The stock market hates HP's new strategy(google.com)
google.com
The stock market hates HP's new strategy
http://www.google.com/finance?q=nyse+hewlett+packard
27 comments
Apotheker is taking the pain upfront, and undoing the damage wrought by Fiorina and Hurd over the last decade. He only took over in November 2010, and had to take some time to look at the business, and give the WebOS launches a chance.
But he's basically unwinding Fiorina's Compaq acquisition (as Michael Dell implied in his tweet yesterday), and Hurd's Palm/WebOS acquisition.
HP used to have a core value of only being in businesses where it could be at the leading edge technologically. Tablets, smartphones and PCs are areas where it's been a copycat.
Plus, Apotheker has likely identified as part of his review since starting (at the end of 2010) that consumer technologies aren't an area that it has a competitively differentiated core competence.
[EDIT for typos/clarity]
This was perhaps a good plan delivered with the poorest tact. The reality distortion field seems to be working in reverse for Leo & Co.
Moving toward an enterprise only strategy could make HP healthier and more profitable in the long run. It may even reap additional benefits from a consolidation of vision.
The PSG offers less and less synergy with the rest of the company with each passing year. Especially if WebOS is dead, which everyone knew but nobody wanted to admit.
The problem is HP could have kept webOS in zombie mode and discretely shopped around the company under the guise of licensing talks. Maybe HP already did that and its last option walked out the door.
And the same with the PSG. HP could have kept that under wraps and saved the news until the transition was nearly complete. "By the way, PSG, the #1 PC maker in the world, is doing great and we think it will do even better as an autonomous company which will happen as soon as the SEC allows it starting from today."
Instead HP delivered an abortion of bad news with little to no concern how it would be received. It's like Apotheker thought to himself, "this is clearly the best solution" and therefore it requires absolutely no explanation. Everyone should just "get it" like he does.
Moving toward an enterprise only strategy could make HP healthier and more profitable in the long run. It may even reap additional benefits from a consolidation of vision.
The PSG offers less and less synergy with the rest of the company with each passing year. Especially if WebOS is dead, which everyone knew but nobody wanted to admit.
The problem is HP could have kept webOS in zombie mode and discretely shopped around the company under the guise of licensing talks. Maybe HP already did that and its last option walked out the door.
And the same with the PSG. HP could have kept that under wraps and saved the news until the transition was nearly complete. "By the way, PSG, the #1 PC maker in the world, is doing great and we think it will do even better as an autonomous company which will happen as soon as the SEC allows it starting from today."
Instead HP delivered an abortion of bad news with little to no concern how it would be received. It's like Apotheker thought to himself, "this is clearly the best solution" and therefore it requires absolutely no explanation. Everyone should just "get it" like he does.
Personally I think that big enterprise software and its sales model, as perfected by Oracle and SAP is dead long term, it will be killed by an on demand cloud products. HP maybe had a chance to get into this market eventually, and WebOS was part of his strategy.
But instead they decided to chase last decades model which makes high margins in the short term.
And why does no one want to try to compete with Apple?
But instead they decided to chase last decades model which makes high margins in the short term.
And why does no one want to try to compete with Apple?
What? The cloud IS Oracle, IBM, SAP, and HP's future revenue model. They are going to build the cloud, build the enterprise cloud services, and bill out consultants specializing in the cloud. HP's future is nothing but the cloud moving forward. HP makes the servers that are the cloud. HP's business software will sit on its servers instead of yours. HP's consultants will charge you $$$ to tell you which services work for you, provision everything, configure it, do the integration, and host it for you in the cloud for a recurring monthly fee per user.
WebOS has nothing to do with capitalizing on the cloud. It's just one of many clients to the cloud.
WebOS has nothing to do with capitalizing on the cloud. It's just one of many clients to the cloud.
That is what they think.
MySpace bought HP servers, but Facebook doesnt. That market will commoditise too, as cloud that uses software not hardware redundancy doesnt need the high margin features.
And the future of business software is gradually being built by Salesforce, Google, Dropbox and so on. The landscape will change drastically.
While there is innovation in clients, owning a platform is still part of a viable strategy. There is still an opening for a business friendly platform, as Microsoft can still lose and RIM is weak.
MySpace bought HP servers, but Facebook doesnt. That market will commoditise too, as cloud that uses software not hardware redundancy doesnt need the high margin features.
And the future of business software is gradually being built by Salesforce, Google, Dropbox and so on. The landscape will change drastically.
While there is innovation in clients, owning a platform is still part of a viable strategy. There is still an opening for a business friendly platform, as Microsoft can still lose and RIM is weak.
> the future of business software is gradually being built by Salesforce, Google, Dropbox
What color is the sky on your planet?
Enterprise software -- the largest software market by a long-shot -- is not scared of ... Dropbox. That's like saying that cars will be wiped out by lawnmowers. The statement doesn't make any sense. Nor does using Facebook and MySpace as examples of enterprise infrastructures. They're medium sized companies with disproportionately large infrastructure needs. What happens at Facebook says virtually nothing about what happens at Mercedes. And nobody in the enterprise trusts Google since enterprise software is all about managing worst case scenarios, and Google's "here, talk to a robot" isn't even in the same galaxy as an acceptable partner program for the enterprise.
Salesforce is the only one of those companies that even should be mentioned in the same breath and they're mostly a pain in the ass for Oracle and SAP because they've been chipping away at the low end of the market (very successfully). It is plausible that they'll continue to push upward and conquer increasingly larger markets, but that's something that will take a decade or two to unfold.
What color is the sky on your planet?
Enterprise software -- the largest software market by a long-shot -- is not scared of ... Dropbox. That's like saying that cars will be wiped out by lawnmowers. The statement doesn't make any sense. Nor does using Facebook and MySpace as examples of enterprise infrastructures. They're medium sized companies with disproportionately large infrastructure needs. What happens at Facebook says virtually nothing about what happens at Mercedes. And nobody in the enterprise trusts Google since enterprise software is all about managing worst case scenarios, and Google's "here, talk to a robot" isn't even in the same galaxy as an acceptable partner program for the enterprise.
Salesforce is the only one of those companies that even should be mentioned in the same breath and they're mostly a pain in the ass for Oracle and SAP because they've been chipping away at the low end of the market (very successfully). It is plausible that they'll continue to push upward and conquer increasingly larger markets, but that's something that will take a decade or two to unfold.
