Today marks a jolting and sobering inflection point to a global mega-business that was in serious danger of developing multiple-personality disorder.
We've been trying to figure out what HP's game-plan is for sometime now, as it attempted a multi-faceted series of strategies that go after hardware, software, infrastructure, mobility, consumer technology, IT services and BPO markets. Oh, and there's Cloud in there somewhere too.
Quite simply, HP loves the high-margins of the enterprise IT business and has been trying to find its sweet-spot. With Léo Apotheker taking the helm, we even predicted a potential move to acquire SAP could be on the cards, especially with the defection of a host of senior SAP executives onto Léo's team. That may even still happen in the future, but much less likely in the near-term with the current seismic changes going on with the business.
Today's announcements have been a bold move to redefine the business, as it spins off its PC, Touchpad and WebOS mobile businesses. It also announced its intention to make a $10bn acquisition of enterprise information retrieval software firm, Autonomy. So in one full swoop, the firm is moving away from consumer electronics and defining its future strategy as an enterprise IT systems, software and services provider.
While the IT industry is scoffing with amusement at the quick u-turn made on its tablet strategy (in fact, there's a TouchPad ad running as I type), its apparent exit from consumer IT and the high price-tag of Autonomy, let's actually give Léo some credit. He needed to make some tough decisions, and do them quickly. And in the process they've stated their reduced earnings outlook. Yes, HP may have just ripped off its own BandAid, relieving the agony quickly and avoiding a slow and painful journey at a time when the economy sits on a knife-edge.
In one full swoop, Léo's sent his firm on a path where we can actually understand what HP's game-plan is all about. If HP had continued down its confused previous path, it would surely have faced being broken up and spun-off into all sort of assortments and flavors. Let's be honest - could we really see HP giving Apple and Google a run in the consumer space? Was HP really in the right shape to lead PC sales in a fast-commodotizing market?
Meanwhile, they've clung onto their enterprise IT and services businesses and are slowly rolling out some meaningful strategies that can leverage their global presence, their industry strengths and massive footprint of enterprise clients.
Provided the firm can now structure its units successfully, HP has now chosen its path to go after IBM in the enterprise arena. A smart acquisition or two to bolster its enterprise services presence, a well-executed management and business re-organization, a cohesive and clear marketing plan, and we may yet just see this company start to fulfill some of its potential.