It was a busy September for HP as the company announced a change in direction and the significant purchase of enterprise information management vendor Autonomy.
The changes included the suggestion that HP would move out of the PC business, and would only remain involved in services in that area. HP’s services and hardware businesses bring in roughly the same amount of revenue as its PC arm, but analyst reports have shown PC sales slowing while services grow in popularity.
HP CEO Leo Apotheker also announced that the firm was dropping its WebOS and Touchpad tablet devices. While these changes were alarming, others seemed understandable for a firm looking to increase its appeal in a rapidly changing technology and services marketplace.
The Autonomy purchase gives HP a foot in the important enterprise data and software knowledge business, and the firms have complementary technology that should appeal to enterprises.
However, Forrester analyst Brian Hill warned that the acquisition would not be easy. “Autonomy faced some portfolio rationalisation challenges... HP will face some tough choices in determining which of its product lines will receive corporate investment over the long term,” he said.
The analyst believes that CIOs will have to choose to move from, rather than move to, an HP or Autonomy product in this area.
Internally, HP will have its eyes on the Enterprise Information Management market, which is becoming increasingly important for CIOs.
“Autonomy brings to HP higher value business solutions that will help customers manage the explosion of information,” said Apotheker when he announced the deal. “Together we plan to reinvent how both unstructured and structured data is processed, analysed, optimised, automated and protected,” the CEO added.
Forrester’s Hill confirmed this strategy. “Upon completion, the deal will bring HP strong search and analytics capabilities and a broad portfolio of e-discovery, archiving and records management tools,” he said.
With these in place does HP need to keep working on hardware? The waters around this part of the decision are murky, and firms using HP’s hardware might be concerned about their future.
The confusion is apparently mirrored within the firm, where the UK division’s managing director has taken pains to explain that HP is not vacating the market.
“Let me be absolutely clear in saying that at no stage has HP said it is quitting the PC business,” said Paul Hunter, head of Personal Systems Group, UK & Ireland.
Instead he explained that HP is looking at three avenues: a spin off, a sell off, or nothing at all, and added that customers would continue to be supported.
The move towards services is “treacherous” according to vendor watcher and Forrester analyst John McCarthy.
“[To] focus on software and services is a bold but extremely treacherous move,” wrote the analyst. “The biggest hole that the company will need to fill is its lack of business/domain expertise. Its technology management-centric software offerings and its infrastructure outsourcing business leave it outside looking in when it comes to working with the business to innovate and talk about changing business models.”
As a business HP, which historically performs well in the PC market, may appreciate the reprieve from the increasing competition there.