I mostly agree, but Google Apps for Business is slowly chipping away at some of the market that 5 years ago might've bought an enterprise "email solution", especially at the lower end of the market, like universities, state governments, and medium-sized businesses. Less success among very large businesses, but a few have adopted it.
Chipping away from the bottom takes time. But it will happen. Do you see the big enterprise software companies doing serious innovation in their products? The stuff that they built was often fairly cutting edge when they built it, but that was years ago, and those companies are sales driven not innovation driven, like Oracle. Of course they buy in newer more innovative technology, but then try to merge it with the legacy.
Enterprise software is a hell of a lot more than racks of web servers and managing licenses for Microsoft Office. Any publicly traded company, even one that is not a software company, has tons of business processes that are specific to its way of doing business and its industry. That requires various specialized if not custom software and lots and lots of glue to put it all together. On top of that, businesses want to see into all that activity so all the data from that software needs to be extracted, collected, combined, and reported on properly which requires technical and business expertise specific to that company's business practices and technology choices. The addition of more cloud services increases this burden while decreasing other burdens.
HP makes lots of money through EDS selling consulting services and outsourcing services to do all that stuff. Stuff that is being fed by the move to more and more cloud services whether internal or external.
And when I say enterprise services, I mean software as a service stuff like Salesforce. There are more services that business need than Salesforce such as data warehousing that HP is in a strong position to enter or dominate. That said, even though something like Salesforce is a turn key solution hosted off site, it doesn't mean there isn't an enterprise sales process. A middle manager doesn't buy up 1,000 seats of Salesforce subscriptions at $65 per month without going through the normal enterprise approval process. I've seen it and it can take several months even though your average small business owner can sign up in 10 minutes with a corporate credit card. The real deal involves contract scrutiny and due diligence work. And just because Salesforce is easier, it doesn't mean you don't need a ton of development and integration work to bring it in line with your existing practices and software tools which usually requires outside experts at least for training if not complete outsourcing.
HP makes lots of money through EDS selling consulting services and outsourcing services to do all that stuff. Stuff that is being fed by the move to more and more cloud services whether internal or external.
And when I say enterprise services, I mean software as a service stuff like Salesforce. There are more services that business need than Salesforce such as data warehousing that HP is in a strong position to enter or dominate. That said, even though something like Salesforce is a turn key solution hosted off site, it doesn't mean there isn't an enterprise sales process. A middle manager doesn't buy up 1,000 seats of Salesforce subscriptions at $65 per month without going through the normal enterprise approval process. I've seen it and it can take several months even though your average small business owner can sign up in 10 minutes with a corporate credit card. The real deal involves contract scrutiny and due diligence work. And just because Salesforce is easier, it doesn't mean you don't need a ton of development and integration work to bring it in line with your existing practices and software tools which usually requires outside experts at least for training if not complete outsourcing.
Respectfully, I don't think you appreciate the scale of huge companies and the requirements for the software and suppliers that help to manage them.
If HP or IBM or SAP or Oracle wanted to do what, say, Dropbox does, they would throw effectively unlimited funding at the problem until it was solved. They might not even bother to market the result publicly, to avoid diluting their brand, but if they chose to do so, then the unfortunate small company concerned would probably be gone in a few months (assuming the large company didn't just litigate it out of existence because it was easier, if you're in a jurisdiction like the US).
Put another way, companies like Dropbox don't do well because they have a magic recipe that the big boys don't, they do well because they've chosen a niche where they're too small for the big boys to care about and where there are plenty of smaller businesses who will value and pay for that kind of offering because they don't have the same kind of resources in-house to do it themselves.
Edit... I should also mention Google, who aren't likely to be competing in the "enterprise" arena any time soon for a very different reason: they aren't set up to support that scale of customer. If you want to sell software to an engineering giant or a global services firm with an employee count in six figures, you don't show up with a few web pages and an e-mail address, you send a CxO or two on a plane to their head office to schmooze them, and then you appoint an SVP whose only role is to lead a large team of sales and support staff dedicated to jumping when that customer says jump.
If HP or IBM or SAP or Oracle wanted to do what, say, Dropbox does, they would throw effectively unlimited funding at the problem until it was solved. They might not even bother to market the result publicly, to avoid diluting their brand, but if they chose to do so, then the unfortunate small company concerned would probably be gone in a few months (assuming the large company didn't just litigate it out of existence because it was easier, if you're in a jurisdiction like the US).
Put another way, companies like Dropbox don't do well because they have a magic recipe that the big boys don't, they do well because they've chosen a niche where they're too small for the big boys to care about and where there are plenty of smaller businesses who will value and pay for that kind of offering because they don't have the same kind of resources in-house to do it themselves.
Edit... I should also mention Google, who aren't likely to be competing in the "enterprise" arena any time soon for a very different reason: they aren't set up to support that scale of customer. If you want to sell software to an engineering giant or a global services firm with an employee count in six figures, you don't show up with a few web pages and an e-mail address, you send a CxO or two on a plane to their head office to schmooze them, and then you appoint an SVP whose only role is to lead a large team of sales and support staff dedicated to jumping when that customer says jump.
>If HP or IBM or SAP or Oracle wanted to do what, say, Dropbox does, they would throw effectively unlimited funding at the >problem until it was solved.
And if there is one thing we've learned from Microsoft etc. is that throwing unlimited funding at a problem fixes it.
And if there is one thing we've learned from Microsoft etc. is that throwing unlimited funding at a problem fixes it.
>And if there is one thing we've learned from Microsoft etc. is that throwing unlimited funding at a problem fixes it.
The main problem for Dropbox is simply scale. You, as a service provider, need to keep up with the storage and bandwidth requirements. The only way to deal with that is through buying more hardware/Cloud CPU time and bandwidth. If you're Dropbox, that means that you might need to get more funding. If you're IBM or HP, and they've made it a priority, it's much easier to get what you need.
Dropbox isn't really all that special from a technical perspective at this point. Any of the large tech firms can solve it easily, and Apple, Amazon and Google have all come out with services that do basically the same thing as Dropbox.
