Global CIO: Hewlett-Packard CEO Hurd Shifts Strategy Toward Services
Six months ago, Hurd dubbed HP "the infrastructure company" but he now seems to be tilting toward services as HP's centerpiece.
integration, security, compliance, management, troubleshooting, and all the way out to cloud outsourcing and more. Those cloud-based services play directly into HP's services lineup.
And in describing the role that BladeSystem Matrix product will have as a pioneer in the eventual blending of server, storage, and networking infrastructure, Hurd indicated that the longer-term growth prospects for hardware could be less attractive than they will be over the next few years. In fact, he said, another new HP product is actually designed to reduce customer demand for networking products—in spite of the fact that HP just paid $3.2 billion for 3Com.
"Now we really believe to our core that the network world, the storage world, and the server world will start to blend together over the next several years—you'll hear a term 'converged infrastructure'—and this BladeSystem Matrix is really the first offering into the market that begins to make that a reality," he said.
As for HP's new Virtual Connect Flex-10—"which I'm sure sounds like a tremendous branding name to all of you," Hurd quipped—is designed to "virtualize the number of network ports that a customer would need, thereby decreasing their need for networking." Smart move—if virtualization is cutting down on server sprawl, then get more deeply into virtualization and all the services sure to follow from that.
The services initiative came through most forcefully in Hurd's exchanges with shareholders about the company's very limited success in the bustling smartphone and PDA segment. Hurd attempted to gently deflect any suggestions that the company had missed an opportunity there and instead turned the discussion toward one of opportunity for delivering the services that support and enable all those mobile devices.
"Our strategy has really been to follow the data down" instead of providing a wide range of devices at each product point, Hurd said, but then he got a bit tangled in trying to explain that while HP is the world's biggest supplier of PCs, it has not been a significant player on the mobile side. But he untangles himself when he gets back to the services discussion.
"So I would tell you it's less to us about the—and I'm trying to use the words right—'the device' than it is about the ecosystem of capabilities and services above the device layer. We're pretty good at making devices but I can tell you the device in isolation—we got some opportunity to do more cause we'll ship—Tony? 60 million, 65 million, roughly, devices in the PSG [Personal Systems Group] space, so a very major piece of footprint. I would also add to you that the web-connected printer I just described now becomes yet another device.
"And the combination of that ecosystem now gives us a tremendous opportunity to build services that can be used by those two capabilities, of which case than just a device, to your point, makes even more sense than the view you're describing. We can build a device very quickly—it's more important for us to build that services layer of capability out which is what we're driving at now."
So Hurd's got his company in a very interesting situation right now—I believe the currently fashionable term now is "pivot point": the company with the world's biggest and broadest line of hardware products is actively envisioning and planning for a next stage of market evolution wherein the services that light up and add value to all that hardware could actually become more significant than the hardware products themselves.
And the CEO of the world's leading supplier of PCs has just told shareholders that he's not sure he wants to get into what is currently the hottest segment of the personal-technology market—smartphones and PDAs—but instead wants to weave a web of services that empower and enhance all those devices.
The pivot Hurd appears to be executing is a tricky one but also potentially a powerful one: continuing to be a dominant infrastructure supplier at just about every point on the spectrum while also raising the profile and revenue of the services business that animates and extends the value of that infrastructure.
It will be fun to watch Hurd as he transforms The Infrastructure Company into The Services & Infrastructure Company.