No other name in technology carries as much reverence as Steve Jobs. His departure as CEO of Apple combined with HP investigating a spin-off of their PC division has a lot of companies wondering what changes are in store. A few points:
1. In the face of the major market shifts, a strong case can be made for multi-sourcing your enterprise PCs. Recent events highlight the risks that enterprises face -- risk that will be more apparent in 1-2 years. Apple’s product roadmaps have already been planned for the next 15-18 months (depending on the product line), so I don’t expect to see any significant downside for Apple until this current roadmap is past. But when Apple's current roadmap is refined under new leadership, we’ll start to see the effects on Apple’s enterprise strategy. In addition to this news, more certainty exists with HP's spinoff of their PC division, and Dell will show their hand in how they plan to move forward in the face of these developments. The landscape in 2-3 years will be drastically different. Diversifying your PC suppliers via multi-sourcing can help mitigate that risk.
Last week, HP announced it would discontinue the TouchPad and all webOS-based products. This was a dramatic reversal in strategy; just a few months ago (in March), I attended HP’s analyst event, during which HP CEO Leo Apotheker presented webOS as a central tenet of HP’s consumer product strategy and said the TouchPad was “the first of hundreds” of devices that would be running webOS, including printers and PCs.
Everyone heard the news last week of HP making a decision that it wants to emulate IBM rather than Apple by shedding its PC and cell phone businesses. But for Application Development Professionals, what does this announcement mean for HP QC and its newly defined ALM platform?
The bad news
The investment in WebOS and Palm meant that HP was in the mobile platform business, a business that is heavily connected to developers, open source communities, and applications. That connection would have required HP R&D to gain strong relationships to the developer community and be active in making it easier for developers to build on top of its platform. Of course, there were many questions regarding whether HP would be able to connect to developers; after all, it is a hardware company, and hardware engineers traditionally ignore software, considering it an afterthought — but at least the need was there, which is always a good place to start. Now that objective has gone. Mobile developers, who increasingly are becoming the mainstay of the next generation of applications, are not a core community for HP to court. And if IBM is to be copied, then mobile will be dropped from HP’s corporate vocabulary.
The good news
Without the distraction of WebOS, HP will now increase its investment in its applications business, in particular the integrated strategy of IT Performance Suite and its supporting software solutions for IT strategy, ALM, and IT operations. This solution is aimed squarely at IT departments and the enterprise. The potential acquisition of Autonomy will only extend HP’s reach into enterprise IT, and if applied to IT performance management could provide valuable insights into the application environment.
Minutes after the Wall Street Journal reported that HP plans to spin off its PC business, I'm already getting press inquiries. There's still a lot we don't know, and I hope we'll learn more on the earnings call tonight. Based on what we know now, here's my take on what product strategists at HP are thinking:
HP's PC product strategy is squeezed by two macro-trends: The commodification of the PC market, led by Asian manufacturers like Asus, and the transition to a post-PC era, led by Apple, Inc. (formerly Apple Computer). HP is the biggest PC manufacturer in the world, but its position will rapidly decline if it can't adjust its product strategy to combat both trends.
It makes sense that HP shareholders don’t want its low-margin PC business dragging down its high-margin enterprise services business. As for HP’s chances as a standalone PC manufacturer, it’s tough to be a PC maker in a post-PC world. HP’s competition is Apple on the high end, which has justified higher margins based on non-hardware offerings: service (Genius Bar, Apple Store reps), channel (Apple Store), and software (iTunes/App Store). On the other end, all of HP’s competitors, other than Dell, are based in Asia and have very different manufacturing and labor economics. HP has been caught up in a race to the bottom as the PC market has commodified. Now it needs either to become comfortable with commodification or to build out the elements of an ecosystem to enable true competition with Apple.
We have been repeatedly reminded that the requirements of hyper-scale cloud properties are different from those of the mainstream enterprise, but I am now beginning to suspect that the top strata of the traditional enterprise may be leaning in the same direction. This suspicion has been triggered by the combination of a recent day in NY visiting I&O groups in a handful of very large companies and a number of unrelated client interactions.
The pattern that I see developing is one of “haves” versus “have nots” in terms of their ability to execute on their technology vision with internal resources. The “haves” are the traditional large sophisticated corporations, with a high concentration in financial services. They have sophisticated IT groups, are capable fo writing extremely complex systems management and operations software, and typically own and manage 10,000 servers or more. The have nots are the ones with more modest skills and abilities, who may own 1000s of servers, but tend to be less advanced than the core FSI companies in terms of their ability to integrate and optimize their infrastructure.
The divergence in requirements comes from what they expect and want from their primary system vendors. The have nots are companies who understand their limitations and are looking for help form their vendors in the form of converged infrastructures, new virtualization management tools, and deeper integration of management software to automate operational tasks, These are people who buy HP c-Class, Cisco UCS, for example, and then add vendor-supplied and ISV management and automation tools on top of them in an attempt to control complexity and costs. They are willing to accept deeper vendor lock-in in exchange for the benefits of the advanced capabilities.