The main problem for Dropbox is simply scale. You, as a service provider, need to keep up with the storage and bandwidth requirements. The only way to deal with that is through buying more hardware/Cloud CPU time and bandwidth. If you're Dropbox, that means that you might need to get more funding. If you're IBM or HP, and they've made it a priority, it's much easier to get what you need.
Dropbox isn't really all that special from a technical perspective at this point. Any of the large tech firms can solve it easily, and Apple, Amazon and Google have all come out with services that do basically the same thing as Dropbox.
Your logic here seems to be that because throwing huge amounts of money at (say) search landed Microsoft in second place behind one of the most successful, lucrative, and well-capitalized technology companies of all time, money doesn't matter.
Second place after merging the service with the service in the second place (Yahoo search). Google wasn't the most successful, lucrative and well-capitalized technology when it started. Google was the case of one company completely dominating a market which they helped create. Dropbox is example of another such market (I am not comparing dropbox with google just giving an analogy).
Well, how much software have you paid for lately to help view your files and directories in a graphical tree, defragment your disks, compress the data on them, or scan that data for viruses? A few years ago, all of those things were available through a variety of commercial tools. Microsoft basically eliminated those entire industries when it provided a decent alternative built in to Windows.
In any case, your comment is a cheap shot. Microsoft have a relatively strong track record when it comes to establishing footholds in new markets, even if they've been slow to see the opportunity at first, by committing vast resources and running loss leaders for a while if necessary to establish their product. They also have some of the best R&D in the business, thanks in no small part to hiring some of the smartest people and putting them in top class facilities.
In any case, your comment is a cheap shot. Microsoft have a relatively strong track record when it comes to establishing footholds in new markets, even if they've been slow to see the opportunity at first, by committing vast resources and running loss leaders for a while if necessary to establish their product. They also have some of the best R&D in the business, thanks in no small part to hiring some of the smartest people and putting them in top class facilities.
>Well, how much software have you paid for lately to help view your files and directories in a graphical tree, defragment your disks, compress the data on them, or scan that data for viruses?
As me how much Microsoft software I've used in last say an year. I know. Zero. Microsoft isn't a behemoth it used to be.
>In any case, your comment is a cheap shot. Microsoft have a relatively strong track record when it comes to establishing footholds in new markets, even if they've been slow to see the opportunity at first, by committing vast resources and running loss leaders for a while if necessary to establish their product
I wouldn't be so sure of a strong track. I think the only thing they have to show for themselves in last decade is Xbox. I can't think of any other new market where they have been as successful. I do understand where you are coming from, MS does have a reputation of going into new domains and becoming a NUMBER TWO player. But that's hardly what a company of the caliber of MS aspires to do. I do have respect for MS and its research facilities, but that doesn't mean I believe that it has what it takes to kill off start-ups with good momentum, like Dropbox. At best it can be the Bing to Google.
As me how much Microsoft software I've used in last say an year. I know. Zero. Microsoft isn't a behemoth it used to be.
>In any case, your comment is a cheap shot. Microsoft have a relatively strong track record when it comes to establishing footholds in new markets, even if they've been slow to see the opportunity at first, by committing vast resources and running loss leaders for a while if necessary to establish their product
I wouldn't be so sure of a strong track. I think the only thing they have to show for themselves in last decade is Xbox. I can't think of any other new market where they have been as successful. I do understand where you are coming from, MS does have a reputation of going into new domains and becoming a NUMBER TWO player. But that's hardly what a company of the caliber of MS aspires to do. I do have respect for MS and its research facilities, but that doesn't mean I believe that it has what it takes to kill off start-ups with good momentum, like Dropbox. At best it can be the Bing to Google.
> Microsoft isn't a behemoth it used to be.
Microsoft Windows desktop market share: 90+%
Microsoft Office market share: 90+%
Internet Explorer market share: 40-50% (still by far the most popular browser)
> I think the only thing they have to show for themselves in last decade is Xbox. I can't think of any other new market where they have been as successful.
A few obvious examples:
Client division: Windows 7
Server and Tools division: Windows Server, Visual Studio, SQL Server, Exchange Server
Business division: Office
Entertainment and Devices division: XBox 360, various games, various mice/keyboards/etc.
R&D: Seems to employ/fund just about everyone doing industrial programming language research except for the 3 Google managed to hire, and a huge proportion of the industrial HCI research too.
MS obviously aren't dominant in all of these fields (compare Oracle for DB, the other major consoles for gaming, etc.). However, no start-up is going to compete with these sorts of products any time soon.
The most obvious targets for disruption by smaller players are the browser market, except that both Chrome and Firefox have basically written off business users as clients so MS will have a base there for as long as it wants one, and programming, except that with the resources and R&D Microsoft are throwing into that field lately it seems more likely that MS will pull away from the small time competition rather than losing ground for the foreseeable future.
That means at best, start-ups are going to be competing against Microsoft's secondary portfolio, things like BizTalk and Dynamics, and it's not as if there's a huge amount of innovation going on in the start-up sector in unsexy fields like that (unless you still think a business plan featuring the word "cloud" in big enough letters is worth VC funding, I suppose, but since the likes of Google Docs haven't even made a dent I don't suppose MS will be too worried about that sort of start-up for now).
Microsoft Windows desktop market share: 90+%
Microsoft Office market share: 90+%
Internet Explorer market share: 40-50% (still by far the most popular browser)
> I think the only thing they have to show for themselves in last decade is Xbox. I can't think of any other new market where they have been as successful.
A few obvious examples:
Client division: Windows 7
Server and Tools division: Windows Server, Visual Studio, SQL Server, Exchange Server
Business division: Office
Entertainment and Devices division: XBox 360, various games, various mice/keyboards/etc.
R&D: Seems to employ/fund just about everyone doing industrial programming language research except for the 3 Google managed to hire, and a huge proportion of the industrial HCI research too.
MS obviously aren't dominant in all of these fields (compare Oracle for DB, the other major consoles for gaming, etc.). However, no start-up is going to compete with these sorts of products any time soon.
The most obvious targets for disruption by smaller players are the browser market, except that both Chrome and Firefox have basically written off business users as clients so MS will have a base there for as long as it wants one, and programming, except that with the resources and R&D Microsoft are throwing into that field lately it seems more likely that MS will pull away from the small time competition rather than losing ground for the foreseeable future.
