The new CEO is a Software Guy and has Prior Experience only in Enterprise sales – A Clear Mismatch with The Current Philosophy of HP – The Largest IT Company in The World. Is he The Right Choice?
While HP is known for its hardware, distribution and B2C business, software is more of loose change (accounting for 2.8% of HP’s topline for Q2, 2010). And this is precisely what Apotheker has set out to repair. Expectably, under him, HP’s focus on software will increase manifold. But with software, comes innovation. And Apotheker’s SAP files prove him a failure at it. Also, he has earned a reputation for establishing an environment at SAP, which focuses on high-cost and low return maintenance and support pricing, rather than profitable applications, despite the billions spent on innovation. The fact that he has also presided over product delays and has demonstrated ill-sense of pricing techniques, also does not ensure better days ahead for HP; the foreboding danger being a repetition of what happened to SAP – HP might soon find competitors chiselling away its PC market share.
So what should Apotheker do? He has options. The most irresistible one will be not to tamper with HP’s pride – its hardware business. But he is apparently going to do that, despite knowing that Hurd tried in vain to give HP a software and enterprise business edge with its acquisitions of EDS, 3Com and Palm. Neither did the $13.9 billion EDS acquisition help HP make waves in the consulting & services business (where IBM is #1), nor did the $2.7 billion 3Com buy manage a dent in the network arena where Cisco rules. And as far as the $1.2 billion Palm buy goes, everyone knows what an HP ‘smartphone’ looks like, right?
Many claim that Apotheker might do to HP what Palmisano did to IBM. But the truth is – the very imagination lacks logic. HP is not IBM. When IBM chose to go the software way, it was being sucked into a black hole, with its hardware business collapsing. It was then that IBM decided to shed deadweight. HP is in not in a similar situation by light-years! It is the #1 IT company in the world (having made $114.55 billion in revenues in FY2009) and sells the largest numbers of PCs and printers in the world (claiming 37% of global market share in the printer segment; Q3, 2010). What makes Apotheker believe that HP needs a makeover? Whether he will take a dig on cloud computing is a wonder (as he has had his share of expensive failures in this regard while at SAP, burning $5 billion in 2 yrs.), but what is inevitable, is that HP under Apotheker will join the battle to capture the enterprise space from the likes of Oracle and IBM. This would call for expensive acquisitions of players like SAP, Salesforce.com, et al, which will put big question marks on the ROI figure of HP, that is already lower than the industry’s (12.36 and 15.56 respectively).
All said and done, Apotheker has never before been answerable to such a large shareholder base. So the first task for him is not managing the finances or balancing the software-hardware see-saw. It is to win favour of and retain talent at HP, who would already have headhunters knocking at their sedan doors, as King of Mindspring adds, “HP enjoys a host of experienced, senior executives leading its printer, server, storage and networking divisions, who can keep the company’s efforts on track while Apotheker learns the ropes.” Lesjak (CFO), Bradley (Personal Systems Group Head), Robinson (CTO & CSO), Perez (Head of HR), and Joshi (Head of Imaging and Printing Group) are names which should find a regular place in Apotheker’s dining plans over the new few months, if he is to imagine any chance of being around at a multifaceted monolith like HP before his debut speech is forgotten this time.
So what should Apotheker do? He has options. The most irresistible one will be not to tamper with HP’s pride – its hardware business. But he is apparently going to do that, despite knowing that Hurd tried in vain to give HP a software and enterprise business edge with its acquisitions of EDS, 3Com and Palm. Neither did the $13.9 billion EDS acquisition help HP make waves in the consulting & services business (where IBM is #1), nor did the $2.7 billion 3Com buy manage a dent in the network arena where Cisco rules. And as far as the $1.2 billion Palm buy goes, everyone knows what an HP ‘smartphone’ looks like, right?
Many claim that Apotheker might do to HP what Palmisano did to IBM. But the truth is – the very imagination lacks logic. HP is not IBM. When IBM chose to go the software way, it was being sucked into a black hole, with its hardware business collapsing. It was then that IBM decided to shed deadweight. HP is in not in a similar situation by light-years! It is the #1 IT company in the world (having made $114.55 billion in revenues in FY2009) and sells the largest numbers of PCs and printers in the world (claiming 37% of global market share in the printer segment; Q3, 2010). What makes Apotheker believe that HP needs a makeover? Whether he will take a dig on cloud computing is a wonder (as he has had his share of expensive failures in this regard while at SAP, burning $5 billion in 2 yrs.), but what is inevitable, is that HP under Apotheker will join the battle to capture the enterprise space from the likes of Oracle and IBM. This would call for expensive acquisitions of players like SAP, Salesforce.com, et al, which will put big question marks on the ROI figure of HP, that is already lower than the industry’s (12.36 and 15.56 respectively).
All said and done, Apotheker has never before been answerable to such a large shareholder base. So the first task for him is not managing the finances or balancing the software-hardware see-saw. It is to win favour of and retain talent at HP, who would already have headhunters knocking at their sedan doors, as King of Mindspring adds, “HP enjoys a host of experienced, senior executives leading its printer, server, storage and networking divisions, who can keep the company’s efforts on track while Apotheker learns the ropes.” Lesjak (CFO), Bradley (Personal Systems Group Head), Robinson (CTO & CSO), Perez (Head of HR), and Joshi (Head of Imaging and Printing Group) are names which should find a regular place in Apotheker’s dining plans over the new few months, if he is to imagine any chance of being around at a multifaceted monolith like HP before his debut speech is forgotten this time.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
