As Hewlett-Packard (s HPQ) dithered over key strategies in the past year, it confused the market and put itself at a big disadvantage in the fastest-growing hardware arena — mobile devices — and perhaps in cloud computing as well.
Meanwhile key rivals in both areas forged ahead. Apple’s (s AAPL) iOS and Google’s Android (S GOOG) operating systems are battling each other for market share supremacy on phones and tablets. IBM (s IBM), Dell (s Dell) and others forged ahead with their own cloud computing buildouts with decidedly less drama. There’s some question whether the iconic tech giant can recover.
HP’s sad tablet story
Last March, HP and its CEO, Leo Apotheker, were gung-ho for its proposed webOS-based TouchPads and smartphones, which were positioned as key on-ramps to HP cloud-based services. In August, Apotheker killed TouchPad in its cradle and said HP might sell its entire HP PC business. At that point, HP’s cloud and enterprise software push were hung on HP’s controversial $10.2 buyout of Autonomy. A month later, Apotheker was gone, replaced by Meg Whitman.
Late last month, Whitman said HP would keep its $40-billion-per-year PC business after all, citing the supply chain efficiencies it brings to the entire company.
This was all confusing enough on the device front, but these course reversals also affected HP’s cloud computing push. The promised on-ramps were gone or in doubt, and there was little talk about enterprise and consumer apps stores from HP, which Apotheker had promised along with what sounded very much like an HP-built Platform-as-a-Service offering.
With TouchPad dead (except for a few Lazarus-like sightings at Best Buy (s BBY)) Whitman says HP will cast its lot with promised Windows 8 tablets. There is one small problem with that: Windows 8 won’t be out until mid-2012 at the earliest. In the meantime, HP will use Windows 7–based devices as placeholders while the iPad continues its march toward world domination. As for webOS’ future? That’s anyone’s guess. But more on that later.
This tablet-phone problem spills beyond the devices themselves. The vision Apotheker laid out — in which mobile HP devices would tap into HP online stores and services — was pretty compelling. Few companies field both smartphones, tablets, PCs and servers — all of which played off a backdrop of HP-built cloud services. HP had all of those bases covered. But now that those phone and tablet on-ramps are in question and possibly gone, that cloud-as-back-end-to-all-devices loses some pizzazz.
We’re not dead yet!
While HP misses out on the hottest part of the client hardware, Todd Bradley, EVP of HP’s personal systems group, insists there is plenty of time for HP to stake a claim. Others don’t buy that.
For all the bad press, the TouchPad had some good points. GigaOM’s Kevin Tofel cited the TouchPad’s easy integration with wireless and cloud printing options. It had some promise but was overpriced relative to the iPad. When HP offered discontinued TouchPads at a fire sale, they sold out fast, leading many to say that if they had been priced appropriately in the first place they would have done just fine.
One of HP’s issues is that it seems to react (or overreact) to competitors rather than build its own opportunities in the old “HP way.” In that context, HP’s near-jettison of PCs was a belated attempt to mimic IBM’s divestiture of its PC business to Lenovo six years ago, and refocus, as IBM did, on software and services. And HP’s $1.2 billion buyout of Palm in 2010 was meant to gain traction in tablets and smartphones against Apple and Android devices.
HP has said it’s looking into options for webOS and may sell it off entirely. Since all HP smartphones run webOS, their future is in doubt. The company could jump into the Android or Windows Phone 7.5 arena or — since Whitman said she wants the company to do a few things really well — could get out of the phone business altogether. That again would cut HP out of one of the fastest-selling tech segments.
What HP can do
It’s not all doom-and-gloom: HP has a lot to build on, provided it can execute. For one thing, PCs may not be as hot-selling as mobile devices, but the company still sells two PCs every second.
HP could model IBM’s old PC model, in which IBM made boxes to run anyone’s OS and applications. Then HP would have devices to run all the relevant operating systems — Windows, Android, even webOS — always ensuring it retained the device-to-cloud connection, said Dana Gardner, a principal analyst with Interarbor Solutions.
Others recommend a more targeted approach. “Most of the industry is clear that in the commercial segment, Android as currently configured won’t do it,” said Roger Kay, the founder of Endpoint Technologies Associates. Commercial tablets require a more full-featured Windows 8–type OS, he said. Kay also figures that webOS is a goner, citing defections of top developers and lack of traction.
But on the other side of the cloud equation, HP holds a few wild cards. Its purchase of Vertica, with technology that analyzes structured data, and Autonomy, which does the same for unstructured data, could give HP a bigger presence in enterprise software and cloud computing.
While most agree that HP overpaid for Autonomy, the deal is done and it’s got to make the most of it.
“Autonomy can crawl all media, information and content, categorize it, index it and use it with other analytics,” Gardner said. “That capability gets more important when we talk about multiple devices connecting in and more importantly in hybrid clouds where data is spread around and you need to do joins with all types of information, not just relational,” he said.
HP has to work to overcome the perception that the company is adrift. “HP has tremendous assets and reach that only a few companies can rival but the public doesn’t seem to know that and worse, investors don’t believe it,” he said.
So, with its fourth CEO in six years, HP has to pick a course and stick with it.
As Whitman acknowledged on the conference call announcing HP’s PC business decision, it’s important to make decisions and be clear about them. “Uncertainty in business is never your friend,” she said.
Amen to that.