That means at best, start-ups are going to be competing against Microsoft's secondary portfolio, things like BizTalk and Dynamics, and it's not as if there's a huge amount of innovation going on in the start-up sector in unsexy fields like that (unless you still think a business plan featuring the word "cloud" in big enough letters is worth VC funding, I suppose, but since the likes of Google Docs haven't even made a dent I don't suppose MS will be too worried about that sort of start-up for now).
>Microsoft Windows desktop market share: 90+%
A relic of last decade. A case of momentum.
>Internet Explorer market share: 40-50% A side-effect of the above.
I hate to be sidetracked by my perceived opinion of Microsoft. I am not the one to spew hate on MS. I have a lot of respect for MS and its research philosophy.
However, the point I am trying to make is that Microsoft has never solved a problem by throwing money at it. When they have tried, they have ended up (inspite of having good products) in number 2 position.
>Internet Explorer market share: 40-50% A side-effect of the above.
I hate to be sidetracked by my perceived opinion of Microsoft. I am not the one to spew hate on MS. I have a lot of respect for MS and its research philosophy.
However, the point I am trying to make is that Microsoft has never solved a problem by throwing money at it. When they have tried, they have ended up (inspite of having good products) in number 2 position.
Its worked well enough for them so far. MS Office killed Lotus 123 and Word Perfect. Internet Explorer killed Netscape. The XBox 360 is outselling the PS3. The only place where the "spend money until the problem goes away" strategy hasn't worked is in phones, and even there, the final chapter is hardly written.
"HP Upline" was that service:
http://www.pcmag.com/article2/0,2817,2286656,00.asp
and it was discontinued in 2009:
http://www.pcmag.com/article2/0,2817,2341804,00.asp
http://www.pcmag.com/article2/0,2817,2286656,00.asp
and it was discontinued in 2009:
http://www.pcmag.com/article2/0,2817,2341804,00.asp
They have no interest in doing what Dropbox does now. It is not a threat. But its a beginning. Dropbox is raising a lot of money to go after some aspect of the enterprise market. From niches will come the important profitable software of the future. Start with revenue from small businesses. SAP and Oracle are simply not innovating in that way.
> But its a beginning. Dropbox is raising a lot of money to go after some aspect of the enterprise market.
They really aren't. Revenues 2010 from various quickly Google'd sources and Wikipedia:
DropBox $100M
IBM $99.9B
Oracle $26.8B
SAP $17.9B
All of the big players there saw double-digit revenue growth relative to the previous year, too.
If you're about to reply with something about DropBox having a $5B valuation according to their next funding round, please consider that (a) AFAIK the round hasn't actually closed yet, and the markets have been pretty messed up recently so it's a lot less likely now than it might have been even a month ago, (b) GroupOn have been getting "valuations" well into 11 figures as well, which tells you how much this crazy maths is actually worth as a guide to future potential, and (c) DropBox are probably still small enough to be wiped out just by bad press and/or lawsuits over their reportedly dubious security and privacy policies, at least until any new round of funding goes through, and (d) in any case, a $5B valuation is a long, long way from having $5B in cash available to invest in attacking the enterprise market.
> From niches will come the important profitable software of the future.
I'm not sure what sort of niches you're imagining here. Pretty much every deployment of the heavyweight enterprise software is bespoke. That's why the developers tend to have teams dedicated to each major customer: they make a fortune on the consulting and customisation, on top of the cost of the software itself.
They really aren't. Revenues 2010 from various quickly Google'd sources and Wikipedia:
DropBox $100M
IBM $99.9B
Oracle $26.8B
SAP $17.9B
All of the big players there saw double-digit revenue growth relative to the previous year, too.
If you're about to reply with something about DropBox having a $5B valuation according to their next funding round, please consider that (a) AFAIK the round hasn't actually closed yet, and the markets have been pretty messed up recently so it's a lot less likely now than it might have been even a month ago, (b) GroupOn have been getting "valuations" well into 11 figures as well, which tells you how much this crazy maths is actually worth as a guide to future potential, and (c) DropBox are probably still small enough to be wiped out just by bad press and/or lawsuits over their reportedly dubious security and privacy policies, at least until any new round of funding goes through, and (d) in any case, a $5B valuation is a long, long way from having $5B in cash available to invest in attacking the enterprise market.
> From niches will come the important profitable software of the future.
I'm not sure what sort of niches you're imagining here. Pretty much every deployment of the heavyweight enterprise software is bespoke. That's why the developers tend to have teams dedicated to each major customer: they make a fortune on the consulting and customisation, on top of the cost of the software itself.
> Personally I think that big enterprise software and its sales model, as perfected by Oracle and SAP is dead long term, it will be killed by an on demand cloud products. HP maybe had a chance to get into this market eventually, and WebOS was part of his strategy
It's not going to be the market it once was, but those companies have very, very good reasons to use enterprise software: they can't rely on no-name cloud providers for legal and ass-covering reasons, they need the local installations and control of their infrastructure, and their sales structure is optimized for dealing with large corporations.
> And why does no one want to try to compete with Apple?
Doing your own hardware is expensive, and getting good margins much more so. HP hasn't made high-quality hardware in ages, and they can't possibly compete with Apple or Google's partners in the arena when they have to catch up and invest even more money than them.
It's not going to be the market it once was, but those companies have very, very good reasons to use enterprise software: they can't rely on no-name cloud providers for legal and ass-covering reasons, they need the local installations and control of their infrastructure, and their sales structure is optimized for dealing with large corporations.
> And why does no one want to try to compete with Apple?
Doing your own hardware is expensive, and getting good margins much more so. HP hasn't made high-quality hardware in ages, and they can't possibly compete with Apple or Google's partners in the arena when they have to catch up and invest even more money than them.
Interesting perspective - Particularly as I see so much crappy enterprise software being installed in our company, for pretty much the reason you are communicating.
But, where does salesforce.com come into play? They seem to be pretty successful.
If I had to bet - it will be short-term (5-10 years) enterprise software continues to be successful. But longer term (10 years+) cloud software demolishes the whole concept of "Local installs and management of every enterprise software under the sun."
But, where does salesforce.com come into play? They seem to be pretty successful.
If I had to bet - it will be short-term (5-10 years) enterprise software continues to be successful. But longer term (10 years+) cloud software demolishes the whole concept of "Local installs and management of every enterprise software under the sun."
