Global CIO: As HP Stomps, Software Industry Shakes

"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.

RECOMMENDED READING: Global CIO: HP Mobile Dump Of Microsoft Is Brilliant Global CIO: HP And Microsoft Launch Fleet Of Application Appliances Global CIO: Sam Palmisano Reveals Secret Behind IBM's Century Of Success Global CIO: HP's New Strategy Will Intensify Battles With IBM And Oracle Global CIO: The Top 10 CIO Issues For 2011 Global CIO: Are HP And SAP Perfect Match Or Train Wreck? Global CIO: HP Calls Out Apple In CEO's Quest To Be Coolest Of All Global CIO: Silicon Valley Crackup: Oracle & HP Killing 25-Year Alliance? Global CIO: Larry Ellison Vows To 'Go After' HP; Is Alliance Dead? Global CIO: The PC Is Dying: Long Live The iPad! Global CIO: Larry Ellison And IBM Lead Surge In Optimized Systems Global CIO: An Open Letter To IBM CEO Sam Palmisano Global CIO: Apple Storms The Enterprise As iPad And iPhone Surge Global CIO: The Rise Of Analytics Triggers The Fall Of The Tactical CIO Global CIO: IBM Leads IT Industry With Surge In Analytics And Hardware Global CIO: Larry Ellison's 10-Point Plan For World Domination Global CIO: SAP's Striking Turnaround Triggered By Customer-Centric Strategy Global CIO: HP CEO Leo Apotheker's Agenda: What Will He Do First? Global CIO: The Top 10 Most-Influential IT Vendors Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

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