Monday, October 6, 2014

Finding our way …

While driving into unfamiliar surroundings, a GPS is handy – perhaps, two of them, to make navigation easier. For HP, in entering new waters, splitting in two should allow the company to better navigate in two completely different marketplaces!

This weekend it was a case of a quick drive along the Hudson River, the “river that defined America”.  As it is still fall and the leaves continue to change color, it was one of the drives we had always wanted to do and the color show didn’t disappoint. Final destination Sunday night was Montréal where we will be spending a little time on business before enjoying more of what Montréal has to offer. As you can see above, the old Montréal Port and grain processing plant look great in the autumn sunshine!

While the route up the Hudson was straight forward, finding our hotel in the center of town proved challenging. Given that we were later to find out that there were several streets with the same name, our first attempt to locate the hotel via our vehicles GPS led us to an industrial site some 15 miles from the city center. Being typical NonStop aficionados, we pulled out our backup tablet and used it’s GPS and once we shut down the stream of instructions that continued to emanate from the first GPS we threaded our way through city construction zones and found our way to the hotel.

This week, it will be CTUG that is very much on my mind. It was only a week ago that we attended MATUG, held in a hotel just outside Philadelphia, a circumstance I commented on briefly in the last post. NonStop has always been defined by its community and so there was a strong showing by HP and the vendor community with a sprinkling of customers thrown in for good measure. NonStop has always enjoyed energetic supporters, of course, but looking ahead to CTUG, I am hoping for a little larger turn-out of users.

The good news for those tracking HP NonStop developments of support for NonStop in the Intel x86 architecture is that it all looks to be going well with HP looking for even greater community participation in the Beta program.  While I can only speak on behalf of a handful of vendors who have tested their products on x86, there’s only been a few minor hiccups to report all of which were quickly addressed by NonStop development. If I were to speculate, I suspect there will be a couple of users nearing production rollout of their applications on x86 in the new year – very impressive indeed!

However, even as I was thinking about this post over the weekend, there was very little news coming from the financial and business press to highlight what has so quickly transpired over the past 48 hours or so. Yes, we are going to have two HPs now, not one. The much heralded split between consumer and enterprise customers is going to happen and we will be seeing the formation of two independently operating companies. Certainly it is going to liven up the agenda for HP Discover (Europe) that will take place in Barcelona, December 2-4, and I sure wish that I could find a way to participate.

I have kicked off a discussion on the LinkedIn group, Fools for NonStop, and if you are a member of this group you will see that comments have already started to appear. It is true that splitting the company was rumored as being on the agenda of the former CEO, Leo Apotheker, but as soon as Meg Whitman took over, she went to great pains to downplay such a move by HP. However, as this quarter’s results were published and as Whitman responded to the financial community, no matter how good the latest news appeared, HP stock took another hit.

According to a post to the site, Seeking alpha, one analyst wrote of how, “The company is going to be splitting into two divisions, putting more action into practice as it continues its restructuring and comeback under CEO Whitman.” Furthermore, said the analyst, “After the street didn't seem to like the strides the company had made last quarter, it eventually came to its senses. HPQ has dipped over the last month, however, shedding nearly 10% of its value.”  It’s a tough crowd for sure, but in the end, few other options remained for Whitman and HP after focusing on profitability and operational costs. The company is “huge”, as I noted in the LinkedIn discussion, and generally, Wall Street prefers companies tightly focused rather than the sprawling portfolio conglomerates among which HP was now counted.

The specifics? As the news officially broke this morning, it was not surprising to read in the official HP Press Release that “HP has announced its plans to separate into two new publicly traded companies: one comprising of HP's enterprise technology infrastructure, software and services businesses, to be called Hewlett-Packard Enterprise, and HP Inc., which will comprise of personal systems and printer ops; Meg Whitman will become President and CEO of Hewlett-Packard Enterprise; Dion Weisler will become President and CEO of HP Inc.; Immediately following the transaction, which is expected to be completed by the end of fiscal 2015, HP shareholders will own shares of both Hewlett-Packard Enterprise and HP Inc.”

I have always taken with a liberal number of grains of salt that there was synergy between a consumer, PC company, and a business, enterprise-system company, but I was prepared to let that slip on by for the sake of better story telling. There were so many ways to write about value that a company as big as HP provided but it was getting harder and harder to keep a straight face. Yes, the addition of support for x86 brought some synergy but anyone who has looked at the Intel roadmap for Xeon knows all too well that there’s a swag of different Xeon chips covered by the roadmap and to the naked eye, it was easy to get lost among the numerous pages that comprise the roadmap – different charts for consumers, small business and the enterprise.

Appointing Weisler as the new President and CEO of HP Inc. looks promising, as I’m always pleased to read of any Australian doing well in corporate America, but he will certainly face a challenging job – Lenovo overtook HP just recently and if Australians are just one thing, it’s that they are furiously competitive in all that they do – apart from our Kiwi brethren across the Tasman, I know of no other nation as competitively minded as Australia, including America. But there’s a whole lot more here than just freeing up the PC business to compete, as there is a real need to sew together a competitive mobile offering and even though I thought the Palm deal was a solid beginning, now I am not so sure what HP Inc. will be doing to develop a presence in this part of the market.

Across the aisle, Hewlett-Packard Enterprise lacks a couple of items – a unifying database technology (IBM, Microsoft, and Oracle all have strong database plays), a unique OS (apart from NonStop, of course), and a virtual platform. And this raises the question; should EMC spin off VMWare, should HP buy VMWare? With all that I am watching in the telco space I think a very good case could be made for such an eventuality, particularly as talks to acquire all of EMC apparently broke down a short time ago. But again, even if such a deal transpired, what of NonStop?

For the last couple of years – in my Wishes for NonStop posts to this blog, as well as within my more recent user event presentations – I have openly discussed the morphing of NonStop into something quite different to what we see today. While I have stressed that should you check all the right boxes, you will still be able to order a NonStop system, more than likely, the future will include NonStop as a set of features, services and libraries atop a next generation Linux along the lines of what HP CTO, Martin Fink, has been referencing of late as part of his vision for The Machine. I have no real evidence in support of this other than my own observations so it may prove very interesting times for NonStop development during the next couple of years.

HP does need a course correction. It does need to find its way again and perhaps a complete turnaround is required. In the HP Press Release, Whitman did say, “The decision to separate into two market-leading companies underscores our commitment to the turnaround plan. It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders. In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders.”

CTUG now beckons and I am sure that this latest news from HP will generate numerous discussions. All we need to do is figure out how to depart 
Montréal for the drive south, along the St Lawrence Seaway. I’m pretty sure I will be able to find my way to Mississauga with the help of my GPS aids, but nothing is ever certain. Like HP, hoping for renewed market interest with a turnaround that involves doing the splits, I too am hoping I can make it without any further course corrections or U-turns. Looking forward to seeing many of you shortly, at CTUG, and I am certain that with this latest announcement from HP, there will be many discussions to follow! 

2 comments:

Sue Adorjan said...

There will definitely be a lot of discussion about the split. We look forward to an exciting conference and expect record attendance.

Richard Buckle said...

CTUG as usual put on quite the show - most enjoyable. And yes, lot's of discussions followed for sure - perhaps for me the interest continues to lie in the perception among financial analysts that the HP Inc is the hardware company whereas Hewlett-Packard Enterprise is the software company ... umm?