As an Enterprise IT person you probably know that today is the day that HP splits into two companies and discards the “deadweight” of the $50 Billion PC and Printer business to “HP Inc” while the new Hewlett Packard Enterprise (HPE) company is expected to be leaner and more focussed on Webscale and Enterprise $50B business.
The prevailing logic is the declining desktop/laptop sales is a long term trend and that, eventually, printers won’t be necessary and that to would become a shrinking market. There are opportunities too with rise of mobile computing, IoT and other consumer/retail markets that HP Inc can develop new opportunities leveraging the HP brand.
Not very interesting to me.
A smaller company should be a better company and HPE is now focussed on Enterprise, Cloud and Webscale business. I say small but it will be a $50billion per annum company.
The launch promotions are clear with slogans like “Tomorrow belongs to the fast”, “Accelerating Next” that HPE wants to change itself and change with its customers.
Its true that there are many parts of Enterprise IT that are stagnant and unchanging with decade-long buying cycles. This means that incumbent suppliers are hard to displace and have plenty of time to change direction.
We know that Private cloud & SaaS are accepted as the next decade of IT. Now HPE hopes to be a key supplier of products and services to make that happen.
Services are key. No one expects to increase sales of hardware. And open source is disrupting revenue models around selling commercial software in a huge way. HPE, like Cisco, Dell and IBM, will continue to build services of many different types – cloud, SaaS, consulting, maintenance, software and more.
The Dell/EMC Thing vs HPE Thing
The Dell/EMC merger is the opposite of what HP has achieved today and comparisons are inevitable and likely invidious. HP announced the split in October 2014 and so much has happened since then. Its worth noting that the proposed Dell/EMC merger will take at least a year to complete once agreement is reached. It could be 24 months before its all completed.
The Dell merger is complex to explain but maybe the best summary is to “go big or go home”. The commoditisation market trend can force big companies to get bigger and achieve economies of scale that can result in maintaining profit margins. By servicing more of what customers buy, by filling all the sales niches and market Dell hopes to build a brand that has a greater share of the $50-100 Billion1 Enterprise & Webscale market, adding services (professional and cloud) while also retaining the logistics & production capability that has been its core competitive advantage. As a bigger company, Dell has more leverage on suppliers to reduce costs and customers to increase profits.
Going big has large risks but success in the business is often measured on size. Its usually an acceptable trade-off.
The risk here is that big companies move slowly, resist change and lack flexibility. At the same time, big companies can achieve big things. They can wait for a market to mature before entering, they have funds to buy their way into established markets.
HPE has chosen to focus. My view is that HPE has is about focus on profitable products, to produce better products and move faster. Its plenty big enough to buy, build or partner as needed.
The EtherealMind View
Market disruption happens in different forms and the commoditisation trend in IT Infrastructure drives change as surely as any other. HPE is the result of change in response to this disruption and a smaller, focussed business is a good outcome. Bigger isn’t always better (look at IBMs deep seated woes while Cisco continues to thrive).
One thing I’m looking for is a transformed internal culture. HP was so large that business units acted independently of each other. For example, the HP Moonshot servers that ran 512 ARM servers in a single chassis didn’t use HP Networking (they used a Broadcom OEM Board) for networking connectivity and ultimately didn’t compare well to other products.
Lets get back to delivering some IT.
Postscript: The Website
I’ve been critical of the HP website for a number of years. It was awful. I’m hopeful that HPE has abandoned the old CMS they were using and have moved to a system where the content, URLS and interface is based on modern web methods. Finding information on the old site was awful, hoping that the new site gets it right.
- depending on who you ask, how they measure etc etc. ↩