LAS VEGAS: Along with 12,000 or so of its customers, partners and staff – with or without the 11,000-16,000 employees who were added to the soon-to-be-ex-HPer list two weeks ago – I’m back in Sin City for HP Discover 2014. With most of the action taking place on Tuesday and Wednesday, I thought I’d take a look at some of the recent developments at the world’s largest IT vendor, including its latest financial results, new job cuts and growing datacenter aspirations.
Best known for PCs and printers, and stuck in commodity hell like its much smaller IBM-wannabe competitor Dell, HP has been struggling to become more of an enterprise products and services powerhouse. Cisco CEO John Chambers painted a bleak picture for HP (and IBM) at last month’s Cisco Live. “You’re going to see a brutal, brutal consolidation of the IT industry,” he warned, hinting at a “musical chairs-like movement” over the next few years.
He further predicted that many of the current players in “high tech” won’t exist 10 years from now. Citing Gartner research and recent earnings reports, Chambers pointed fingers at IBM and Hewlett-Packard, saying the beleaguered tech giants haven’t produced revenue for some time.
Following on the heels of Chambers’ comments, HP’s latest financial results, flat sales for Q2, and an additional 11,000-16,000 job cuts, didn’t make things easier for CEO Meg Whitman. This will bring the total number of employees leaving under the previously announced 2012 restructuring program to as many as 50,000, she said during the following analysts’ call. “No company likes to reduce their workforce but the reality is that HP must be maniacally focused on continuous improvement in our cost structure.”
The extra staff cuts will result in gross savings of a $1 billion. That is incremental to the $3.5 billion to $4 billion that we announced for the 34,000, she said.
Whitman also commented on the overall shape of the company, how its doing halfway through her five-year reorganization makeover, and living in a market that’s shifting at “warp speed”. “This is the fastest market shift I’ve seen in my career. And by the way you know I grew up mostly in the consumer space which tends to move faster than the enterprise space. I would actually say, I am feeling more confident because we have seen a stabilization of revenue, the very high single digit declines are over. We’ve had three quarters of pretty good stabilization. And I really like our product roadmap.”
However Technology Business Research believes more far-reaching changes are required. HP Software’s bread-and-butter, ITSM, is moving to a services-led model, a transition which was initiated by the launch of HAVEn, blogged Senior Analyst Jillian Mirandi. Unfortunately, like competitors CA and BMC, which are also struggling to change traditional habits, HP’s sales teams have not broken old habits of leveraging software to sweeten hardware deals on the cheap.
‘By positioning its Vertica, Autonomy and HAVEn platforms as extensible foundations onto which enterprises can move and manage workloads while planning for the future, HP seeks to provide its software capabilities to developers eager to establish footholds in enterprise markets.’ TBR anticipates the impact of Software on HP’s larger transformation will be limited until it positions its software capabilities on par with its hardware and services prowess.’
HP made two big software-related announcements a week ago. At SAPPHIRE HP extended its SAP HANA portfolio with the announcement of the HP ConvergedSystem 900 for SAP HANA (and services). Back in a March interview Tom Joyce, SVP and GM, HP Converged System, said HANA is a big opportunity, for HP. SAP has more than 250,000 customers and we have 47,000 customers using SAP, including more than 800 system implementations for SAP HANA. “We believe a large number of SAP customers are going to migrate to HANA over the next few years.”
While the timing for the HANA announcement was clear, why HP also announced the latest additions to its HAVEn (Hadoop-Autonomy-Vertica-Enterprise security-n/apps) portfolio a week before Discover was somewhat murkier. Unveiled at last year’s Discover, HAVEn is intended to allow organizations to consume, manage and analyze massive streams of IT operational data from a variety of HP products, as well as third-party sources.
Just to reinforce that its not all about commodities, software or cost-cutting, HP also recently broadened its data-center portfolio with the Facility-as-a-Service (FaaS). It’s a data center sourcing alternative that allows customers more flexibility in their build-versus-buy decisions, said Rick Einhorn, VP, Worldwide Data Center Consulting, HP Technology Services Consulting.
“It’s not a new type of data center, it’s a sourcing strategy for customers to obtain a data center without the capital costs of the data center,” he told IT Trends & Analysis. It takes the capital cost and moves it to an operational cost over the five-year lease. Essentially HP does all the work and customers just pay a monthly fee, he said. “We think this is a game-changing capability.”
DISCLAIMER: I’m back in Lost Wages courtesy of HP, and I’m also a shareholder, so let the poker chips fall where they may.