Hurd: Software critical to HP success

LAS VEGAS -- HP intends to become the leading technology provider in the world, and the company's success rests on its software business, according to CEO Mark Hurd.

"We don't have 15% or 20% share of the enterprise market; we have single digit share, but there is a $1.1 trillion IT market we can approach and we cover about 60% of it today," Hurd told attendees during his keynote address Tuesday at HP Software Universe, which drew about 3,400 attendees.

Hurd, who also addressed between 5,000 and 7,000 attendees of HP Technology Forum & Expo Monday, said the company will not abandon its strengths in hardware, but that it will focus its attention on building its software business.

HP, which analysts estimate will bring in $100 billion in revenue this year, may be a leader in that financial metric, but Hurd said the company still has work to do in terms of delivering its technology to customers. And with 35,000 engineers at HP, technological excellence is not a problem, but big company bureaucracy is.

"We know we are not perfect," Hurd said, adding that he is working to "eradicate bureaucracy from HP. Our challenge is to make sure our complexity becomes as asset to customers and not a problem."

According to Hurd, HP is not only increasing its software portfolio through acquisitions -- about 12 in the past year alone including this week's news around HP signing an agreement to purchase SPI Dynamics -- but the company is also investing most of its research and development dollars into becoming a software powerhouse. HP has spent some $20 billion on research and development over the past five years, and of the $3.6 billion the company spent on R&D last year, HP dedicated 70% of that to software.

"Four years ago we spent 70% of our R&D dollars on hardware, but last year that 70% was dedicated to software," Hurd said.

"We are not interested in protecting the old; we are interested in diving into the new," Hurd said, explained saying most of the company's growth since he joined the company in April 2005 has been in categories such as business and management software and not flat markets such as high-end Unix platforms.

In fact, HP has spent $500 million to deliver on 50 integration points across HP, Mercury, Peregrine and other acquisitions to ensure its software addresses relevant customer business problems. With somewhere between 200 and 300 products -- HP's OpenView portfolio had more than 100 applications alone -- it is important HP simplify its offerings for customers.

"We will differentiate ourselves with software and services. We have more skin in the game on industry standards," Hurd said.