Global CIO: HP's New Strategy Will Intensify Battles With IBM And Oracle - InformationWeek

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1/17/2011
06:15 PM
Bob Evans
Bob Evans
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Global CIO: HP's New Strategy Will Intensify Battles With IBM And Oracle

HP will pump up investments in high-growth technologies and shift some top-level managers as part of new CEO Leo Apotheker's growth strategy.

After beginning his tenure as HP CEO with a 10-week global listening tour, Leo Apotheker is initiating a series of restructuring moves within the $130-billion IT giant that will transform its product profile into one more closely resembling those of its two largest and primary competitors, IBM and Oracle.

A news-analysis piece posted over the weekend by the Wall Street Journal speculates that Apotheker's strategy includes "shuffling senior management and placing greater emphasis on the most profitable pieces of the business."

Citing "people briefed on the matter," the Journal story said HP intends to pump up its investments in software, networking, and storage, all areas in which the company has made a number of acquisitions in the past year or two.

If those high-growth areas will be getting larger percentages of funding, then it means that cuts will have to be made in less-profitable areas, such as commodity servers.

The cuts could even extend to portions of HP's PC business, the Journal suggested: "The changes being considered include investing more in H-P's software, networking and storage businesses, all of which are more profitable than the Palo Alto, Calif., company's personal-computer and server businesses, these people said."

If the speculation raised in the article is accurate, Apotheker and HP will disclose the changes in mid-March around the time of the company's annual shareholders meeting.

But regardless of the timing, the changes outlined in the piece make it unmistakably clear that Apotheker intends to have HP compete much more directly against both IBM and Oracle.

For the past several years, as former HP CEO Mark Hurd built the company into the world's largest IT company, a price that HP had to pay for its vast scale was its dual presence in not only the enterprise space but also in the consumer space, where its achievement of being the world's largest PC manufacturer gave it a huge boost in procurement leverage but also stunted HP's reputation as a focused and highly capable enterprise player.

Neither IBM nor Oracle had to cope with any such dualities in market positioning, product strategy, marketing campaigns, or public perception: both Oracle and IBM were and are 100% devoted to corporate IT solutions and opportunities, and their more-advanced product lines reflect that reality.

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Under the new strategy he is reportedly crafting, Apotheker is aiming to intensify HP's focus on business customers by plowing more investment dollars into core non-consumer businesses and by initiating a corporate reorganization that reflects those new priorities.

From the Journal article:

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