It had to happen. HP’s botched $A10 billion purchase of British software company Autonomy meant heads would inevitably roll. And roll they have, with chairman of the board Ray Lane, along with two other board members, stepping down late this week.
Under those circumstances, it would be completely normal for the reseller community to feel a little nervous. What, after all, is happening at the company which lost direction under former chief executive Leo Apotheker? And will board blood-letting be enough to stabilise the organisation?
CRN reached out to members of the CRN Fast 50 who do significant business with HP. And the upshot? Since new chief Meg Whitman came on board to lead the company in September 2011, things have markedly improved at the company which once defined Silicon Valley.
“HP is definitely more proactive than it was in the past,” said Jason Ganis, managing director of Smartprint Fleet Management (No.3). “Just last week they reached out to us, wanting to know how they could help us improve the business.”
Virtunet (No. 49) chief Martin Kosasih also reacted positively to the boardroom upheaval, noting the company had become a lot more supportive over the last twelve months. “We now have an assigned business partner manager who comes to visit us every fortnight and work with us,” he said.
The business partner manager program was introduced in the middle of last year, added Kosasih.
The Whitman effect
HP was the original garage start-up. In fact, the original garage, where Bill Hewlett and David Packard founded the business in 1939, still exists, and is treated as somewhat of a shrine in Silicon Valley.
During the 2000’s there were several significant events in the HP story, events which would come back to bite a company founded on hardware and technological innovation.
In 2001, the company merged with Compaq, a seemingly good move given the buoyancy in the personal computing market. As a result of this merger, HP became a market leader in personal – desktop and laptop – computers, as well as an early leader in the personal digital assistant market.
Fast forward a few years, and HP, with an early eye on the services market, bought Electronic Data Systems (EDS). This deal was quickly followed by the $2.7 billion purchase of 3Com, and then a year later, it bought PDA pioneer Palm.
Then things started to go wrong. The company, which had been laser focused, began to lose it agility because of the diverse divisions making up the company – the question was, would HP become a software and services company, like IBM (which had transformed itself in the 1990s, divesting its personal hardware division to Lenovo).
Or would HP follow the General Electric model, taking conglomerate thinking to the tech space?
As it happened, well, nothing happened. And then the leadership problems started. Chief executive Mark Hurd resigned under shady circumstances, and in 2010, Leo Apotheker, a former SAP co-chief executive, was parachuted into the hot-seat.
Apotheker’s reign was short, and ignomious. The Palm division, including its well-regarded WebOS, was shuttered and he began making plans to sell of the personal systems division. The idea was to turn HP into a services and software company. Another IBM, in other words.
His biggest - and history notes - worst decision was the $A10 billion acquisition of UK software company Autonomy, now the subject of fraud investigations.
Apotheker lasted eleven months before the board fired him and board member Meg Whitman, who had previously run eBay, was made chief executive. Whitman pulled the plug on the personal systems sale, amalgamating it with the printer division, and doubling down on the company’s relationship with the channel.
Central to the new relationship with the channel is the Partner One program, which offers streamlined rebates and removes caps on payments.
“We are implementing a simplified compensation model [for the channel],” Whitman told 2,100 partners at the company’s annual Global Partner Conference earlier this year.
The company also promised to 2,500 partners to its Enterprise Group, 500 to its Software Group, and 200 new cloud service providers.
Is HP on the way back?
In an exclusive interview with CRN last month, HP’s vice president of the company’s PC and Printing Group, Dion Weisler, admitted HP had lost its way in the past, and become, in his words, too inward focused.
Weisler said the company is actively seeking to establish fresh connections with its partners and the channel, both locally and globally.
He also confronted, head on, the perception the company was no longer innovating, a barb that must have stung an enterprise so deeply rooted in Silicon Valley’s innovation culture.
“We’ve done some amazing things,” he said, pointing to new Windows 8 tablet hardware, as well as the integration of Autonomy’s intellectual property in the company’s high end managed print solutions. Weisler also said the company was poised to capitalise on the burgeoning cloud market, and in particular virtual desktop (VDI) solutions.
“We have all the pieces in place, and are gaining traction in that market,” he told CRN.
Back to the channel
All these efforts appear to be paying off at a local level, with the boardroom blood letting being perceived as a much needed purge, allowing for the influence of fresh ideas and thinking to take hold.
Aaron Weller, managing director of Crucial Paradigm (No.20) . He welcomed the changes occurring at board level for HP, and told CRN the moves to bring in new blood would be breath of fresh air at the tech giant.
“It’s great because what is needed is fresh perspectives and new ideas,” noted Weller. “The hardware business is very commoditised, and so companies like HP, Dell and others really need to be looking very hard at new business opportunities such as cloud.”
Chris Marshall, managing director at reseller Blue Apache (no.42), also welcomed the move to bring in new faces at the board level. He said he had noticed a real change in the company that occurred around the time Meg Whitman joined, initially on the board, and then as chief executive.
“I think what we’ve seen is a lot more stability, and I think the changes we are seeing at HP are very positive,” he said. “We’re seeing an end to the tumultuous times.”
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