HP Makes Its Move Against IBM

The troubled PC maker tries to push its way into Big Data | “The next step would be to find a niche where HP can differentiate”

Aaron Ricadela and Sarah Frier

As demand for personal computers continues to slump, Hewlett-Packard is trying to make itself more attractive to businesses. On June 11 the company unveiled HAVEn, a software package that knits together technology from its data analysis units. The move pits HP against IBM, a leader in mining corporate data. While HP long succeeded with consumer-friendly design and printing features, it now aims to offer corporate clients a more complete package, says Chief Operating Officer Bill Veghte. “Customers want solutions,” Veghte says. “They don’t want simply a piece of hardware or a piece of software.”

HAVEn combines tools from recent HP acquisitions Autonomy, Vertica Systems, and ArcSight to help customers sift through vast amounts of data, the company says. The Big Data analytics strategy is Chief Executive Officer Meg Whitman’s attempt to avoid an eighth straight quarter of declining sales and wring some value from those deals, made before she took over in 2011. HP spent about $12 billion on the acquisitions, according to figures compiled by Bloomberg. It’s facing a shareholder lawsuit over its $10.3 billion purchase of British software maker Autonomy. In November,

HP took an $8.8 billion writedown on the deal, of which it attributed $5 billion to Autonomy’s accounting practices. HP says the company’s financial reports were manipulated. Autonomy denies any wrongdoing.

Enterprise Applications Consulting analyst Joshua Greenbaum says, “HP is under a lot of pressure to make a mark in the crowded enterprise analytics market. And Whitman needs to justify a lavish and troubled acquisition history and make good on a multiyear commitment to software that has yet to produce any big wins. The next step would be to find a niche where HP can differentiate, and the one software sector where HP has credibility is in systems management and analytics.” Total revenue from Big Data hardware, software, and services is projected to rise to $23.8 billion in 2016, from $11 billion this year, according to market researcher IDC.

IBM, the world’s largest computer services provider — which has seen its earnings stumble amid struggles at its mainframe business — has set a goal of more than $20 billion in revenue from Big Data and analytics by 2020, double the 2010 figure. Other Big Data contenders include Oracle, SAP, Teradata, and closely held SAS Institute.

For HP, which in September disclosed plans to cut 29,000 jobs through fiscal 2014, breaking into the market requires a greater emphasis on software, which currently accounts for less than 4 percent of revenue. The company announced a deal on June 11 to bundle PCs and printers with e-mail, word processing, and calendar software from Google, to compensate for its weakness in that area. HP’s PC sales fell 10 percent last year to $35.7 billion, and printing group sales fell 5 percent to $24.5 billion. That’s better than it had done recently, though, as Whitman pointed out in her June 11 keynote address at HP’s customer conference in Las Vegas. “We have stabilized our business,” she said.

Still, Wall Street expects to see HP’s sales and profits decline through 2015. The company has been slow to capitalize on consumer and business trends like tablets and cloud computing, for which it’s developing new software. EAC analyst Greenbaum says it has a long way to go before it can compete. “Lining up to be the leading commodity vendor in a rapidly commoditizing market is not a leading position,” says Greenbaum. “This doesn’t allow them to go into a company and have a strategic conversation like IBM or SAP.”

The bottom line Meg Whitman is moving into enterprise data analytics to try and notch HP’s first quarter of sales growth in two years.


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