IW500: Ray Lane Says HP Strategy Sound, Messaging Stinks

As InformationWeek Editorial Director Fritz Nelson opened the InformationWeek 500 conference in Dana Point, Calif., he somewhat apologetically announced a lineup change. Keynoter HP CEO Leo Apotheker was a late cancel for the event, instead, HP chairman Ray Lane and CTO Shane Robison would take his place. As it turned out, Nelson's apologetic tone was misplaced. The intellectual jousting match that's typically part of an Apotheker interview never materialized. Instead, the straight shooting Lane gave the clearest vision yet for where HP wanted to go and why it was making the moves it was.

In a nutshell here's what Lane, with color commentary from Robison, said:

-- HP wants to be known as the company that manage unstructured data for business. Oracle can handle the 15% of corporate info that sits in structured databases, HP will take on the 85% that is unstructured.

-- HP is not looking to dump its personal systems business, but it is looking to separate that business from its core enterprise products and services business because the two operate at very different margins and move at a different pace of innovation. Much like when HP spun out its test and measurement business into Agilent, HP expects to retain a close tie to the spun-out company and to protect the interests of longtime customers.

-- HP is not looking to develop a professional services business that competes with IBM, but rather looks to build a services business, based on cloud models, that leverage its EDS acquisition and another $1 billion its invested over the past year.

-- HP thinks that consumer devices will largely be build Pacific Rim powerhouses like Samsung and HTC, and thus it is exiting that low-margin business. It is not, however, dumping webOS, which it sees as a far superior environment for commercial applications and app development versus Android. HP wants to help drive information to mobile devices, but not make them.

With the possible exception of what comes off as a near obsession with the superiority of webOS, Lane's vision is one that makes sense for HP--finally. And had HP and Apotheker started with that vision back in March, the company would be on far better footing today. Yet Lane's answers still left plenty of open issues for HP. While Lane says HP will do right by the personal systems group, he didn't offer specifics. Would it be a spinout like Agilent or an outright sale with a deal for ongoing support like IBM did with Lenovo? Lane said he didn't know yet what would happen. The same was true for webOS. How would HP solve the chicken and egg problem of getting developers to write to a platform that almost no one was using? He didn't know yet, but he acknowledged the problem.

In acknowledging the problem, he also took a clear shot at Google and Android, calling it an unfit platform for commercial development. He also made a point of reminding the audience of the technical excellence of webOS, designed for the Web and for mobility, and he left the impression that serious developers should immediately see webOS's superiority versus Android. Even more so than in the past, it's tempting to make the comparison between Sony and its insistence on Beta's technical superiority in the Beta/VHS battle. Technical superiority seems likely to be a Pyrrhic victory in any battle with the now well-entrenched Android.

But another comparison that comes to mind is another HP foray into alternate standards. Back in the '90s, just as the IEEE was considering 100-Mbps Ethernet standards, HP pushed for its own version, called 100VG-anyLAN, or 100Base-VG in IEEE lingo. Back then, HP put forth what it thought was better technology, but one that broke almost everything about Ethernet. Within months, the company withdrew the technology and said that it had learned to innovate within standards, not with them. It appears that HP is making the same mistake again by pushing a proprietary technology that no one is currently using.

In an odd twist of fate, Google itself has given webOS a glimmer of hope. While there's been plenty of grousing about the quality and control of Android releases, most manufacturers seemed happy to work with Google on the operating system. That equation may have changed when Google bought Motorola Mobility. Samsung, LG, and HTC now have good reason to worry that Google's own phones may end up with an edge that their devices don't have.

While rumors have floated about those companies buying a mobile OS, the market probably won't tolerate that many different operating environments. Developers want just a few platforms for their apps, and four (iOS, Windows mobile, Andriod and webOS) may be tolerable. The role of mobile OS developer will be a strange one for HP, as the company has never done well as a provider of end user operating systems. But then, there was no particular reason to think that Google would be a good provider either.

Within HP's goal of being the provider of business-class data management and access systems, webOS certainly could have a place, but it'll take a deal with at least a couple of the Asian device manufacturers to have any relevance at all.

In a competitive environment where Dell owns the SMB space and has desires (and is making progress) in moving up the ladder, and IBM is a comfortable partner for many blue chips, HP needs to define itself more sharply. One of the most important utterances from Ray Lane was that HP had no desire to get into a professional services battle with IBM. That's a very important distinction, because while IBM has a great software portfolio, knitting it together to systems that solve real problems is not for the faint of the heart.

HP has the opportunity to offer systems that don't take a legion of consultants to assemble into actual problem solutions. It can offer those systems both as managed services in its own cloud and must also make it reasonable to run them on premises. The other clear finding from this week's IW500 conference was that hybrid clouds are interesting to CIOs, but that wholesale adoption of external cloud services is still and will be for some time a bridge too far for most companies. There's a nice spot between IBM and Dell that HP can fill. Laser vision on that goal, and straight talk of the sort we heard from Lane, will serve HP in getting there.

Art Wittmann is director of InformationWeek Analytics, a portfolio of decision-support tools and analyst reports. You can write to him at [email protected].

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