Where to from here?
It’s no secret HP is having a terrible time at the moment. They are in the middle of a very expensive, very distracting, very time consuming split into two new companies, HP Inc and Hewlett Packard Enterprise. Will two separate companies make any difference to HP? They just reported their worst revenue since 2007. They are spending as much of this declining revenue on Capex as stock buy-backs to prop up the share price. This means they are spending even less money to be able to create future money.
All big IT companies have been transitioning themselves away from tin sellers to service companies, well HP Enterprise Services has been told to find another $2 billion in savings in 3 years. That’s because in the last quarter they had a 16% drop in turnover. Are they going to continue to cut costs so drastically that there isn’t anything left to build on? They just can’t seem to compete with the cloud.
Storage which is one of the shining product portfolios has seen its revenues head down by 8.4%. Luckily for them they are still not doing as badly as NetApp but that’s only very very slight consolation. Storage buying is changing, it’s moving to converged, hyper-converged and cloud. Storage is becoming more of a server thing so I wonder how HP is going to show its figures when external storage and internal storage just become two options delivery mechanisms for the same thing.
HP still make very very good enterprise hardware, reliable servers, fast storage but this matters less and less when workloads are moving to the cloud. EMC just bought Virtustream for $1.2B to further build out its Hybrid Cloud offering. HP has made similar investment and a lot of noise about its HP Helion public OpenStack based cloud but this doesn’t seem to be translating into sales or a strategy that enterprises can buy into for the long run.
HP says it is not competing against AWS, in my opinion that’s just admiting you are not in the cloud business. You may as well change your company name to HP Legacy.
Lots of uncertainly about HP, can they turn this sentiment around?
Back to HP Discover, HP has the world watching, what are they going to say?
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