There's an intriguing multidimensional chess game going on that's pitted Hewlett-Packard against its leading software partners as HP, under new CEO Leo Apotheker, is beginning to test just how deeply it can push into various software markets without nuking those strategic partnerships.
A perfect example is HP's leap last week into head-to-head competition with Microsoft Windows by putting HP's WebOS inside not only its new smartphones and tablets but also future PCs and other products.
Is this an apocalyptic slap across the face and a demand to settle things once and for all with pistols at 20 paces?
Is it an inevitable move by HP that has less to do with Microsoft than it does with Apotheker's vision of what HP needs to become in order to grow in relevance and significance among both consumers and business customers?
Is it a recognition by HP that in a rapidly changing world where mobility is driving innovation and customer value, HP needs to be more of a central player and less of a commodity bystander?
Is it a pragmatic and forward-looking gambit by HP to realign its deep-seated partnership with Microsoft away from consumer devices and more toward high-end, high-margin information appliances, such as the $2,000,000 HP Enterprise Data Warehouse Appliance the companies jointly introduced last month?
I think the HP move—for all of its bluntness, and for all of the short-term tension it will likely cause with Microsoft—is in fact a combination of all of the factors cited above and one that underscores how profoundly different the IT industry and its partnerships are today than was the case just a few years ago.
After all, it was only five months ago that Oracle and HP executives loudly and proudly proclaimed their renewed commitment to one another, reaffirming that the issues surrounding Mark Hurd's move to Oracle would not outweigh the value and mutual benefit the companies placed on their 30-year-long strategic alliance.
But then HP named Apotheker as CEO, and that hiring of the former SAP CEO proved to be an incursion too far for Oracle CEO Larry Ellison—and today, the HP-Oracle alliance lies in tatters and is all but dead.
Think of that: a 30-year alliance spanning more than 100,000 jointly supported customers and billions of dollars in revenue reduced to a shell in a matter of months because both companies felt that as significant as their shared past has been, that history could not supercede the need for each company to focus solely on its own self-interest as they moved into the future.
For HP and Microsoft, yes, it's a short-term shocker: Microsoft sees its hegemony over the PC industry further challenged in the wake of the Apple iPad's stunning success among corporations, and HP now steps forth on its own into a world where the only thing bigger than its potential is the risk it faces in having almost no developer ecosystem or support.
As my colleague Fritz Nelson wrote last week in a column called, "HP Goes All-In With WebOS":
"But bold moves don't come without risks. WebOS was astonishingly good when Palm first announced it two years ago, when it received this same sort of buzz. Two years later, with one of the world's biggest, most successful companies behind it, and the OS has yet to attract even a modicum of developer support. Despite Palm's early pledge to make mobile application development as easy as creating a Web experience, I've heard nary a Palm developer back up that claim."
So what's the story—has HP turned suicidal?
For some perspective on that, let's look at a recent comment from the CEO of a company HP dislikes almost as much as it dislikes Oracle: IBM chairman and CEO Sam Palmisano. In a recent speech commemorating IBM's centennial, Palmisano said this about the PC business as I wrote about in Global CIO: Sam Palmisano Reveals Secret Behind IBM's Century Of Success:
"[The IBM PC] was by any measure the most recognizable brand for us—and arguably the only brand that touched individuals: tens of millions of people. For all these reasons, the idea that we would divest the PC business was, for many—pardon the pun—unthinkable."
Yet that's exactly what IBM did because it foresaw the looming commoditization of the PC business and resolved across the company to put those core, long-term beliefs and culture spoken about by Watson 50 years ago ahead of the short-term "unthinkable" consequences.
Here's Palmisano's rationale for that momentous decision: "We are innovators. In 1981 the PC was an innovation. Twenty years later it had lost much of its differentiation. It was time to move on—to the future."
I think that's exactly what HP is doing here: choosing to let go of some very successful parts of its past in order to be able to create a more vibrant and successful future. That decision will let HP focus on two very different but very vital opportunities—and for that, Apotheker deserves a great deal of credit:
1) Building its mobile future around WebOS instead of Windows: Right now, all the buzz is about HP embedding WebOS inside its forthcoming tablet and its smartphones, PCs, and printers. Those are all swell ideas, but the real value for HP could come when that WebOS-powered wireless ecosystem is extended out to engage with HP's sensor business and the tens or hundreds of millions of machines, laboratory equipment, oil wells, appliances, and other devices and systems that will soon be connected via those HP sensors. On top of that physical ecosystem and the staggering volumes of data it creates, HP can then step forward with an analytics play to make sense out of all that data—and, not surprisingly, HP will once more need to redefine some software relationships to fully exploit that opportunity.
2) HP and Microsoft can now focus on high-end, high-value appliances: While HP's massive PC business can provide some nice scale for WebOS, Microsoft needs to look past that and redouble its efforts with HP in developing the new wave of highly engineered, integrated, and optimized systems that are becoming increasingly popular among enterprises. Here's a glimpse at that new type of HP-Microsoft potential from a recent column called Global CIO: HP And Microsoft Launch Fleet Of Application Appliances:
"But no one so far has taken a comprehensive look at solving business problems by standing-up a set of solutions for productivity improvements and that reduce complexity. And we think that the industry's #1 infrastructure company [that would be HP] and #1 provider of productivity tools and business apps [that would be Microsoft] are the only ones who could do this: the industry's first complete portfolio of converged appliances," [HP vice president Paul] Miller said. . . .
[Microsoft general manager Doug] Leland added that the new HP appliances—optimized to run with a wide range of Microsoft software—are intended to deliver to customers "an immediate reduction in cost, complexity, and risk. They're pretuned, preconfigured, and preselected to work together to decrease that cost and risk," Leland said.
In my recent column called Global CIO: The Top 10 CIO Issues For 2011", I included optimized systems as a top priority for CIOs because the innovative technologies offer not only cost savings and faster time to value on the back end, but are also delivering unprecedented levels of performance and scalability due to the optimization efforts by both hardware and software engineers.
There's still a lot of hay to be made via the joint efforts of Microsoft and HP and each company will need to view HP's recent decision in the contexts of not only this rapidly evolving industry but also and more importantly the even more rapidly evolving needs of businesses and tastes of consumers.
Bob Evans is senior VP and director of
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