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HP risks fading fortunes as a top IT supplier

For decades HP has been a preeminent supplier of products and services to corporate IT. But the company’s recent drama has some IT shops concerned for the future.

Questionable strategic decisions about dropping its PC and tablet businesses, sagging sales of its high-end servers and a murky cloud strategy have some corporate shops wondering how long Hewlett-Packard can remain a relevant top-tier IT vendor.

HP still has strength in a number of core enterprise products, but even among those products, it has failed to put together cohesive strategies. For instance, it has a good competitive position in systems, project and lifecycle management software, to go along with its recent acquisition of Autonomy Software, a data management specialist. Yet, the company has failed to articulate a compelling software strategy that sets it apart from its competitors.

Earlier this year the company laid out its plan to be a major force in the cloud services market, but very little of that has materialized. Still, some HP shops have difficulty grasping what’s real.

“I own a goodly number of their (HP’s) Unix boxes and laptop PCs, too. But I have no idea what their roadmap is for someone like me as far as a cloud or cloud services. I am not thinking of them as a potential cloud supplier,” said a purchasing agent with a transportation company in Jacksonville, Fla. who requested anonymity. “Seems like they have an opportunity there though,” he said.

That some IT shops have trouble pinpointing HP’s cloud and software strategies, or are flat-out confused, is not surprising. In March HP’s recently departed CEO, Leo Apotheker, outlined ambitions for his company to be a leader in the “connected world with services, solutions and technologies.” The idea was for HP to create and operate what Apotheker said would be the industry’s first “open cloud marketplace.” It would consist of a portfolio of cloud services from infrastructure to platform services.

Mobile computing pieces missing
Unfortunately, that plan also called for building WebOS into a leading connectivity platform. Apotheker also said that as the leading supplier of PC and printers, the company had the potential to deliver 100 million WebOS-enabled devices a year.

But with HP’s WebOS-based tablet business gone along with its associated employees, and with its PC business up for sale, HP’s plan already lacks a couple of key pieces.

“If you want to be a one-stop shop for the cloud, you need a pretty good mobile lineup. I would say all of (HP’s) competitors have one,” said Eugene Lee, a senior IT administrator with a large bank in Charlotte, N.C.

Analysts and IT shops with an investment in HP PCs believe Meg Whitman, Apotheker’s replacement, should revisit the decision to shed HP’s PC business. Not only does that business account to $40 billion of the company’s $127 billion in revenues as well as being profitable, it also helps drive sales of other key infrastructure pieces, they note.

“They (PCs) act as an enabler for enterprise sales elsewhere including their storage and networking products. The problem for her (Meg Whitman) is the genie is out of the bottle and she needs to put it back in. A decision has to come down quickly because she needs to stop the bleeding,” said David Daoud, an analyst overseeing IDC’s Personal Computing practice.

PC support could be problematic
Some IT pros worry that the quality of HP’s PC would suffer if it sold off the business. They also wondered where they would get PC support.

“I think of HP still as mainly a hardware company that has always delivered quality products. I don’t know who else could take that business over and support them (PCs) in a complex IT environment,” Lee said.

But at her first press conference as HP’s new CEO, , Whitman appeared willing to back some of the decisions Apotheker made at least for the short term. She only stressed that what the company needs over the short term are “management skills, communication skills, and a commitment to executional excellence.”

All of this has done little to help associate HP with its major competitors, mainly IBM and Oracle, as a strong all-purpose IT supplier.

HP still relevant

But some IT professionals and analysts think HP remains not only relevant but necessary to larger corporate shops, if only because it could keep pricing down on enterprise products from archrivals IBM and Oracle.

“A world with no HP is a world where an IBM or Oracle gets too much say in pricing and how (IT shops) should run their business. A really well-balanced market has three or four major players in it and HP should be one of them,” said Dana Gardner, principal analyst with Interarbor Solutions, Inc. in Gilford, N.H.

With a large number of corporate IT shops expected to revamp their infrastructure to accommodate a range of cloud and virtualization technologies, having another heavyweight technology supplier to turn to is vital.

“If you have a bid out for a project that involves a datacenter makeover, you want to talk to all the major companies involved that can sell and support all the pieces. I mean, there are only three or four on the planet anyway,” Lee said.

Let us know what you think about this story; email Ed Scannell at

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