HP sells software business to boring buyer
September 12, 2016
Micro Focus, which has already bought Attachmate (nee WRQ) and Acucorp (maker of a COBOL that was once fine-tuned for the 3000) is now sitting on what HP was selling that Hewlett-Packard Enterprise calls software. Like Autonomy, for example. The latter is probably valued at one-tenth what the-CEO Leo Apotheker's HP board paid for it five years ago. Admiral Grace Hopper's invention has ultimately provided a harbor for HP's exit from the software sector. The buyer builds COBOL.
The entire transaction only costs Micro Focus -- makers of boring software that drives thousands of businesses -- $8.8 billion on paper. HP's is cashing out of software for application delivery management, big data, enterprise security, information management and governance, and IT operations management. With Autonomy in the deal, the company HP purchased for $11 billion in 2011, HPE gets an albatross off its back.
Here's one shakeout: Minisoft is now the only vendor selling 3000-ready terminal emulation that remains under the same vendor brand. WRQ has been absorbed, and HP's out of the terminal business they started with AdvanceLink in the 1980s. (Minisoft's still selling connectivity software to MPE/iX users, too — as in active sales, this year.) HP sells almost zero 3000 software today.
A Reuters report says the HPE move tilts its business mix hard towards hardware, with two-thirds of what's left at HP Enterprise now devoted to a sector with slim margins. HP has stopped much of its operating system development over the last 15 years, casting off OpenVMS and MPE/iX, then stalling HP-UX short of a transformation to Intel-ready software. Instead, MPE/iX got its Intel introduction post-HP, when Stromasys made its Charon HPA the gateway to x86.
NonStop remains a part of to HP's enterprise group and enjoys development, but it's tied to Itanium chips. Nothing left in the Business Critical Systems group -- HP-UX, VMS, NonStop -- gets any love anymore during HP's analyst briefings.
HP software, aside from operating systems, could provide a frustrating experience for 3000 customers. Transact and Allbase were strategic, until they were not. IMAGE got removed from the 3000-bundled status it enjoyed. HP had to farm out its ODBC lab work to keep up during the 1990s.
The deal between HP and Micro Focus gets more unusual when you see that HPE has to pay Micro Focus $2.5 billion in cash. In exchange, HPE shareholders will own 50.1 percent of Micro Focus. HPE wanted to get its software out of its enterprise business and into the hands of a company with business success in software. Micro Focus built its rep on embracing backbone technology like mainframe connectivity and COBOL.
"Micro Focus' approach to managing both growing and mature software assets will ensure higher levels of investment in growth areas," Whitman said, "like big data analytics and security, while maintaining a stable platform for software products that customers rely on."
Reliability and boring are sometimes conflated, but a stable platform is often built upon software with both attributes. UBS analyst Steve Milunovich, who tracks HPE, said HP's sell off of assets is "strategy that works well for current shareholders, who gain significant ownership in better-run businesses." A company whose backbone is COBOL now owns HP's software assets — a line that lost its COBOL compiler when the 3000 was dismissed.