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11/12/2007
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HP's Hurd: Software Industry Consolidation Could Accelerate

"How fast will the consolidation occur?" HP's Mark Hurd asked. "It could happen fast, if the right alignment of players occurs."

Mark Hurd, chairman and CEO of Hewlett Packard, said the consolidation that's already taken place in the software industry is likely to continue and, if anything, accelerate as the companies with large cash reserves try to make long term, strategic acquisitions.

Hurd gave a keynote address on the opening day of Oracle OpenWorld, its annual user group meeting in San Francisco.

HP has 800 million consumer incidents a year, many of them calls for customer service. Each caller gets an average 4.5 minutes, said Hurd, generating more data for the company to save and manage. The data management problem "is going to get a lot harder before it gets easier." HP's partnership with Oracle was one of its keys to keeping data management under control. Even when HP offers a business intelligence appliance, HP "surrounds it with Oracle middleware," Hurd noted.

Hurd was the target of a series of pre-recorded questions asked by Oracle OpenWorld attendees. One of them was whether HP could become a software company as well as a printer and server hardware company.

Hurd responded: "We're already a software company. We're very focused on the management space." HP is in the process of teaming up its OpenView network and systems management software with its recent applications monitoring and performance management acquisition, Mercury Software. In addition, Hurd pointed out, "we just bought OpsWare," a data center automation specialist firm, for $1.6 billion.

HP will seek to align the three product sets to provide "an integrated view from the application to the device" on which the application runs or on which it gets its network services.

Another questioner asked whether he should buy a Dell or HP personal computer.

Hurd paused, as if devoting a lot of thought to the issue. "I'm surprised it wasn't a longer list [of potential PC suppliers]," he responded at first. Then he added, "I'd say you should buy HP."

When asked which of today's technology companies will be around after 2010, he responded cautiously. The industry has already seen much consolidation and the disappearance of many companies that had been part of the early days of computing. "You will see continuous consolidation. The survivors will be those companies that are well financed and well positioned. ... There's only a handful of players that have an excess of $100 billion in cash," he said, implying that those will be the ones that can make the key acquisitions for survival.

"How fast will the consolidation occur?" he continued, asking himself a rhetorical question. "It could happen fast, if the right alignment of players occurs," he added, without elaborating who might lead the consolidation or what companies might be acquired in the process.

Both Oracle and its partners HP and AMD spent part of their time in the spotlight praising each other as worthy partners. Paul Ortellini, CEO of Intel, is expected to also do so Tuesday and Sun Microsystems CEO Jonathan Schwartz is expected to add his praise for Oracle as a partner Wednesday.

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