I doubt it. Yeah, it might be technically feasible. But politically? No way. Corporations are control freaks. I've seen it time and again - as corporations grow, they require a level of customization that generic third party cloud providers can't provide and they bring their infrastructure in-house.
... they can't rely on no-name cloud providers for legal and ass-covering reasons, they need the local installations and control of their infrastructure, ...
Amazon Federal http://aws.amazon.com/federal/
"Amazon Web Services (AWS) offers federal government agencies a secure, reliable, and cost-effective computing platform in the cloud. By using AWS products, government organizations can focus on meeting their mission-critical objectives, and spend less time procuring, developing, or managing IT resources. "
"Security: In order to provide end-to-end security and end-to-end privacy, AWS builds services in accordance with security best practices, provides appropriate security features in those services, and documents how to use those features. AWS’ compliance framework covers FISMA Low, PCI DSS Level 1, ISO 27001, SAS70 type II, and HIPAA."
Amazon Federal http://aws.amazon.com/federal/
"Amazon Web Services (AWS) offers federal government agencies a secure, reliable, and cost-effective computing platform in the cloud. By using AWS products, government organizations can focus on meeting their mission-critical objectives, and spend less time procuring, developing, or managing IT resources. "
"Security: In order to provide end-to-end security and end-to-end privacy, AWS builds services in accordance with security best practices, provides appropriate security features in those services, and documents how to use those features. AWS’ compliance framework covers FISMA Low, PCI DSS Level 1, ISO 27001, SAS70 type II, and HIPAA."
Given the requirements of the US Patriot act, (cloud providers must turn over customer data to the government without disclosing it to the customer and without the benefit of a warrant), I don't see large corporations moving to public clouds. Private clouds maybe but not public ones.
Its hard to compete against a religion.
Pepsi competes against Coke. Islam competes against Christianity.
It requires a long term view that businesses are no longer good at in general.
It requires a long term view that businesses are no longer good at in general.
Another MBA type killing a great tech company. I don't understand why it doesn't occur to these boards that engineers/technologists/innovators should lead tech companies. For some reason they can't imagine that technology can save a technology company. It wasn't some genius business maneuver that turned Apple into the biggest company in the world, it was genius technology.
Not to discount the idea that tech companies should be run by innovators, but Apple wouldn't be one of the biggest companies in the world if not for its ingenious vertical integration, which ensures that competitors are always a year or more behind. A few famous examples include the way they temporarily monopolized the supply of a crucial type of flash memory for iPods, and still control the entire supply of certain touchscreen sizes for tablets. They provide the up-front capital to build factories in China to produce these new technologies in exchange for exclusivity. And after the exclusive period is over, Apple pays a discounted price, which means that their competitors actually subsidize Apple's products. There are plenty of other examples of operational genius within Apple along the same lines. Without those genius business maneuvers, they would probably be a successful company, but certainly not the biggest company in the US. The key thing is that this innovation in business ops is in the service of grand technological vision. Ops without vision dooms a company in the long term.
I agree with everything you say. And yet, Apple is not run by MBAs or MBA culture - it is being run by a person whose roots are in technology, liberal arts, LSD and hare krishna, and is a college dropout. http://en.wikipedia.org/wiki/Steve_Jobs#Early_years is illuminating about who this person is.
The main reason they hire MBA types instead of engineers is because the main purpose of the company is to make money. A lot of MBA's don't take a long view on technology for various reasons. Thus, when every product you make isn't shipping a million pieces a month, these guys get worried and make stupid moves. In HP's case, they made a succession of stupid moves.
Apple does have genius technology, but you can't underestimate the influence of Steve Job's eye for design in the success of Apple products.
Apple does have genius technology, but you can't underestimate the influence of Steve Job's eye for design in the success of Apple products.
I meant to include Steve Jobs when I referred to engineers/technologists/innovators
Steve Jobs is not an engineer.
"Technologist" is sufficiently squishy that I can't make an argument against it, but I can cite Stross in "Steve Jobs and the Next Big Thing." Stross has a good anecdote about how Jobs didn't know how to use an email client when he was running NeXT, and that he would have his secretary print everything out for him.
http://www.amazon.com/Steve-Jobs-Next-Big-Thing/dp/068912135...
"Technologist" is sufficiently squishy that I can't make an argument against it, but I can cite Stross in "Steve Jobs and the Next Big Thing." Stross has a good anecdote about how Jobs didn't know how to use an email client when he was running NeXT, and that he would have his secretary print everything out for him.
http://www.amazon.com/Steve-Jobs-Next-Big-Thing/dp/068912135...
>Another MBA type killing a great tech company.
Fiorina killed it many years ago. Even though she is long gone, the company has been infested with the drones since then. The company will of course linger for decades as an enterprise software/hardware provider. As exciting as SAP.
Fiorina killed it many years ago. Even though she is long gone, the company has been infested with the drones since then. The company will of course linger for decades as an enterprise software/hardware provider. As exciting as SAP.
[deleted]
I think a lot of it has to do with how the decision was... presented?
They made one product and couldn't sell it[2] and pulled the plug on the entire vision while at the same time announcing a huge corporate shift.
Busy day for HP.
[1] http://www.engadget.com/2010/04/28/hp-buys-palm/
[2] http://allthingsd.com/20110816/ouchpad-best-buy-sitting-on-a...
1. HP tablet sales fail.
2. HP warns of low earnings, then announces them.
3. Promise to make announcement only after market closes on the 18th.
4. Rumors that they are spinning Compaq back out.
5. Changes mind and makes announcement.
6. They are buying Autonomy (enterprise/IBM space)
7. They are shooting the mobile device effort in the face.
They made one product and couldn't sell it[2] and pulled the plug on the entire vision while at the same time announcing a huge corporate shift.
Busy day for HP.
[1] http://www.engadget.com/2010/04/28/hp-buys-palm/
[2] http://allthingsd.com/20110816/ouchpad-best-buy-sitting-on-a...
Realize that a different CEO was in charge at HP when the acquisition of Palm occurred and the new CEO came from an enterprise software company (SAP) and seems intent on turning HP into a company he knows how to run, rather than running HP as the company it is. Someone (maybe at precentral.com) likened it to when a sports team gets a new coach he recruits players for his style of game instead of building with the talent at hand, AKA "a rebuilding year".
