With just these two issues—enterprise/consumer convergence and the cloud—Leo's chance for a quick upside is enormous, for one simple reason: if all he does is get HP's famously disparate business units to work synergistically in terms of development, productization, marketing and sales, he'll be able to engineer an enormous amount of growth for the company. Right now HP's big three divisions—printers, PCs, and enterprise--are largely uncoordinated in every way. Cross-selling, much less cross-product development, has never been HP's strong point, and, under Mark Hurd, compartmentalization became more of a virtue than ever before.
This is a key part of the Léo Apotheker strategy that's largely ignored today. Wall Street's evaluation of HP has been very much a 1+1+1=3 equation, meaning the sum of the parts is equal to the whole: That's the legacy of no up-sell. If HP can start building a cross-sell/up-sell capability, there's an enormous upside to be had without disrupting any cash cows. While that's hardly simple, Leo's chops as a global sales executive are unassailable and making this kind of shift at HP is very much within reach.
Palm is another undervalued and unappreciated asset. While there are many who think the mobile market is already sewn up (though by whom seems to change frequently; Nokia's decision to go with Windows 7 Mobile apparently changed the game again), the fact that Palm's WebOS will find its way into 100 million HP devices--pretty much any printer worth more than $100, and all its PCs, and of course, phones--means that mobility is about to mean something more than just a cool cell phone and a massive apps marketplace. (Though WebOS is cool too, as unheralded in the market as it is: The only multitasking OS is actually one of the best, most intuitive cell phone operating systems in the market.)
This multitouch mobility strategy has many legs, including the aforementioned convergence opportunity, as well as the analytics focus that Leo is planning on bringing to HP. The company's strategy involves leapfrogging several well-worn domains in enterprise software, and analytics is one of them (the other two are core ERP and the relational database: HP won't reject them, but they're not part of its leading edge innovation strategy).
The Analytics Opportunity
The acquisition earlier this year of Vertica was clearly a defining moment in the strategy: next generation analytic tools and services that go beyond the old-style relational data warehouse/BI tools approach that was already old and tired at the dawn of the 21st century. While there is much to be learned about the details of HP's analytics strategy, you can assume that Vertica is just the first of many acquisitions. It's clear that HP intends to take the analytics opportunity and do a much better job at driving value and controlling cost, and effectively cleaning up one of the most lard-heavy, and results- and ROI-challenged, parts of the IT budget.
Marrying this next-generation analytics approach to a ubiquitous mobility offering like WebOS is an important linchpin to the strategy: Next-generation analytics depend on a analyzing significant amounts of data coming from myriad distributed devices and delivering the resulting information back to whatever endpoint the business user or consumer prefers. With WebOS at all the endpoints--printers, PCs, laptops, tablets, phones—the collection of data and the delivery of information to anyone, anywhere becomes something HP could have a significant advantage in providing. Again, this a could be an opportunity, one that HP still has to fully realize, but it's potential as a game changer for the industry and for HP is huge.
Finally, there's the services part of HP's business. This is the big question mark in Leo's strategy: HP's EDS unit will be able to provide a significant amount of support for the cloud services side of the business since the similarities between outsourcing and cloud services far exceed any differences, but there will have to be an acquisition or two if HP wants to build a high-level services offering that can take this strategy into the field and execute on it.
Talking The Talk
Which brings up the final reason why I'm bullish on HP. If I were to level an elevator-speech-length criticism at the old HP, it would be this: HP doesn't have the market position that gives it a legitimate reason to directly engage at the C level and at the business-user level simultaneously. The old HP did well in the space in between these two sets of influencers, but the new HP has to do a much better job at expanding its conversations with the market to include the execs at the very top and the masses of business users everywhere else. The convergence requires it, the cloud requires it, next-generation analytics requires it, and driving synergy in sales and services requires it.
Léo Apotheker's new strategy positions HP right where it needs to be. If he can make this strategy a reality, it will be one of the great turnaround stories in technology. And stock price and critics notwithstanding, so far, so good.
Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP and other firms that are sometimes analyzed in his columns. Write him at [email protected].
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