Weekly Update

HP’s Latest Ambitions: Connectivity is Key, but so is Differentiation

Hewlett Packard‘s new CEO, Léo Apotheker, presented a sweeping vision this week for his company’s plans, one that encompasses cloud, connectivity, hardware, software and more. During the keynote, Apotheker outlined a vision for his company that encompasses “the home, the workplace and on the road.” Connectivity is key, with “seamless, secure and context-aware” access to cloud-based content and services via a range of devices. Much of what he said makes sense, but how will HP differentiate itself in the already crowded enterprise, SME and consumer markets?

Having watched Apotheker’s presentation and read much of the coverage, it’s not entirely clear where that real and lasting differentiation HP needs lies.

At one level, of course, this is simply the Internet he’s talking about. We already access a wealth of public and private content using phones, tablets, laptops, desktops and televisions. We use websites that deliver one version of a page to an iPhone and another to a web browser running on a desktop, smoothly and automatically. We already have email and calendars pushed over the Internet to smartphones, interacting with rich desktop applications or stored securely on servers for access via any web browser.

That aspect of Apotheker’s vision is an attainable reality today for many, from those using Google Apps out in the cloud to those running Microsoft Exchange on a server inside an enterprise data center. HP plays many valuable parts here: It provides the servers, storage and networking infrastructure on which that enterprise Exchange server depends; it sells many of the laptops and desktops on which content from both Google Apps and Microsoft Exchange is accessed; and it even, with webOS devices, is making new inroads into the smartphone market, which the company at one point appeared to have left behind.

As EMC’s Chuck Hollis comments, the new HP that Apotheker describes in the keynote no longer appears content to provide pieces of the whole — that is, servers, storage arrays or laptops that in most cases could easily be swapped out and replaced by very similar products from competitors. While explicitly — and repeatedly — recognizing the important role played by HP’s partners, the new HP appears determined to own whole market segments, and to deliver end-to-end services capable of addressing consumers, SMEs and large enterprise customers. If achieved, this domination makes HP’s position in a market far more defensible, and carries far higher margins. But it’s a risky strategy, too, because it has a tendency to be an all-or-nothing one: Either you completely dominate a market segment, or you have virtually no presence in it at all. Will WebOS, for example, ever really be more than a worthy competitor in a market dominated by Apple, RIM and Android?

Apotheker’s presentation wasn’t long or focused enough to provide many details, and there was no real indication that HP intends to leverage its existing market position in order to do anything new or particularly different. HP is the number one seller of desktops and notebooks. That’s a lot of new computers arriving at desks every day. Rather than simply providing a me-too cloud infrastructure that resembles Amazon or Rackspace or anyone else, why doesn’t HP aggressively market a cloud-based backup and storage solution to consumers and SMEs? Every new machine could ship with a free account for the HP cloud, a few GB of space and a wizard that pops up and simply asks when they’d like the backup to begin. And every new owner might then become an advocate for an HP cloud that fits Apotheker’s vision.

Instead of using market position to copy what others are already doing perfectly well, an HP with a vision of where it’s going should be using its market position to innovate, and to do what others cannot.

Question of the week

How can HP differentiate itself to achieve Apotheker’s vision of market domination.