I really, really hope they license WebOS to a good phone manufacture, The only real problem with the touchpad was underpowered hardware. I read somewhere that they got WebOS running once on iPad hardware for testing purposes and it rocked. WebOS on a dual core tablet has the potential to be really cool.
I really, really hope they license WebOS to a good phone manufacture, The only real problem with the touchpad was underpowered hardware. I read somewhere that they got WebOS running once on iPad hardware for testing purposes and it rocked. WebOS on a dual core tablet has the potential to be really cool.
>seems intent on turning HP into a company he knows how to run, rather than running HP as the company it is.
but what is HP currently? all their consumer-level products are shit. i don't have any experience with their current enterprise services, but from the way apotheker is talking i'd assume they have a decent infrastructure in place there to build upon. their last few CEOs have kind of run their consumer hardware manufacturing division into the ground, maybe pulling out is the best thing to do at this point.
but what is HP currently? all their consumer-level products are shit. i don't have any experience with their current enterprise services, but from the way apotheker is talking i'd assume they have a decent infrastructure in place there to build upon. their last few CEOs have kind of run their consumer hardware manufacturing division into the ground, maybe pulling out is the best thing to do at this point.
They have been moving towards enterprise services since Carly. Mark Hurd bought EDS and Mercury specifically to strengthen HP's enterprise offerings. Mark buying Palm seemed really out of place at the time.
I am not so sure it was out of place. If you think of WebOS as a client to the enterprise software, it provides an interesting story. No need for Microsoft licenses and somewhat common (good enough for marketing) development set with the web people.
The thing is, the Touchpad already had a dual core cpu built in.
I can't really imagine that HP has put the effort of completely porting webos over to a different hardware platform, but I think that instead they might have tested the enyo toolkit on the iPad and have seen tremendous performance improvements. Those, I think, can be attributed to the superiority of MobileSafari (having hardware acceleration and having a very fast Javascript VM being the primary sources of better performance).
I can't really imagine that HP has put the effort of completely porting webos over to a different hardware platform, but I think that instead they might have tested the enyo toolkit on the iPad and have seen tremendous performance improvements. Those, I think, can be attributed to the superiority of MobileSafari (having hardware acceleration and having a very fast Javascript VM being the primary sources of better performance).
>The thing is, the Touchpad already had a dual core cpu built in.
Except it's an A8 instead of an A9.
Except it's an A8 instead of an A9.
Was HP's expecting customers to kill each other over Touchpad?
HP is buying spree feels like recently dumped women who finds solace in shopping and dumping the new dress in overflowing closet.
On serious note, WebOS is praised all around for beauty and technical supremacy yet HP wants to drop it because the failed to execute one piece hardware. This is a very emotional and personal reaction.
HP is buying spree feels like recently dumped women who finds solace in shopping and dumping the new dress in overflowing closet.
On serious note, WebOS is praised all around for beauty and technical supremacy yet HP wants to drop it because the failed to execute one piece hardware. This is a very emotional and personal reaction.
It's surreal when I think back to between 2001 and 2005 I honestly thought the iPaq running Windows Mobile was going to be the future of computing. Microsoft and HP looked poised to dominate forever.
... and then nothing happened. Both HP and Microsoft turned out to have ZERO vision, and just decided to stop innovating, kicked back, and collect their big fat dividend checks. And now Apple is eating their lunch with two fists.
... and then nothing happened. Both HP and Microsoft turned out to have ZERO vision, and just decided to stop innovating, kicked back, and collect their big fat dividend checks. And now Apple is eating their lunch with two fists.
Barron's nails it:
a) "decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch" - Leadership doesn't know what they're doing w/acquisitions.
b) "expensive acquisition of Autonomy" - $10b to jump into a new market via acquisition which we just proved we're not good at.
c) "material layoffs" and "talent drain over the next 12-24 months' - I believe this. Current talent bails. Changing focus means new recruiting, years of training / efficiency building.
As a shareholder, ouch.
via:
http://blogs.barrons.com/techtraderdaily/2011/08/19/hp-drops...
a) "decision to cease all webOS devices (including the TouchPad) a mere 48 days after the launch" - Leadership doesn't know what they're doing w/acquisitions.
b) "expensive acquisition of Autonomy" - $10b to jump into a new market via acquisition which we just proved we're not good at.
c) "material layoffs" and "talent drain over the next 12-24 months' - I believe this. Current talent bails. Changing focus means new recruiting, years of training / efficiency building.
As a shareholder, ouch.
via:
http://blogs.barrons.com/techtraderdaily/2011/08/19/hp-drops...
You forgot the "we're refocusing ourselves to our core competency as a software company". HP hasn't had competent software for years since HPUX and even then, it's questionable. They are a hardware/printer company so this is going to be a painful transition for them.
Unfortunately in the enterprise space, competent software isn't necessarily a requirement.
That is changing, albeit slowly.
Not really. I doubt it will ever change. Why do you say it's changing? All the same BigCorp programmers I know remain employed...
The Java and .NET ecosystems seem to preach a better/agile way to develop software: Continuous Integration, unit-tests, keep it simple, etc.
Sure, some of the code are still crappy, but at least they are less crappy than yesterday.
Are all of BigCorp programmers doing this? No.
Will they? maybe, especially with the newer/younger generations.
Mobile and tables are making in-road to enterprise.
Enterprise slowly decided to give cloud (SaaS, not the other *aas) a chance because they don't like to have in-house IT departments (whether this is good or bad I don't know).
When you see BestBuy using Google AppEngine even for their simple app, I think that's a sign of change.
Is it going to get better all across the board? probably no. But they're changing nonetheless.
Sure, some of the code are still crappy, but at least they are less crappy than yesterday.
Are all of BigCorp programmers doing this? No.
Will they? maybe, especially with the newer/younger generations.
Mobile and tables are making in-road to enterprise.
Enterprise slowly decided to give cloud (SaaS, not the other *aas) a chance because they don't like to have in-house IT departments (whether this is good or bad I don't know).
When you see BestBuy using Google AppEngine even for their simple app, I think that's a sign of change.
Is it going to get better all across the board? probably no. But they're changing nonetheless.
It kind of rankles when I hear people say HP is a "printer company" (I know you also said "/hardware', but still). You could just as reasonably call them a "calculator company". They're also the company behind the PA-RISC. When people lament the lost engineering culture at HP, they're not feeling bad for the printers.
