In an industry stuffed with uneasy alliances forged by the frequent necessity for adversaries to compete and cooperate simultaneously, I think the Oracle-HP pairing—one that's been in place for more than 25 years and has been about as deep as such partnerships can get—is rapidly becoming the uneasiest of all.
Larry Ellison and Oracle were eventually able to get over HP's ouster of his pal Mark Hurd two months ago, although in the interim Ellison famously thundered about the incompetence of the HP board, and HP sued Hurd to prevent him from joining Oracle since the two companies are beginning to compete across a wider spectrum.
But all that was overcome in the interest of shared business opportunities that were proclaimed in press releases gushing with mutual admiration and that just so happened to come out right in time for some HP executives to take the stage in prominent keynote spots at Oracle Open World.
DefCon 4 status was ratcheted back down to DefCon 1, and everything was once again fine between HP and Oracle.
And then on Sept. 30, the same HP board that two months earlier had pushed Hurd out and prodded Ellison into a rant about their horrendous judgment announced that the company's new CEO was none other than long-time SAP executive and short-time SAP CEO Leo Apotheker.
Of all the executives in all the industries from all the companies, HP picks the one guy with whom Ellison would find it just about impossible to work: Leo Apotheker, who not only worked for Oracle's arch-enemy but was ultimately fired as CEO over declines in market share, profits, employee morale, and customer trust.
Of course, it's not the job of HP's board to placate Larry Ellison and Oracle with its choice of CEO. But it's also impossible to imagine that the HP board, particularly with its simultaneous addition of venture capitalist and one-time Ellison lieutenant Ray Lane, would not have understood the repercussions with Ellison that their hiring of Apotheker would have.
And those repercussions—at least the initial ones—were juicy. Here it is from the Wall Street Journal:
"I'm speechless," he wrote in an email to the Wall Street Journal. "HP had several good internal candidates…but instead they pick a guy who was recently fired because he did such a bad job of running SAP."
An H-P spokeswoman said Ellison's comments don't "deserve the dignity of a response."
Well well! Is this any way for bosom-buddy allies to talk? Is this just a temporary bit of pique from two partners that will soon settle back into comfortable cooperation? No, this means war. And here's why:
I think Apotheker's selection by HP's board is something quite different and signals HP's unmistakable intention to compete in enterprise software every bit as aggressively as Oracle has come to compete in hardware and systems via its acquisition of Sun.
I think that HP's very deliberate selection of an executive who's spent the last two decades at the world's largest supplier of enterprise applications is anything but a coincidence—quite the opposite. HP's board apparently feels it is essential to the company's long-term viability to move more aggressively into higher-value software and related fields, eventually shifting its revenue mix more aggressively away from hardware—much of it fairly commodity stuff in the form of mass-market servers and PCs.
I think HP's board is willing to bet that by redoubling its commitments to and relationship with SAP (and I'll share SAP's reactions to Apotheker's appointment in a moment), HP can thereby afford the risk of alienating Oracle, which it had to know Apotheker's selection would precipitate.
Contrast Ellison's comment about Apotheker with this statement I received from SAP co-CEO Bill McDermott:
"This is great news for HP and for SAP. SAP and HP are outstanding partners, HP is a great SAP customer, and this move only sets the stage for an even deeper relationship between our two companies. Leo understands our business model and how to fully advantage this partnership to help our joint customers be best-run businesses. I personally congratulate Leo on this tremendous appointment."
Very interesting, isn't it? While McDermott has spent the past 8 months total remaking the company that was in pretty bad shape when Apotheker was forced out in February, McDermott focuses on the future for HP and SAP by saying "this move only sets the stage for an even deeper relationship between our two companies."
I think we can count on a pretty quick and pretty decisive reaction from Oracle and that Ellison will ask newly named co-president Mark Hurd—the guy who spent the last five years running HP—to be the point person in developing the strategy that uncouples the Oracle-HP partnership and identifies new ways to fill the gap their inevitable separation will create.
They say that if you mess with the bull, you get the horns. And in hiring Leo Apotheker, Hewlett-Packard—just days after reaching a peace accord with Oracle—has commenced waving a very big and very red flag directly in Larry Ellison's face.
The horns are coming, Leo—your move.
Bob Evans is senior VP and director of
To find out more about Bob Evans, please visit his page.
For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].