Friday, July 01, 2011

Why HP needs to focus more on software

Why HP needs to focus more on ES and HPSW?

Issac Newton introduced the most fundamental law of universe, law of motion. And Charles Darwin introduced the most fundamental law of Earth, survival of fittest (or natural selection). It is not surprising then that Herbert Spencer found parallels of this in Economics. The matter of truth is - in this competitive world, only the fittest survive. And this holds true for business as much as it does to principles of biology.

The context is Oracle’s decision to withdraw support for Itanium based products from their future software and HP’s consequent decision to move to court against it. The problem in this case is that HP has 140,000 customers that is shares with Oracle to lose, whereas Oracle has very little to lose if anything at all. It may just offer an alternate to customers and customers would not see a reason why they should stick to HP and jeopardize their investment remaining in a state of constant confusion. On the other hand, HP is not in a position to offer an alternate to these customers and hence stand to lose billions of dollars in revenue over years.

Why is HP in a situation like this?

The reason comes from the fact that within HP Enterprise Services is a comparatively new focus area. There is still a lot to be done. HP traditionally was a hardware vendor and moved into software services after acquisitions consolidating its position and readying itself for the top spot. Oracle on the other hand was a software company which moved into hardware with acquisitions. It should not have been too hard to predict what would be Oracle’s intention (or long-term business strategy) to acquire Sun.

Anyway, it is still not too late for HP. HP may learn from this episode for the partnership strategies for future. The matter of fact is no organization forms a partnership with another organization for the benefit of the other. Partnerships are always based on self-interests. Specifically an organization needs to be careful if it wants to have partnership with organizations such as Microsoft, which are known to have only have partnerships which benefited them single-sidedly.

A good lesson learned, and there cannot be a better motivation for HP to evolve it’s own Software Solutions and Enterprise Services to support it’s hardware business. Reliance on other vendors is futile, at least not fool-proof and future-proof.

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