In a telegraphed move (Oracle'e Larry Ellison had already both defended and praised him), HP's exiting CEO Mark Hurd is moving to Oracle as co-president. At the same time, current Oracle co-president Charles Phillips is leaving.
Needless to say, Mr. Ellison will still be running the show.
Early press comments seem focused on whether HP knew Hurd was negotiating with Oracle and that this is the real reason for his exit, as well as exactly what he will be doing at Oracle to achieve its goals of beating IBM. No mention of HP by Oracle or Hurd, perhaps because his giant exit payment ($35+ million) might be jeopardized if HP objects to him going to a major competitor. Think of all those HP M&A plans he must have in his head.
I think more to the point is comparing how Hurd did at HP with the job at Oracle.
- Hurd made many of his gains at HP by going beyond cost control to significant cost cutting, including significant lay-offs. This made him very unpopular with HP employees.
- Hurd cut way back on R&D so that HP's current R&D investments are less than one-third of IBM's. Perhaps he felt that his M&A activity meant less need for internal R&D but the R&D investment seems small for an >$100 Billion company.
- Hurd used M&A both to increase HP revenue (and potential revenue) and to help reposition the company into the enterprise space.
At Oracle, much of the repositioning has already been done. The big job ahead is integration of HW and SW offerings and, more important, a decision as to how to get Oracle's service component significantly changed if it is to compete with IBM (which now makes more than one-half of its revenue from Services). HP had not yet optimized its services acquisition when Hurd departed. Services is an important driver of HW and SW sales for IBM and will need to be for Oracle.
And IBM has cards just played (the integration of HW and SW management under veteran Steve Mills, long-time (and very sucessful) head of IBM's SW busdiness as well as cards it could play: aquisitions of its own as well as steppijng beyond its "no applications" stance and competing head on with Oracle in the enterprise applications business.
Also, ignoring HP doen't mean it won't be an Oracle competitor. HP will now have less reason to partner with Oracle and seek other partners (think Microsoft, Google, and IBM).
HP also has a very different business model than IBM and Oracle, with its revenue split between the consumer and SMB printing and PC businesses and its enterprise HW, SW, and Services. IBM took itself out of the consumer and printing businesses long ago and out of the PC business more recently; Oracle has always focused on enterprise SW until its Sun acquisition took it into the HW business. We wonder if this doesn't leave HP at an advantage, as the consumerization of IT (we mean the influence of consumer usage of new technology first) influences enterprise IT decisions. A company with a big stake in the consumer business may know more about what's coming than companies who focus entirely on the enterprise and the midmarket.
We'll get to see Hurd in public very fast since Oracle World is upon us and he will be very present. And all eyes -- cusdtomers, press, analysts, and competitors -- will be on him, looking for hints of what is to come.
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