Two guys out hunting bear sit down for a rest, their guns on the ground beside them. A massive bear crashes through the bushes and the guys run for their lives. After sprinting all-out for a full minute, one guy pants, "I don't know how much longer I can outrun that bear." And the other guy says, "I don't give a hoot about the bear -- I just have to outrun you!"
I get the sense that a lot of software companies in the applications and analytics markets are feeling that way these days as Hewlett-Packard is displaying a ravenous appetite for software, whether through acquisitions (Vertica), partnerships (Microsoft for appliances), or leveraging existing products (choosing to go with its own WebOS instead of Microsoft's Windows Phone 7).
All of those moves -- and there are surely many more to come -- show that HP is actively defending and expanding its own interests even if that self-interest clashes with established relationships in the here and now HP's also showing clear indications that it is putting its own well-being, its own needs, and its own hunger far ahead of any considerations for the feelings and sensitivities of existing partners.
For HP itself, that's a very good thing: over the past couple of years, as other leading IT companies fattened up on software acquisitions in the burgeoning sectors of analytics, BI, data warehousing, and vertical-industry apps, HP focused almost exclusively on its management and infrastructure software portfolio.
Again, not a darned thing wrong with being a big and aggressive player in those area -- but for a company aspiring to top-tier status, management tools and infrastructure technology, no matter how good, are simply not enough in our data-driven world.
But what about HP's new and decidedly more-aggressive intentions toward the software market? Are its recent steps just a random flurry of activity or a sign of bigger and bolder things to come, including more acquisitions, more restructured partnerships, and in general a relentless effort to be considered a powerhouse in 21st-century enterprise applications?
CIOs trying to plan on what the software landscape might look like in mid-2011 have to consider the extraordinary upheaval that's taken place in just the past six months in the relationships involving HP and its two biggest and longest-tenured enterprise partners, Oracle and SAP. Only five months ago, execs from both Oracle and HP renewed their pledges of commitment to each other, only to see those vows blown up just days later when HP hired long-time Oracle nemesis Leo Apotheker as its CEO.
Since then, Oracle has become a bitter rival of HP, and Oracle chief Larry Ellison has given every indication that HP as a partner is dead to him.
Great news for SAP, right? Well, it certainly started out that way, and it might still end up that way, but recently HP, particularly with the acquisition of Vertica, has shown that it wants a big piece of some of SAP's most-strategic businesses, including analytics, BI, and data warehousing.
And that's sure to make things less cozy for HP's relationships with both SAP and Microsoft, says top technology analyst Jason Maynard of Wells Fargo:
"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."
Contrast that current assessment with the understandably optimistic forecast offered by SAP co-CEO Bill McDermott in early October after Apotheker was hired: "This is great news for HP and for SAP," said McDermott, as reported in my column called Global CIO: Larry Ellison Puts HP In Crosshairs Via Slap At New CEO.
"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.
Bob Evans is senior VP and director of
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