Global CIO: HP's New Strategy Will Intensify Battles With IBM And Oracle

"H-P would invest more in its software, networking and storage businesses and the company would emphasize systems that combine these functions with other H-P products, said people briefed on the matter.

"Additionally, Mr. Apotheker plans to focus on so-called cloud computing, an industry catch-all term for information and programs that are accessed over the Internet. Mr. Apotheker would like to increase sales of equipment to telecommunications firms and other companies that operate "clouds" and build a business helping corporations build similar setups, said the people briefed on the matter." (End of excerpt.)

While I'm not sure what exactly is meant by "systems that combine those functions with other H-P products," I'd bet they're talking about one or possibly both of the following efforts: (a) either an acceleration of the company's Converged Infrastructure program, under which servers, storage and networking conform to the same architectures and over time begin to become integrated together; or, (b) the new wave of highly optimized and engineered systems, such as Oracle's Exadata or SAP's Hana, which weave all of those separate technologies into large boxes that are built expressly to wring maximum power and speed out of the software that runs on them.

In either case, HP would be attempting—wisely—to move upmarket and either get out of the commodity hardware business or aggressively complement it with extensions into higher-performance and higher-margin systems.

IBM has been a mainstay in what it calls workload-optimized systems for many years, and is expected to dramatically expand its presence in that high-growth sector of the market this year. And while it had been moving away from commodity networking products for several years, it jumped into the high-performance portion of that market last year with its acquisition of Blade Network Technology.

HP will also bump into IBM in many slices of the software business, as IBM is a top-tier player in databases, middleware, and particularly in analytics, where it has become the world's leading force in applications, research, related services, and the accompanying vision that has helped persuade customers that they need to invest in this powerful forward-looking capability.

Apotheker will also have his hands full with Oracle, which is well-known as one of the world's top software companies and has also spent the past year transforming itself into a formidable competitor in high-end systems that take maximum advantage of highly engineered systems that are built from the chip level on up to optimize software performance.

In storage, IBM and Oracle both are parlaying their vast strengths in database software to drive new innovations and accelerate the evolution of storage from being hardware-centric to being software-centric.

So while it was in some ways just about inevitable that Apotheker or any other new HP CEO would have to move the company away from significant reliance on commodity technologies, what is not nearly so inevitable is HP's ability to design and deliver higher-end technologies and products that are markedly superior to those already on the market from IBM, Oracle, and others.

On top of that, Apotheker and his retooled management team will also need to reshape how the world perceives HP's enterprise products, and address very aggressively why CIOs should select the still-to-come vision from Apotheker over the fairly persuasive ones from IBM and Oracle currently echoing throughout the industry.

If Apotheker can do that, then he can leverage HP's massive size, market presence, and installed base to reposition the company as not just the biggest IT supplier but also one of the most innovative and forward-looking.

Whatever happens with those three big players, their escalating competition surely means good news for corporate customers, who'll now have three of the world's largest tech companies slugging it out in 2011 on high-end innovation and enduring customer value in the technology categories that matter most to CIOs.

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