HP's Move Toward Services, Software Pits it Against Oracle, IBM

By CIOinsight  |  Posted 08-22-2011

Hewlett-Packard's shocking one-two punch -- that it would discontinue making its webOS mobile devices, and look to shed its PC business -- is the sort of thing that business schools will be analyzing for years to come.

Certainly HP's decision to embrace software and services, and abandon a sizable but relatively low-margin PC business, is indicative of where companies are finding their money these days. IBM did something similar in 2005 when it sold its PC division to Lenovo in favor of enterprise IT. Oracle and SAP are major competitors in the services area, and Microsoft clearly wants a bigger piece of that pie with its business-centric "all in" cloud strategy.

Now HP's hurling itself into that mix, pinning its hopes on a reconfigured company that leverages Big Data for enterprises. Key to that will be its acquisition of Autonomy, Europe's second-largest software company behind SAP.

"If the rumors are true about Autonomy , then HP stands to add a substantial software company to complement Vertica and 3PAR," Charles King, primary analyst at Pund-IT, told eWEEK. "They can provide the search analytics at the big data-type software layer that HP lacks right now."

But HP will also have to bulk up its software-and-services muscle despite what will surely be vigorous opposition from the likes of Oracle and IBM, which aren't exactly known for being easygoing opponents.

Meanwhile, some analysts are seeing HP's move away from PCs as part of a seismic shift for the industry as a whole.

"HP just abdicated playing a role in the mobility revolution except from the air-conditioned comfort of the cloud data center. This move makes Google's acquisition of Motorola look prescient," Yankee Group analyst Carl Howe wrote in an Aug. 19 research note. "We are witnessing the final collapse of the Silicon Valley PC era."

Even as its PC business suffered, HP had a hard time breaking into mobility with its new tablets and smartphones. Placed head-to-head against Apple's bestselling iPad, the HP TouchPad's app ecosystem seemed paltry, and the device wasn t helped by early reviews that damned its slow user interface. PC sales have been softening of late -- even forcing a reduction in Microsoft's Windows revenue last quarter -- but it s difficult to tell whether this is due to the cannibalizing influence of tablets, or more a factor of an anemic economy.


To read the original eWeek article, click here: HP Strategy Faces Immense Challenges, Oracle, IBM