At the start of this week’s HP Discover Europe 2013 in Barcelona I wrote that HP is facing a major inflection point in its history, one that will determine whether it will remain a Fortune 15 company and one of the dominant forces in the IT industry or start to fade into legacy or commodity provider status. So what did observers find out about HP direction from the two days of keynotes and the Cube interviews, both webcast live on SiliconAngle.tv?

The most significant revelation is that HP is making a huge effort to become the leader in cloud of all kinds – public, private, hybrid, and managed. Speaking during Tuesday’s Keynotes and then on TheCube Wednesday, , SVP and general manager of converged cloud for HP, talked about the progress HP has made in building a single cloud group combining what where the separate public and private, and managed cloud groups who often competed against each other for sales. Over the last year under Gillai HP first combined the engineering groups and then, at the start of its FY2014 on November 1, it combined the sales groups. Although he did not mention this specifically, he also hinted that a cloud consulting function has been added. Today HP’s response to an engagement begins with an HP cloud engineer analyzing the client’s needs to determine what kind of cloud – public, private, hybrid, or managed — best fits those needs.

In June, he said, HP’s Board of Directors approved a major increase in investment in the cloud program. He declined to give figures but said that “over the next year our investment will become more plain to the public and the level of investment will amaze people.”

HP’s cloud software, including the new Cloud OS that it announced at the conference, are based on OpenStack. Gillai emphasized HP’s total commitment to OpenStack during his interview in TheCube, saying that HP’s investment in it “will benefit us and other people”, an apparent reference to IBM and Rackspace among others.

What HP needs in cloud

This commitment to cloud is exactly the right strategy for HP. Cloud clearly is a big part of the future of IT both in terms of technology and user strategy, and by positioning itself as a leader HP is making the right moves to gain a major share of that business and bring its customers forward into the next generation architecture. Unifying its sales and software development is a major step and not an easy thing for it to do since it disrupts established internal political structures.

Hardware was noticeably absent from Gillai’s statements, a strange omission for what is still mainly a hardware company. HP clearly needs a “converged system for cloud” offering designed from ground up to support private/hybrid cloud installations with OpenStack and the HP Cloud OS and other associated software pre-installed, ready to go out of the box. This approach has been very successful for IBM PureSystems. If HP is not already working on this, it should put an engineering team together starting Monday.

Of course HP faces strong competition in the cloud space, mainly from Amazon AWS, which is the clear leader in what Gillai called “the first wave of cloud”. A great deal of cloud software is being developed on AWS, and because Amazon’s system is proprietary, when it comes time to put that software into production it will be difficult to port it to an HP (or any other vendor’s) cloud. And with Amazon apparently moving to provide private cloud hardware and software to augment its public service, this threat becomes larger. To counter this, HP needs to develop specific software tools backed by consulting support to make it as easy as possible for its customers to move their AWS-developed cloud software to HP Cloud OS.

Moonshot

HP Moonshot, its hyperscale architecture which it hopes to sell to both the large Web-based services and to its Fortune 100-sized clients, is another important part of its strategy. HP CEO Meg Whitman devoted half of her keynote to discussing Moonshot and interviewed HP EVP of Technology & Operations John Hinshaw about how Moonshot is revolutionizing the environments inside HP’s four worldwide data centers. They made a strong case about how Moonshot has provided large amounts of extra capacity in a smaller space with lower power and cooling use. Hinshaw predicted that with Moonshot HP would “never need to add another data center”, which given that HP is a F15 company running its entire operations in four data centers, is quite an endorsement.

However, HP is the only user Whitman could cite. In every other case, the keynote presenters talked about the number of customers or sales and similar statistics that gave an indication of how successful the products and services they were talking about were in the real market. Whitman never gave any of that information. Even if other customers could not be mentioned by name, viewers are left to presume that if HP had other users she would have said “we have X number of sales”, leaving viewers to wonder if this major new product, announced in April, has any customers.

HP converges systems and storage

HP spokespeople in both the keynotes and interviews in TheCube made a strong case, backed with figures, that they are being very successful with their converged systems and storage initiatives. Both, they made clear, are aimed at EMC and its VCE converged system alliance with Cisco. Hardware convergence is another big piece of the future architecture. As operational focus moves up from hardware to the virtualization layer, and as prices per unit of compute and storage continue to drop, purchasers will be less concerned about customizing new hardware to specific anticipated demand and instead want boxes that arrive ready to run out-of-the-box. All of the major vendors have converged offerings – EMC and Cisco have VCE, IBM has PureSystems, and HP has its converged systems. HP was a pioneer here, and its vision is obviously paying off.

Printers and Personal Services

My one real disappointment was with the keynote by Dion Weisler, head of the Printing & Personal Services Group. Earlier this week I published a piece about what HP needs to do to rescue its end-user device business. Weisler talked a great game at the start of his Keynote, which was notably scheduled as the last in line on Wednesday, which may be a hint as to where this group is in terms of HP’s overall strategy. He talked about how the new generation of workers want to use multiple devices as “be proud of the device they carry.”

But when he got to specifics, he suddenly was showing off new laptops instead of new market strategy. HP has refreshed most of its laptop lineup recently, and yes they are thinner, sleeker, more powerful, and with longer lasting batteries. But every manufacturer’s new laptops are thinner, lighter, and more powerful. At one point he actually felt he had to say that HP “remains committed to its business tablets.” That may be a hint at just how bad things in this area are for HP. The heads of mobile devices for Apple, Samsung, Google, Android, or even Microsoft would never have to say that; their commitment is obvious. He gave no hint of a change in strategy to create a major presence for HP in the consumer market, where the vast majority of tablets are sold.

Conclusions

Things are happening at HP. Its cloud and converged systems businesses in particular, and its strong showing in storage, provide hope. But today an IT business cannot be sustained long-term on hardware alone. HP still has much too little revenue from software and services, and as hardware becomes commoditized, and that is happening rapidly in many areas, its market share may remain huge but its income from that will shrink. So Discover 2013 Europe closed with HP’s future still in doubt, although it did provide reason to hope that it is creating a path to a better future.