Dear Meg (and Ray Lane),
I wanted to share my near-term recommendations for HP to quickly re-establish its credibility with investors, analysts and large enterprise customers:
1) Fix The Autonomy Deal: First and foremost, activate the termination clause for the recently announced abomination of an acquisition known as Autonomy. I know that it’s pretty much a done deal, but I would still consider paying the 1% break-up fee and get the hell out of that deal.
Paying $10B—an extremely high 79% premium. Considering the fact that Mark Hurd passed on this deal, as did all of your mainstream competitors (including Oracle), . Not HP customers, not HP shareholders, not HP channel partners—nobody.
If you do it, then make it work fast. Bring something new to the table to compliment the image that Autonomy is an old asset. Bring Vertica to the table fast.
2) Get Cloud Right: Articulate a clear cloud strategy to the market. Right now, investor and customer perception of HP’s cloud offerings are that it’s in shambles. Complete disarray. On one hand, you have HP Labs offering public cloud powered by OpenStack—which, as SiliconAngle and Wikibon reported before, is not ready for prime time. then you have the server group pushing something called a “CloudSystem Matrix”; the StorageWorks team pushing everything from 3PAR boxes to X9000 boxes as their cloud solution of the day and some other group pushing Cloud Maps (whatever that is…).
At the end of the day, there is too much confusion with Wall Street to reward any progress in cloud that HP may have actually made, and too much confusion for HP customers to understand what the hell they’re supposed to actually buy.
Cloud storage is the hottest sector of cloud right now and HP has no end-to-end cloud storage play for its enterprise customers at this time. All of its combined offerings still don’t add up to a common object store and a common file system to use across private cloud and public cloud storage deployments. Your customers are asking for hybrid cloud storage federation, but you can’t deliver this today. The solution that would enable HP to actually deliver a clear cloud vision and win the respect of the Street? Acquire a cloud storage startup for new blood. The startup guys have cloud figured out, sorted out, and deployed in big time shops, many of them likely HP customers in one form or another.
Companies like Nirvanix for enterprise and Box.net for consumer, among others all have done the heavy lifting on cloud storage so HP doesn’t have to. Make the shift to cloud as a service and bring a message of clarity to external audiences and influencers. Be aggressive or your competitors will.
3) Keep the PC business, just as analysts have been saying. Don’t give up on it. HP is NUMBER ONE in this market. Granted there may have been market share losses in recent quarters, but this can be rectified with a bit more focus on consistent innovation and sustained execution.
The industry influence, the sheer buying power that the PC business brings to HP throughout the entire tech sector is not something that should be spun off or sold off like a piece of ragged lawn furniture. Billions of people around the world know and respect HP for its PC products. HP can provide everything from the desktop to the back-end data center, which is a value that cannot be replicated by many of your fiercest competitors. Wall Street will again reward HP for keeping its PC business intact rather than pressing the “delete” button on it. IDC analyst Crawford Del Prete said, “I think [the pc business] is getting a fresh look.”
I hope he’s right.
So in closing, abandon the Autonomy deal or integrate as fast as possible, go acquire smaller fast growing companies (like Nirvanix or Box.net) before they get any bigger in the cloud space, and keep the PC business integrated within the core of HP.
I’m confident that these three strategic steps would increase HP’s valuation, restore shareholder faith in the company’s direction, and have a positive, long-standing material impact across your customer base. Which, as of right now, is largely wondering if HP is a company they still want to do business with.
Bonus and Extra Credit: Please punch Oracle in the face.
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