> HP hasn't had competent software for years since HPUX and even then, it's questionable.
I just going to say it like this: There was a reason HPUX bit the dust.
I just going to say it like this: There was a reason HPUX bit the dust.
That's a Wall St. view that completely misses the point. You could look at it very differently. The new CEO is making some bold moves to undo a bunch of bad decisions his predecessors made.
Buying Palm was nonsense. HP was never the company to make it work. Contrary to that, Autonomy, one of the best software companies in the world, is a good fit for HP's enterprise strategy.
Spinning off the PC business is very likely a step towards selling it altogether, similar to what IBM did years ago.
I think these are all steps in the right direction and I'm thinking of buying the stock once the current stock market panic has settled down a bit.
Buying Palm was nonsense. HP was never the company to make it work. Contrary to that, Autonomy, one of the best software companies in the world, is a good fit for HP's enterprise strategy.
Spinning off the PC business is very likely a step towards selling it altogether, similar to what IBM did years ago.
I think these are all steps in the right direction and I'm thinking of buying the stock once the current stock market panic has settled down a bit.
> Autonomy, one of the best software companies in the world,
By what metric? From my perspective they are reviled by their clients and their own (engineer) employees.
By what metric? From my perspective they are reviled by their clients and their own (engineer) employees.
They sell a lot of software to those unhappy clients, very similar to other hated companies like Oracle.
Isn't it better to buy stock in the midst of the panic?
The best time to buy is when a panic subsides. It's better to miss the first 10% of a recovery than to lose 20% catching falling knives. That's what I have learned painfully in 2008. (I just wish hadn't forgotten it by 2011 :)
How do you know that +10% is after the bottom and not a temporary bump on the way down?
I don't, but at that point the fundamentals matter again. The decline isn't self feeding any longer.
Most investors set stop loss levels for themselves. So when a stock crashes through those levels it triggers a lot of sell orders which makes the stock go down more triggering more stop losses, etc. Once the cascade has stopped, the game changes a little bit and fundamentals are reconsidered.
[Edit] And I didn't mean a 10% bounce immediately after the fall, but rather a gradual move up over the course of a few weeks.
Most investors set stop loss levels for themselves. So when a stock crashes through those levels it triggers a lot of sell orders which makes the stock go down more triggering more stop losses, etc. Once the cascade has stopped, the game changes a little bit and fundamentals are reconsidered.
[Edit] And I didn't mean a 10% bounce immediately after the fall, but rather a gradual move up over the course of a few weeks.
You could look at trading volume to determine whether the stock has "settled down". That would at least indicate decreased volatility.
HP at a 20% discount is looking pretty good... ~50billion market cap, 5.8 p/e, 2% dividend, and they're getting out of unprofitable sections of their business. At risk of being cliche, think of it as failing fast and pivoting. Go big or go home kind of thing. Success is far from certain but it may be better than staying the course and crashing into the beach.
Also, that $1.2 billion isn't going to look like such a bad investment when Apotheker sells the Palm patents to Apple or Google or Microsoft or Samsung for 5x that price.
In this case getting out of the business of making stuff was probably the right thing to do. Blame the US patent system, not the HP execs. The decision would've been an easy one after the Motorola sale.
In this case getting out of the business of making stuff was probably the right thing to do. Blame the US patent system, not the HP execs. The decision would've been an easy one after the Motorola sale.
I have to give the HP board the benefit of the doubt that when they hired the new CEO they knew he'd steer them in this direction. He used to work at SaS so his expertise is software services. He must have told them in the recruitment/appointment process that he'd give some things a shot (webOS, TouchPad etc.) and failing that, he'd steer them towards services and become more like IBM.
I made a lot of assumptions, but again, giving people benefit of the doubt.
I made a lot of assumptions, but again, giving people benefit of the doubt.
>He used to work at SaS
SAP.
SAP.
Thanks for the correction. Freudian slip perhaps.
Heh, well, maybe what they need is SAS.
[deleted]
I think the most interesting and least talked about thing is b) "$10b to jump into a new market via acquisition which we just proved we're not good at."
HP has never been good at software. Hands up, who fondly remembers a nice HP software experience? Who remembers a hair-pulling awful one?
(And before you say webOS; please, webOS is nicely designed, but engineering wise it's bug ridden and terrible.)
HP has never been good at software. Hands up, who fondly remembers a nice HP software experience? Who remembers a hair-pulling awful one?
(And before you say webOS; please, webOS is nicely designed, but engineering wise it's bug ridden and terrible.)
Does anyone have any experience with Autonomy and its IDOL technology? I visited their site and they look a little bit shady :)
I used to run their dev servers (briefly back in 2001). I don't entirely understand what you mean by shady but the tech does work - and provided you use it for the right thing, extremely well. The key is to realise that it tries to be a semantic search, not a text search - if you want brute force grep you'll be better with a google search appliance or similar, I suspect.
The development team were well looked after and the CEO now is the same as then, so I'd hope the internal culture is still pretty pleasant - I really enjoyed working there and most of the employees genuinely believed in the product's ability to deliver (when not mis-sold, which, well ... seemed to happen reasonably rarely, which is about the best I've seen in any sales department). I only left due to discovering I really HATED living in Cambridge, which wasn't really something they could fix.
The development team were well looked after and the CEO now is the same as then, so I'd hope the internal culture is still pretty pleasant - I really enjoyed working there and most of the employees genuinely believed in the product's ability to deliver (when not mis-sold, which, well ... seemed to happen reasonably rarely, which is about the best I've seen in any sales department). I only left due to discovering I really HATED living in Cambridge, which wasn't really something they could fix.
Ive used idol very extensively for approx 5 years. Its like combining oracle db with google search and then adding language analytics. Basically its a very advanced db (these were the first guys to really get nosql into the enterprise). You dont query the db, you search it. Keyview is also a nice addition to the IDOL stack.
This graph is much more useful if you compare it against some other tech giants: http://www.google.com//finance?chdnp=0&chdd=1&chds=1...
I said, "No, I'm never going to leave Hewlett-Packard. It's my job for life. It's the best company because it's so good to engineers." It really treated us like we were a community and family, and everyone cared about everyone else. Engineers—bottom of the org chart people—could come up with the ideas that would be the next hot products for the company. Everything was open to thought, discussion and innovation. So I would never leave Hewlett-Packard. I was going to be an engineer for life there.
