The New HP's Opening Day: What to Expect?
October 30, 2015
The last business day for Hewlett-Packard as we've come to know it has almost ended. By 5 PM Pacific, only the Hawaiian operations will still be able to count on a vast product and service portfolio offered by a $120 billion firm. Monday means new business for two Hewlett-Packards, HP Inc. and Hewlett Packard Enterprise. It's possible that splitting the company in half could improve things by half. Whether that's enough will take months to tell.
On the horizon is a battle with the bulked-up Dell, which will integrate EMC as well as massive share of VMware in the coming months. The Dell of the future will be a $67 billion entity, larger than HP Enterprise in sales. Dell is a private concern now, while HP is becoming two publicly traded entities. The directions could not be more different, but HP will argue that demand had better be high for a monolith selling everything.
Dell is extending its offerings to a new level of complexity, but the level of product strategy and technology to comprehend has become too great for this week's massive HP. Hewlett-Packard never controlled an operation this large until the last decade. The company that built instruments and business computers and printers added a PC empire from Compaq. But it had just spun off Agilent two years before that PC merger.
But then after loading up with billions of dollars of low-margin desktop and laptop lines, the HP of the early 21st Century blazed forward into services. Headcount rose by more than 140,000 when Carly Fiorina sold the concept of buying EDS for outsourcing and professional services. The printer business swelled into cameras and even an iPod knockoff, built by Apple. HP's TVs made their way into retail outlets. It seemed there was nothing HP could not try to sell. Some of the attempts, like the Palm OS-based tablets or smartphones, shouldn't have been attempted. Their technology advantages couldn't be lifted above entrenched competition.
HP's CEOs since lifer Lew Platt retired — Fiorina, Mark Hurd, Leo Apotheker, and now Meg Whitman — didn't have much chance understanding the nature of so many products. Three years ago, HP started in the public cloud business, yet another branch of IT commerce aimed to take market share from Amazon. Whitman said in the New York Times that outsiders like her who've tried to lead the company have had too broad a beam of corporate ship to steer.
"This is crazy — Carly, Mark, Léo, me — the learning curve is too steep, the technology is too complex for an outsider to have to learn it all," she said in a story about what's next. The most audacious of HP's enterprise efforts was The Machine, technology that was to employ the near-mythical memristor to "change the future of computing as we know it." This summer the company fell back and said it would build that product with more conventional components and assemblies. It doesn't have a target date for releasing The Machine.
HP Enterprise, to be traded as HPE on the NYSE Monday, will sell private clouds that it will build, and staff if customers want HP administration, rather than the retail-level cloud services of AWS. HP Cloud could never host HP-UX customers. The fine-tuning of cloud hosts for Unix apps might be a part of the 2016 offerings. Just about anything to get more Integrity servers installed will have traction at HPE.
Although networking products and mass storage and software like Helion will be parts of the new HP facing the 3000 community, expect this business to be about how servers will drive its fortunes. In a Bloomberg report from this week, Whitman said she spent one full day on the three year plan for HPE's server business. She's been the CEO since 2011, and that was the first full day she concentrated on the business that put HP into business computing.
"There’s a great deal to be said for focus," Whitman said in the article. "You’ve got to be on it. You’ve got to be working on the product road map."
Work on product roadmaps in October used to be commonplace at HP, although it's probably been since Lew Platt's time that the CEO was involved in any way. MPE/iX users who've stayed with the OS, rather than the company, could still benefit from a rise in HP's fortunes. Sales of those allied product lines, as well as research to improve them, have a chance of improving. Homesteading 3000 customers would have to let the HP badge back into their shops. Maybe adding the "Enterprise" to the HP hardware nameplates will help restore the trust.
As for the HP Inc. side of the split-up, it's got less technology to comprehend and more competition with similar products. Some analysts are saying HP Inc. could be a takeover target, given its slim profit margins. HP's combined stock was down 30 percent from the start of this year, as the final day of Hewlett-Packard ended. On Monday HPE will start trading at about $15 a share. What will make the difference will be a fresh share of mind for a company that once specialized in business IT. MPE is gone, HP-UX is fading, and VMS has been sold away. The future will be different, but customers who remember a better HP might hope for a strategy that feels older: focused on how innovation and relationships can deliver success to customers.