HP just killed WebOS devices, and put their Personal Systems Group up for grabs, then purchased Autonomy for US$10Billion. Microsoft is probably smiling.
Microsoft has had a long-term relationship with HP, and a bit of that changes and perhaps actually strengthens. HP announced on August 18th, 2011, that it was putting its Personal Systems Group on the block. The PSG represents about 18% of retail personal computer sales, and is considered “top tier” along with machines from Dell, and Lenovo. The PSG hardware sold across the planet represents an enormous sales channel, itself a combination of Compaq (with its acquisition, DEC), and HP’s own gear—but not its printers or allied services or enterprise servers. It’s still a HUGE number, in terms of machines that will now be sold by someone else. There are millions of HP notebooks, desktops, displays, and so forth. Someone else will take up the HP name and sell them, likely. But HP was in the PDA market for a long time, and the acquisition of Palm was supposed to help HP vault over the top. It didn’t happen. I have a lot of derelict HP/Compaq devices now sitting in the lab. One of my Treo phones remains the only one that can hold a battery charge for a month when not in use. No longer. The PSG business is not so much a mess, as it’s low-margin business. It’s been dogged by the nVidia litigation settlement that quietly cost HP a bundle. It faces a decline because of the shifting sands of the desktop and notebook market towards tablets and smartphones. HP was very late getting into smartphones and desktops with models whose features were competitive with Android and iOS. HP was shown that it takes focus and raw brute strength to turn and beachhead a market. Their intelligence operatives were either asleep at the switch, or were ignored. It doesn’t matter which, now. But there is a silver lining. HP is no longer a direct operating competitor to their old friends, the Big Dogs in Redmond. None of that open sauce stuff will be used in a major set of HP product lines. Certainly HP has used Unix variants before, but in the PSG products, Windows dominated. Someone will buy that business and Microsoft will continue to dominate it so long as the business doesn’t change. HP purchased, and lots of people never heard of: Autonomy, a UK database maker. Autonomy calls itself a pan-enterprise “meaning-based” computing company. Their competitors are in business intelligence, and enterprise-wide legal/compliance and ediscovery applications, as well as pan-organizational metadata manipulation. If you think about these products, you can see who HP is designing to compete against: IBM’s custom software business, Oracle (and its mile long list of options for organizations that have become a retirement plan for consultants, some say) and more interestingly still: Google, who hasn’t extended search in the ways that Autonomy has. It’s also true that HP has tried to run their own database businesses and have failed and killed the business units. Ask any major telco. The EDS guys might find some joy here, but HP will need to prove their case to get the level of buy-in needed to make the Autonomy believable. It’s a high degree of integration, and while HP retains the server and storage horsepower needed, Autonomy’s not necessarily a cloud-play. But cloud-play or not Microsoft has a friend coming back into the fold. They don’t compete anymore with Microsoft anymore with a Linux derivative. WebOS is dead as in finished until it’s sold, licensed, or simply ignored out of existence. Whether you want to applaud HP for paying attention to business principles, or find fault with the problems that lead to cashiering twenty years of product line, there’s one thing that HP has told the world: except for printers, the consumer business has gone to the Chinese, and those that can feed their ideas to the Chinese/Japanese/Taiwanese/Korean hardware making engines. Only a handful of computer makers for retail consumption are domiciled in the US, and only a handful of them actually design and make machines in the US. HP cedes a huge chunk of business that will have to be replaced quickly if the acquisition is to succeed. The pressure is on.
