is going to grow," said CEO Leo Apotheker. "The fact is, people like working on PCs and that isn't going to go away." He added that HP won't be dumping Windows in favor of webOS. But the company is hawking its shiny new OS.
The tech outlook for webOS is cheery, but its market prospects are cloudy indeed. That's where CloudSystem hopes to create a compelling strategy for the Number 1 vendor which could use a thunderbolt of a software leap. HP wants to leverage enterprise demand in building a webOS world.
That sound you just heard was HP pushing its hardware into the back seat in favor of driving with its software and web services. Sure, there's always going to be millions of HP laptops and printers shipping. But there will always be enduring relations with customers who are tethered to a vendor via software. After all, the MPE/iX OS still holds HP 3000s in place at thousands of companies, more than seven years after Heweltt-Packard ended its manufacturing of the hardware. The newest HP operating software is now the best candidate to double company profits by 2014.
MB Foster's founder Birket Foster, who pointed us to the webcast of the summit, said the CloudSystem strategy is still building its parts needed to play a role for remaining 3000 migration candidates. Apps, the crucial element in webOS, are still on the way.
"This is a new infrastructure," he said. "You're going to have to wait for the cloud applications to actually show up. Larger companies will be able to take advantage of it because they already have staff who know about things like Java. The small and medium enterprises will have to wait for the finished apps to be there. There's some assembly required right now, and data integration is not included yet."