* HP puts appropriate emphasis on management software
The biggest news from HP’s corporate analyst event – yes, this is apparently the season for analyst events – is big indeed, in my view. HP, as far as I know, is the first vendor to make most of its revenue in hardware while being fully aware of the value of management software.
Last year’s event was a move in this direction; this year the line was crossed – cleanly and intelligently.
Time and again – from CEO Carly Fiorina on down – it was made clear that management was the central control point in aligning business with infrastructure. Management and security were also singled out as two of HP’s four key opportunity areas, along with rich media and mobility. And a great deal of attention was paid to architecture vs. product (according to Fiorina herself, “the pure product era is over”).
HP is tackling the adaptive enterprise as a point of architecture/design and – to some degree – even business models. While this may sound arcane, it is in my opinion exactly right – and once the industry begins to understand it, it will force some serious reevaluation around how vendors and service providers plan and build products, how they interact, and how customers define their expectations and demands.
HP’s most obvious competitors are Dell and IBM. Dell is not yet even in the ring with this type of vision and doesn’t have, of course, the management product history to support it. To some degree, the comparison here then is almost unfair – and Dell’s role may evolve into a higher-volume, more commodity business with a deliberately less strategic core.
IBM, on the other hand, has significant management product and service offerings and is very much in the same ring – with its “On Demand” and “Autonomic” directions. IBM’s potential here is significant – and while management has become a more visible part of its systems value add, the company has not yet demonstrated a C-level (CEO, CTO) position clarifying management software’s central role in delivering on an automated, business-aligned solution. However, IBM has been able to garner significantly higher percentages of its revenue from software than HP has. And this, of course, poses a challenge to HP, which will have to not only execute on its challenging and provocative strategic position, but also accelerate its capabilities exploding what it likes to call “share of wallet.”
HP’s other major competitors are all software companies – and of course generally embrace the centricity of management software (witness CA’s “Age of Management” at its event). The one advantage HP has – if it can maintain and continue to evolve with the strict discipline it has committed to in its June event – is that it can look at “adaptive” or “on-demand” networking from a bigger picture. Among other things, HP promises to review its hardware portfolio as evolving and contributing citizens within a schema targeted at – in its own words – the creation, delivery and enjoyment of content. If HP can leverage its work in entertainment and consumer markets to enhance user experience in business contexts as well, it should find some distinctive market advantages.
HP will also have to wrestle with the thorny mess of instrumenting hardware devices and applications to become full citizens of a managed universe – not only within its own portfolio, but also in network hardware and among competitors in systems hardware. To succeed, HP will have to fight off many temptations for short-term differentiation that’s uniquely “hardwired” to its own product set, and submit to numerous frustrations in trying to promote new habits of mind across the industry.
If HP can maintain a disciplined approach, it will be in a strong and unique position.
