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6/13/2011
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HP Bolsters Its Strategy On Four Fronts

After threatening legal action against Oracle, Hewlett-Packard spells out details on infrastructure, cloud computing, analytics, and security.

The show was relatively modest for the number-one technology vendor, but it's safe to say that Hewlett-Packard's recent Discover user conference met its most important goal: showcasing the continuing evolution of a new strategy around key enterprise and consumer markets that played to the strengths of the company's current capabilities and aligned well with the vision of its new leadership.

Though not billed as such, Discover was the latest opportunity for HP to float its new strategy to its customers and test that strategy -- and therefore this new overall vision -- in front of its most important audience. While the equity markets continue to scratch their heads in confusion, it's clear to me, based on my conversations with customers, that these early tests of a vast and unfolding strategy are earning top scores.

HP's leadership is not only being tested on the technology and product front, but also on the political and legal front. With the cut-off-your-nose announcement by Oracle that it was de-supporting Itanium-based systems, HP Discover was also an opportunity to see how HP planned to respond to the kind of shenanigans that are making Oracle look silly and frivolous -- if not a little scary -- in the eyes of its critics.

The result was a well-orchestrated one-two punch back that, in the opinion of many (Dennis Howlett and Rob Enderle seem to concur) has the potential for turning the incoming Itanium attack by Oracle into a serious, self-inflicted wound. Unless Oracle does something about it.

First, HP lined up a top Intel executive, Kirk Skaugen, to run through a presentation to the Discover audience that included a clearly stated roadmap for Itanium. Lo and behold, it turns out that Itanium is strategic and has a future at Intel and HP. Of course, apparently everyone but Larry Ellison knew that (even Mark Hurd should have been in the know), but it was nice to see the roadmap clearly and unequivocally spelled out to the audience.

Then, HP unleashed its lawyers and sent Oracle a nasty-gram in the form of a demand letter. The letter, really a pre-cursor to a legal fight, claims that Oracle and HP have existing contractual agreements that require Oracle to continue to support Itanium. The letter demands that Oracle honor those agreements.

The letter has two impacts. The first is that it places HP squarely on the side of its customers, many of whom are both incredibly unhappy at being played by Oracle as part of its "get HP" campaign as well as scared of facing down Oracle's massive and aggressive legal team by themselves in a one-to-one fight. Having HP offer to throw the first punch on behalf of its customers is a nice, clean, customer-friendly act.

The second impact is that the letter actually gives Oracle a semi-gracious way out of an embarrassing mistake. They don't even have to say they are backing down because HP told them they should, they can simply announce they are changing their minds, and then issue the following statement:

Dear Itanium customers,

With today's announcement, we are giving customers the best of both worlds -- more value from their existing hardware, which we plan to support indefinitely, and an option to upgrade to future technologies, if customers have a business case to do so.

I personally think Mark Hurd would be a good one to add his John Hancock to the statement.

While this looks like a lot of crow to swallow, the truth is, this kind of crow tastes delicious when seasoned with enough customer good will. Oracle, in fact, knows quite well the recipe for the sauce: they whipped up a big batch back in 2006 when the company announced its Applications Unlimited plan. In a similar vein, that plan promised never-ending support for a set of products (PeopleSoft, JDE, and later Siebel, among others) that Oracle had threatened to de-support in the muscular aftermath of the company's acquisition spree.

That's why the above statement might look familiar to anyone who has followed Oracle's strategic gyrations: it's a close paraphrase of the statement from former Oracle co-CEO Charles Phillips on the announcement of the Applications Unlimited strategy.

This is hardly the only example of Oracle dining on crow, and, to their extreme credit (and this I mean with no sarcasm whatsoever), admitting failure and moving on is one of Oracle's greatest strengths. As a 25-year Oracle watcher, the list of mistakes that the company has managed to move beyond is impressive: desktop apps in the 80s, many failed versions of Oracle Financials in the 90s, network PCs, Oracle CRM, and on and on.

The Itanium kerfuffle is another one of those moments, and HP's letter actually gives Oracle an out that it should take if it wants to keep its relations with the 140,000 joint HP-Oracle customers on an even keel.

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