Global CIO: As HP Stomps, Software Industry Shakes
The $130 billion giant's moving aggressively into software and is proving it's not afraid to stomp on some toes -- even those of trusted partners.
"The confusing part of this acquisition is the fact that it may complicate HP's partnerships with SAP and Microsoft," wrote Maynard in a research note on the Vertica deal. "We were under the impression that HP wasn’t going to take Oracle and IBM head-on since they discontinued the Neoview data warehousing product and recently announced a new appliance with Microsoft."
"SAP and HP are outstanding partners, HP is a great SAP customer, and this move only sets the stage for an even deeper relationship between our two companies. Leo understands our business model and how to fully advantage this partnership to help our joint customers be best-run businesses," said McDermott.
But Vertica's only the beginning for HP as it begins to buy its way into the software industry's hottest sectors, which are being propelled by voracious demand from companies that have come to understand that business analytics have shifted from being exotic applications for specialists to being indispensable decision-making tools for entire organizations.
(For a great overview of Vertica and the HP deal, be sure to check out this analysis by my colleague Doug Henschen.)
It's a great young company but offers HP only a toehold in its ascent into the upper echelons of the software industry. Here's how Wells Fargo's Maynard summarized it in his research note: "On its own, Vertica is not enough to change the game and make HP a player," Maynard wrote.
"Normally, a small acquisition such as this would not be a big deal, except for the fact that it potentially could signal bigger software plans under new CEO Leo Apotheker. If there aren’t additional steps then it doesn’t seem worth the trouble and customer confusion given the potential overlap with their jointly developed partner offerings."
That's the key point: without additional acquisitions, "it doesn't seem worth the trouble and customer confusion" (boldface emphasis added). Uncertainty among partners can be nettlesome, but when that spills over into confusion among customers, uncertainty becomes real trouble.
HP has to address this potential customer confusion, and it has to do so soon. As described above, the Vertica deal should give SAP every reason to wonder about HP's longer-term intentions. Also, within the last couple of weeks, HP snubbed another strategic software partner, Microsoft, by making HP's own WebOS the heart of its mobile strategy, instead of Microsoft's Windows Phone 7. (You can read all about that in Global CIO: HP Mobile Dump Of Microsoft Is Brilliant.)
Four months ago, I wrote a column called Global CIO: Are HP And SAP Perfect Match Or Train Wreck?, and here are the central questions I explored in that column: "Did the HP board really bring on Leo Apotheker and his nontrivial baggage just to manage and perhaps expand HP's relationship with SAP? Is that all there is? Even if HP had hired Barney Fife as CEO instead of Apotheker, SAP would almost certainly have wanted to extend its relationship with HP, particularly in the face of Oracle's increasing presence in hardware and IBM's increasing presence in software."
And today, as HP has acquired Vertica and begun stepping into SAP's core business; as HP has brushed off Microsoft's mobile OS in favor of its own; as HP has sent mixed signals to Microsoft about the role it will play as HP's core appliance partner; and as HP clearly intends to buy its way more deeply into the software industry, those questions are even more relevant.
HP has signalled clearly to its partners that HP's #1 priority is its own self interest -- and bully for HP for taking that awkward but essential step. But at the same time, HP should not be surprised if its core software partners -- particularly Microsoft and SAP -- begin doing exactly the same thing.