HP's Whitman Faces Skeptical CIOs At Gartner Event

CEO Meg Whitman faced tough customer questions during her keynote interview at the Gartner Symposium--but will CIOs be persuaded by her answers?

Michael Endler, Associate Editor, InformationWeek.com

October 24, 2012

7 Min Read

Microsoft isn't the only one trying to answer to big expectations this week. Recent months have seen HP lay off enough employees to populate a small city and struggle to balance its trusted brand against an ambiguous roadmap. So when CEO Meg Whitman took the stage Wednesday for a keynote address at Gartner's Symposium/ITxpo in Orlando, Fla., many among the CIO-heavy crowd were no doubt wondering what she'd have to say.

Whitman covered a number of themes, notably: the company's future in big data, cloud services, and information security; an allegiance to HP's legacy of innovation; and her belief that the Palo Alto, Calif.,-based giant has positioned itself for long-term growth by focusing on core strengths and rededicating itself to R&D.

The last of these themes has two sides: a concession that HP's restructuring efforts won't deliver tangible dividends immediately, and a promise that the company will achieve victory by playing the long game. As such, it was the statement that asked the most faith of those in attendance.

Whitman has talked about a multi-year recovery before, but with so many current and potential customers listening, and so many competitors showing off wares elsewhere at the event, the urgency of audience buy-in was arguably at a peak.

[ Don't count on your defense. See Play Offense On Security In 2013: Gartner. ]

In setting Whitman up to make her case, event organizers didn't pull any punches. The session began with a video montage of questions posed by event attendees. The topics spoke not only to the breadth of HP's operations but also to uncertainty surrounding the company's agenda. Queries ranged from whether HP will release a smartphone, to how it will break into information security, to--in a clip that provoked laughs throughout the packed conference hall--how Meg Whitman feels about Cisco CEO John Chambers's September assertion that she has no chance of turning around HP.

Keynote moderators Yvonne Genovese and Neil MacDonald, both Gartner analysts, maintained the theme, cycling through declines in HP's core markets and contentions that it has missed key inflection points such as cloud and mobility, among other topics. The company's bright spots, such as printers and servers, were acknowledged before Whitman was finally introduced to sort things out.

On the whole, Whitman responded candidly; she periodically retreated to the abstract rhetoric you might expect of a former gubernatorial candidate, but generally tackled questions directly. Whether her answers will satisfy the influential crowd, however, remains to be seen.

The moderators began by asking Whitman why she decided to join HP. The former eBay CEO answered that the company's talent pool was a major draw--a remark that probably won't sit well with those the company recently let go, but one to which she nonetheless returned throughout the event. She additionally said that HP's innovations were an appeal, though she acknowledged that many of them need to be repackaged. The computing giant's global reach of 200,000 partners and 27,000 direct sales executives rounded out the strengths Whitman "saw right away."

She elaborated that she took HP's reigns at a "difficult time" and said her task was "to figure out what the company does really well, and do more of that." This remark was the closest Whitman came to addressing layoffs; she argued that restructuring, consolidation, and a shift toward R&D are necessary to reshape the company. Citing the company's instrumental role in the creation of converged infrastructure, Whitman shifted to HP's role as a "solution provider" that also "makes products." To a certain extent, the statement could be seen as deflecting from the company's PC woes; though a market-share leader, HP suffered bigger-than-average declines in the slumping space--a point Whitman did not address in playfully contesting Gartner's contention that Lenovo has displaced her company as the market's overall leader. She also rarely addressed PCs directly, aside from explaining that she decided not to abandon the business shortly after becoming CEO. Instead, she discussed how the Personal Systems Group would evolve as necessary, with tablets cited as an example.

Nevertheless, Whitman said enough to substantiate the "solution provider" label. Much of what she said had been declared before, but she articulated enough goals and measuring sticks that the areas of emphasis could be easily identified.

Information security was one such emphasis. "It's one of our priorities because it's one of yours," Whitman told the audience. She cited holdings including ArcSight, TippingPoint, Fortify, and Autonomy--which she said played a major role in protecting the London Olympics--as strengths that would allow HP to excel. She also, in another nod to her confidence in the company's engineering prowess, said secure hardware is in the company's pipeline.

Genovese pointed out that the security focus was enterprise-centric, with much of the attention focused "behind the firewall." Whitman at first appeared to challenge the characterization before remarking, "Our focus is on the enterprise because that's where the big vulnerabilities are."

Information optimization, essentially HP's take on big data, was another focal point. The ability to make sense of unstructured data, Whitman said, is enormously important, remarking that if the capability had been available when she ran eBay, the company could have saved millions of dollars by more easily identifying scam auctions. "Autonomy does this better than anyone else," she said, adding that marketing applications are on HP's radar.

With moderators reminding her that "8,000 IT leaders are here, all ready with checkbooks," Whitman turned to converged clouds as another major focus. She remarked that some see the company as a latecomer, but said, "Our heritage is in heterogeneous environments," a tradition she linked to the company's ability to deliver "your cloud, your way." Whitman emphasized several successes, such as the company's large installation of private clouds, and touted HP's centralized, open architecture--which she said has been one of her goals as CEO "since day one"--as central to providing customer choice.

On the topic of competitors, Whitman remained steadfast, though she sometimes relied on easy fallbacks, such as the company's engineering talent, to justify herself. The moderators pointed out that Chambers had softened from his aforementioned comment, but Whitman quipped that though she and the Cisco CEO are friends, "I'd rather have my hand than John's hand." She rejected fears of commoditization in the networking and storage spaces, citing Project Moonshot among other initiatives, and pointed out that HP has a 41% share of the networking market in China, a fast-growing region.

When asked if she, as a Microsoft partner, objected to the Surface tablet, Whitman dismissed the idea, welcoming competition. She did, however, assert that the much-ballyhooed device will be unlikely to crack the enterprise market. She mentioned its keyboard as a particular disadvantage insofar as a "PC-like experience" is concerned and claimed HP's SmartJacket-equipped tablets represent better, more versatile options.

Whitman also said the company will likely need to introduce a smartphone at some point, but said not to expect one in 2013.

Near the end, Whitman was asked, given her concession that HP is rebuilding, how customers can judge the company's progress one year from now. She responded by re-emphasizing the talking points to which she had returned throughout the keynote.

She said that HP, as a solution provider, should be judged according to how much easier it has made customers' jobs, and how much more successful it has made their businesses. She cited more efficient data centers and clouds that "don't lock you into a closed stack" as part of the process.

Speaking more specifically, she said the company should lead the converged infrastructure market, and that its products should be "number one" in enterprise business.

"Do you think of us a year from now as helping you do your job more effectively and helping you turn IT in a strategic weapon to grow your company?" she asked.

About the Author(s)

Michael Endler

Associate Editor, InformationWeek.com

Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 and, pending the completion of a long-gestating thesis, will hold an MA in Cinema Studies from San Francisco State.

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