Apotheker Steers HP Toward the Cloud

Monday was a big day for old-line tech companies: IBM discovered e-commerce and HP discovered cloud computing.

HP CEO Leo Apotheker outlined the company’s strategy at the HP Summit 2011 in San Francisco on Monday, emphasizing cloud computing, Internet-connected hardware, and its goal to plant webOS in PCs, printers, tablets and smartphones.

HP’s hybrid cloud ecosystem will offer an online marketplace for developers to test, secure and sell applications varying from enterprise resource planning to games. HP will also push its own applications, Apotheker noted, focusing on business analytics and security.

The presentation was Apotheker’s first as HP’s CEO.

HP did not respond the E-Commerce Times’ request for comments by press time.

Well-Positioned for the Cloud

Given HP’s deep history in hardware and software, the company is positioned well for a cloud computing initiative.

“Logistically, the company is in a pretty good place for bringing its vision of the cloud to pass,” Charles King, principal analyst at Pund-IT, told the E-Commerce Times. “HP has strong offerings across a wide range of hardware and service solutions, and is well-recognized across consumer and business markets. The biggest challenges are in developing stronger software offerings and strategies — the primary justification for Apotheker’s hiring — and in organizing highly complex, cross-company solutions.”

One challenge for HP, King noted, is that it still hasn’t fully differentiated its services from its competition.

“The presentation was good in that the company’s strategies fall largely in line with those of its primary competitors: IBM, Dell and Oracle. The larger question is whether — and how — HP is doing anything appreciably different or better than those players,” he said.

Financial analysts were likely hoping for a bit more from Apotheker’s debut.

“This event is Apotheker’s coming out party,” said King, “and given his software background — and the dramatic events following his hiring and Mark Hurd’s departure — I expect that the financial community was hoping for a grander vision and more dramatic announcements,” said King. “Instead, Apotheker sketched out a future which reflects a continuum of HP’s present course and condition.”

Apotheker’s comments were in line with the company’s muted expectations for the current quarter — caution’s the word.

“That’s probably sensible,” said King. “Despite HP’s troublesome past quarter and cautionary guidance, the company still drives far more revenues than any of the competition. The first order of business in shifting the course of a company the size of HP is to do so without the wheels falling off.”

While Apotheker may not have come across as bold, his comments will likely please HP’s existing clients.

“Overall, Apotheker’s plan is workable and takes good advantage of HP’s considerable existing assets,” said King. “It should be welcome among the company’s myriad existing customers and partners, but I don’t know how compelling potential clients will find HP’s vision of itself and the future.”

Cloud Has Potential – Late for Mobile

While HP clearly has the potential to deliver cloud-based software, the company is late to the mobile party.

“The term cloud computing is a rather vague term that describes any use of remote resources,” Jim McGregor, chief technology strategist, In-Stat, told the E-Commerce Times.

“From a server and IP infrastructure perspective, HP already has a good understanding and participation in the market,” he noted. “In terms of mobile devices, however, HP is a late comer to the smartphone and tablet market and is coming with a software platform that is not the port-of-choice for software vendors.”

It’s possible the company is stuck in its comfort zone.

“I think it’s safe to say that HP has a bright future in the growth of the cloud environment, but the company’s prospects in mobile CE devices are highly questionable,” said McGregor.” HP definitely faces challenges in breaking out of its traditional business areas, even in the area of the cloud. HP is now trying to get into other areas of the IP infrastructure where other companies like Cisco have a stronghold. Conversely, Cisco is trying to get into HP’s server business.”

The mobile consumer electronics market — “the golden child of the electronics industry” — requires a more collaborative approach, in McGregor’s view.

“This market is completely different than the computing market and brute force does not work,” he said. “You have to have a rich ecosystem that offers solutions, not just devices. Unfortunately, the traditional computing powerhouses have been slow to catch on to this concept. So, basically, HP faces stiff challenges in breaking out of its traditional business areas.”

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