Over the last couple of weeks, having met with different Hewlett-Packard divisions and run into several old HP friends, I'm starting to get a sense of where this company is going. As the saying goes, IBM and Cisco, and maybe even Microsoft, should be afraid. Very afraid.
Part of the reason you haven't heard more about this is that, when looking at a company such as HP, most analysts and reporters focus on printers, services, PCs and storage. But the power of a firm can't lie in the performance of any single division but, rather, in the synergy of the whole company. This is what CEO Meg Whitman has been quietly working to rebuild.
HP has had a difficult decade. Several ineffective leaders have occupied the CEO's office. One tried to bleed the company to death. On a scale of 1 to 10, with 10 being most difficult, Whitman faces a turnaround effort that's at least an 11.
Commentary: How HP Can Avoid Being Dragged Down by PCs
But darned if she isn't making progress. Recent organizational changes show that Whitman's tuning her staff to favor people and industry partners she knows can execute as she prepares to take HP to war. Let's take a look at some of the more interesting initiatives - keeping in mind that the last is not only the most powerful but the most speculative.
HP Teaming With VMware to Sell SDN Systems
Given its past problems with Cisco Systems and Oracle, HP has a poor reputation for partnering. Look underneath the covers, though, and you'll see that this was largely due to those companies getting greedy. It wasn't anything HP did.
In fact, you can argue that both companies lost more than they gained when they broke up with HP. Oracle in particular seems to realize that it made a mistake, and I'm hearing that Oracle is now looking to partner with Dell. (This doesn't bode well for Oracle's Sun hardware efforts. I recall a top Oracle official saying that Sun hardware blows. That's not a term of endearment, folks.)
Well, HP has been not-so-quietly moving to take advantage of this behavior. Most recently, the group led by Bethany Mayer - senior vice president and general manager of networking, not to mention one of the shining stars in HP's executive ranks - announced a partnership with VMware, largely because VMware and Cisco had started to flip from partners to competitors.
HP is now working with VMware to differentiate both company's software defined networking offerings and create the kind of synergy that Cisco tossed away by choosing to compete with yet another partner.
HP Has Big Unified Communications Plans
HP hasn't been talking about unified communications much, and this happens to form the foundation for much of Cisco's growth strategy. Behind the scenes, I'm told, HP is working with large telecommunications companies to create a converged communications solution - think networking and telecom - that better meets both telco and user needs when it comes to this critical new frontier.
What many people don't realize is that the market is awash with aging switches that need to be replaced because they're a decade or more beyond their "best if used by" dates and because most traditional telco vendors have moved on. Cisco has positioned itself around this opportunity, but it's doing so with high-margin products, and HP plans to take Cisco out at the knees with more capable, less expensive offerings that cover both voice and data transport.
If HP executes well, Cisco may well go the way of Northern Telecom. I doubt Cisco even sees this coming.
Working With Intel, HP Taking Chrome OS To Next Level
Another major HP star is Mike Nash, vice president of product management for consumer PCs and former VP of Amazon.com's Kindle Unit. I met Nash at Microsoft, where he was a major part of the success of Windows 95. Now, he's the marketing muscle behind HP's impressive Chrome OS offerings.
In this regard, HP is taking a page from the IBM playbook. IBM helped make DOS successful. The Chrome OS needs a partner in IBM's class to similarly succeed. HP isn't as powerful as IBM, mind you, but it has partnered with Intel, which remains the most powerful chip company on the planet. This combined effort speaks to the power of HP's partnership and is paying dividends - HP's Chromebook is gaining ground as a stronger alternative to Windows and even iOS machines in markets such as government and education.
Helping this effort behind the scenes is HP's leadership position in thin clients and, with Intel, in systems management. Should Google pull a Microsoft and divorce itself from HP, as it appears to be doing with Samsung and Android, keep in mind that HP's value isn't on the client but, rather, on the cloud services and management tools.
As a result, while IBM's OS/2 effort failed, HP should be able to switch to a more generic Linux-based offering, keeping customers whole while reducing the impact of the switch to something like a regular software upgrade. It's brilliant - it pulls from both HP's and Intel's strengths, it replicates IBM's and Microsoft's early success and it anticipates a split. It's one of the most strategic moves in the industry.
Will HP Invest in 3-D Printing? Wouldn't Hurt
One thing does concern me about HP: It's not a player with 3-D printers yet. My sense is that HP isn't ready to talk about it. Plus, the wave for 3-D printers hasn't reached critical mass yet - though that's fast approaching, and an Intel-sponsored robot build-off should form the foundation of a broad hobbyist movement, much like that which created Apple and Microsoft.
HP and Intel are close partners. HP isn't tied publically to this event, driven by Intel Futurist Brian David Johnson, but if HP joins it will quickly become the most powerful partner. Sure, this is a wild card, but no printer company is more powerful than HP, and 3-D printers are set to be far more powerful than the iPod ever was. If HP catches this wave, the result would be incredibly powerful.
All told HP has several powerful strategies in the works. Any one on its own could redefine the company in the minds of customers and investors, so HP's turnaround increasingly appears all but assured. It's an impressive effort for Meg Whitman's first time as a turnaround CEO.
Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.
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