Note: This post was originally posted on my Archival Blog, Amy Wohl's Opinions on Cloud Computing and SaaS on August 19, 2011, but more properly belongs here.
Officially I'm on vacation, but this seems like a summer without vacations!
I thought of heading this post with the title "Is HP Crazy?" but I decided that didn't quite make my point.
I've just read my way through a dozen posts (try this one from Dennis Howlett) on what HP just did -- announce that it was closing down its nascent WebOS (tablet and phone) business, say that it was evaluating whether to stay in the PC business or spin it off, and announce that it was buying British enterprise software company Autonomy for an amazing $10.3 billion.
I think the press may be covering these in the wrong order. Here's another way to look at it.
HP must have been working on the Autonomy deal for some time. It wanted to announce it now and use the idea of "we're becoming an enterprise company" as the cover for everything else.
That would be nice if it were believable. HP has been trying for some time to move into the arena of enterprise software and services, but they have yet to be a big enough player to gain critical mass and buying another niche software vendor is unlikely to give them the traction they're looking for. Of course, they may have other acquisitions up their sleeve. I am concerned that they are paying too much. Also, deciding to keep Autonomy separate which will guarantee that they can't sell integration as a benefit.
HP then looked at their business and must have thought one of the reasons we're not taken seriously enough as an enterprise play is that too much of our business is PC oriented. If we take that business off the table, our enterprise business will immediately become a much more important part of HP. I think someone should have been asking how they were going to make up for the revenue loss on their PC business, but that doesn't seem to have been in the mix.
In the future, when we understand the tablet business better, we'll be in a position to judge whether their decision to bail out without ever having given the WebOS-based products a real chance was genius or a really bad idea. So much of the tablet business right now (before the enterprises start buying tablets in volume for mainstream applications, HP) is all about competing with Apple -- and HP is in the business of building products but not so much being a consumer marketeer of premium-priced products. I thought that the tablet business was a good fit for HP's drive to the enterprise, but apparently HP did not see it that way. Perhaps they should have been less ambitious and positioned their tablet product right at the enterprise rather than at consumer markets?
I am putting their decision to announce that they are going to spend the year or more considering whether or not to sell off their PC unit under the "doing an Osborne" category (preannouncing something and freezing your current market). Why would anyone buy an HP PC (or do a partnership deal) when this black cloud is hanging over the HP PCs future? The ultimate value of HP's PC division will be plummeting while HP considers its options. If this were the point of the recent announcements, it would have been accompanied by a statement that HP was in talks with XXX and that the details of the deal would be announcement shortly.
So I'm disappointed with HP. Not with the fact that they're probably years away from becoming one of the top enterprise system companies. Not with their initial poor results in the tablet business. Not with their desire to be out of the low margin PC business and into higher margin businesses like services and software. Rather, I am disappointed with the way they are going about it.
As it is, HP is going to provide cheer for tablet and PC vendors who now have a bigger market to divide among themselves and continue to fuel the already hot market for enterprise software, a market where there are already bigger and more successful players.