Whitman’s upbeat keynote at the HP Discover event in Barcelona was long on descriptions of the new world of IT, but also on HP’s strengths as a company and current market conditions. And while it is hard to argue on those points, there is still much criticism of the turnaround, such as over the handling of the Autonomy acquisition and its overall performance.
After the company’s Q2 2013 results, Tom Reuner, principal analyst at Ovum said that they were a reminder that restructuring is “not linear” as Whitman had said previously.
“However, HP’s suggested shift to a ‘new style of IT’ that encompasses mobile, social, Big Data and cloud is not yet central to the restructuring of HP,” said Reuner in May. “The focus is rather on improving operational efficiency. While the ‘new style of IT’ will help to redefine HP’s strategy in the medium to long term, the company needs to refine its communications around how it will differentiate around these industry trends.”
The structural challenges around the low margin PC business and the transformation to a software and services led organisation still persist, said Reuner.
But looking at the Q4 results for this year, paints a steadily improving picture.
The print and personal systems group (PPS) saw revenue down 2% year over year with a 3.0% operating margin, but commercial revenue increased 4% and consumer revenue declined 10%. The total units sold were up 2%, with desktops down 5% and notebooks up 3%.
In comparison to the overall PC market decline according to IDC of 13.9% (April 2013), HP is doing pretty well.
But in much the same manner as the much maligned Microsoft, it is the enterprise businesses where HP is strong and remains so.
The enterprise group revenue was up 2% year over year, with a 14.5% operating margin. Networking revenue was up 3%, industry standard servers revenue was up 10%, business critical systems revenue was down 17%, storage revenue was up 1% and technology services revenue was down 6%. Hardly numbers that signal a terminal decline.
The services side of things looked less rosy, it is true, but again this must be taken in the context of changing demands and requirements for new service models.
Enterprise services revenue declined 9% year over year, with a 4.4% operating margin. The application and business services revenue fell 10%, and infrastructure technology outsourcing revenue declined 9%.
In light of the announcements around the ConvergedSystems, which not only make it easier for customers to specify, procure and deploy IT infrastructure, but enjoy new utility payment and service models which make them more affordable and easier to pay for, these results and the analyst’s comments are significantly tempered.
By offering greater flexibility in all things from procurement and deployment to management and service options, HP is making it much easier to have HP as a foundation for enterprise cloud, irrespective of the flavour of that cloud.
The Discover event also saw major announcements around its big data platform HAVEn, and the Vertica and Autonomy tools to tackle structured and unstructured data (respectively) which sees them become much easier to use. So while the full exploitation of the Autonomy acquisition may have taken a while, HP now seems to have integrated it well to provide an open standards-based solution set that is more consumer-like in use and business friendly.
So while the overall picture and path for HP is not yet rosy or easy, it does not by any means look hopeless. Whitman appears to be streamlining the juggernaut even as it makes its way headlong toward what it has dubbed the ‘New Style of IT’. With a sleeker organisation, albeit with major job losses, that is developing new technologies and adapting to changing market conditions and demands, the only real criticism that could be levelled at HP is around pace. As it took a while to get to grips with Autonomy, if it fails to get its revolutionary technologies from the lab to the production line within a reasonably time, it may be overtaken, or worse still, find that the technologies themselves may be obsolete.
The two major new technologies that Whitman quoted in her keynote were memristors and photonics. Memristors, for example, are based largely around titanium dioxide, where as pure carbon graphene and other new wonder carbon materials could be argued to be closed to production use.
However, momentum is certainly with HP, and it is far from financially unstable as the latest results show and as Whitman was at pains to highlight in her keynote. But as long as that momentum does not hinder its course alterations to take advantage of future trends, it should remain a leader in enterprise IT.
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