- Steve Wozniak, interviewed by Jessica Livingston in "Founders at Work"
http://www.foundersatwork.com/steve-wozniak.html
How sad that it's come to this.
- Steve Wozniak, interviewed by Jessica Livingston in "Founders at Work"
http://www.foundersatwork.com/steve-wozniak.html
How sad that it's come to this.
HP is so far from the founders' ethos that hearing people talk about the old days is like looking at pictures of Beirut before the civil war. I have friends who still work for HP, and it's an amazingly toxic environment with absolutely no concern for good engineering or quality products. I honestly think Fiorina and Hurd would have been delighted if they had the ability to fire every engineer in HP and outsource all product development to China.
The really interesting engineering that happened at HP was all spun off as Agilent in 1999. What's left is just your garden variety technology company that does a lot but doesn't seem to do any of it very well.
Many of the good parts of the old HP were spun off into Agilent. http://www.home.agilent.com/
Any Agilent people here who can say if it still follows the old HP spirit?
Any Agilent people here who can say if it still follows the old HP spirit?
the market always hates big risky decisions. it isn't any indicator of whether it is a good choice or not.
[deleted]
This was in my email this morning
Dear webOS developer:
We have opened the next chapter for webOS, and we understand that you must have many questions. Yesterday we announced that we will focus on the future of webOS as a software platform but we will no longer be producing webOS devices. While this was a difficult decision, it's one that will strengthen our ability to focus on further innovating with webOS as we forge our path forward. Throughout this journey, our developers will continue to be a vital part of the future of webOS.
I feel genuinely sorry for these people - the WebOS team within HP. I'm assuming they knew nothing until the news was made public, and it must hurt like hell to have to compose an email like this (and then have PR sanitise it)
Dear webOS developer:
We have opened the next chapter for webOS, and we understand that you must have many questions. Yesterday we announced that we will focus on the future of webOS as a software platform but we will no longer be producing webOS devices. While this was a difficult decision, it's one that will strengthen our ability to focus on further innovating with webOS as we forge our path forward. Throughout this journey, our developers will continue to be a vital part of the future of webOS.
I feel genuinely sorry for these people - the WebOS team within HP. I'm assuming they knew nothing until the news was made public, and it must hurt like hell to have to compose an email like this (and then have PR sanitise it)
I installed ten (10) HP 3130 desktops two months ago for a local dental practice. No issues. Not one. Nice machine, fast, quiet, runs cool, plenty of space, 4GB, etc.
The list price is $789.00 but they were purchased for about $599.00. At that price the margin can't be very much. My guess -- $150.00
But it takes a lot more energy and logistics to move 1MM desktop PC's than it does to move 1MM iPhones.
If HP is getting out of this market (behind Dell and IBM) it must mean desktop PC's as we know them are dead.
The list price is $789.00 but they were purchased for about $599.00. At that price the margin can't be very much. My guess -- $150.00
But it takes a lot more energy and logistics to move 1MM desktop PC's than it does to move 1MM iPhones.
If HP is getting out of this market (behind Dell and IBM) it must mean desktop PC's as we know them are dead.
Not supprising, as on the face of it, it looks like utter madness.
Dose the stock market reflect real investors(by 'real' I mean people looking at where the company will be in a few years and planning to hold an investment for that length of time)? I wonder how much of this is an institution selling enough shares to change a metric and trigger a bunch of algorithms.
I really wish HP would stop chasing for a market and double down on the one they are good at. HP chased the hot and fresh tablet market. Flop. This move to a more enterprise serving model just looks like HP is chasing the cloud.
You know what I want? I want a new HP calculator. I love my HP 50g, but it's about time for some innovation. It wouldn't even be too demanding on R&D (if that department even exists...), just strip down some of those tablets and sick'em in calculator body, make software and hardware hacker friendly. I don't think it is too much to ask for a calculator that is comparable in utility to a consumer level PC for mathematics processing.
A few months ago HP acquired Vertica (http://www.vertica.com/resources/videos/), which was founded by Mike Stonebraker (http://en.wikipedia.org/wiki/Michael_Stonebraker), the inventor of PostgreSQL. Vertica is the real-time big data analytics system that Zynga is using -- it looks like HP is planning on making a push into that space.
I don't think the HP leaders will regret the change of focus to businesses instead of consumers. Every day we hear that businesses are sitting on increasingly huge piles of cash and that individuals are increasingly jobless.
Then again, I'm not scooping up bargain HP shares, so my idle speculation isn't extremely compelling even to me.
Then again, I'm not scooping up bargain HP shares, so my idle speculation isn't extremely compelling even to me.
Do look at what the rest of the market is doing! So the market doesn't specifically hate HP that much, maybe a couple %.
To be fair, they also missed on earnings. that's going to account for a fair bit of the drop as well.
I wonder if Nokia had approached / will approach HP to acquire WebOS. With Elop @ Nokia's realm, I am skeptical. RIM is too busy building its on OS to be really interested. Amazon, Intel and Samsung seem like very likely candidates to take WebOS off HP's hands.
Nokia, RIM and Samsung seem pretty committed to their choice of OS. Rumors of Amazon tablets running Android keep surfacing but Amazon and Google are not exactly friends - Android is likely the least painful OS choice. They could buy WebOS and be free of Google and avoid developing their own OS from scratch.
If you think about all the services Amazon offers they're basically just an OS and some hardware away from being a "full stack" iOS competitor.
If you think about all the services Amazon offers they're basically just an OS and some hardware away from being a "full stack" iOS competitor.
I still stand by my belief that Nokia should've bought WebOS.
Rehash to go for biz only, wait for Ellison to be in a mood, get bought, everybody happy. No?
What does a company like HP usually do when they have thousands of unsold tablets like this? Take them back and throw them in a landfill or will there ever be a clearance sale?
I do wonder, with the withdrawal from the PC market, will this affect the sales and placement of their printer lines or are they spinning those off too?
The stock market's reaction is understandable to me. This is a big change in what HP does and it's going to take a long time for this to play out.
The autonomy acquisition seems to be the sore point. The reduced forecasts also seem to be a factor.
Putting in a buy order at $20