Sorry I couldn’t blog the last couple of days; at some points I have to travel/work on a schedule that makes blogging impossible!
This week we had HP’s earnings, and generally the Street liked what they got, which was better than they expected. I’m sorry, Wall Street, but I wasn’t satisfied. In tech, especially these days, it’s not enough to say “I’m feeling better!” like the guy on Monty Python, as you’re dragged off with the dead. You’ve got to get out of the cart, and HP isn’t getting out of the cart yet.
Some of HP’s problems can be traced to the shift from PCs to smart mobile devices. Yes, it’s true that tablets are on the upswing and PCs (obviously) are on the downturn. It’s also true that this was a completely predictable consequence of the whole mobile broadband revolution. If you give somebody a gadget they can use to get online from anywhere, and if they did little with their PCs besides get online, nature will take its course. It doesn’t matter that you can do things with PCs that you can’t do with tablets; you can do things with supercomputers you can’t do with PCs and we don’t all have supercomputers.
But we do, sort of, in the cloud. HP managed to ignore the obvious in the PC-to-tablet shift, and they then proceeded to ignore the inevitable when they didn’t ask how a newly equipped community of mobile-broadband users might change how information was used. We all shape our tasks around our tools. Having a hoe doesn’t necessarily create an itch to garden, but it does formulate how you’ll address some garden tasks. We gave users new hoes, and now they are (surprise!) hoeing. As they do, they are changing the way they work and live, and those changes are in turn shaping the design of our metaphorical hoes. Mobile/behavioral symbiosis is what I’ve been calling this.
HP did jump into the cloud, but IMHO they jumped into the “cloud revolution” as a camp follower. Once it was clear you could sell IaaS to somebody, they decided to be IaaS players. In point of fact, HP as a major provider of OS/middleware tools should have been thinking immediately about creating an extended version of OpenStack that added platform services and that created one or more application/service frameworks on which new mobile/behavioral things could have been built. Why? Because they had an inevitable loss of PC market share to face, no chance of getting on top in tablets unless they had a special kicker, and every reason to want to create that special kicker by creating a cloud upside to compensate for their PC downside.
We have learned, in IaaS, that we can do server consolidation into the cloud instead of into virtualization. That’s not earth-shaking. We have learned, in IaaS, that we can sell cloud services to social media startups to help them conserve the VC funding that they’ve obtained. That may line a few more VC pockets but it’s not going to transform the industry—nor will it transform HP. The mobile/behavioral stuff would likely do that.
This same kind of “platform service” is also how HP could become relevant in the two other spaces (besides cloud) that are dominating serious IT planning—SDN and NFV. If there is going to be application/central control of networks, it’s going to have to run as a cloud application because the meaningful applications of SDN are associated with more dynamic application-to-resource linkage than traditional IT creates. Because virtual network functions are cloud applications and have to be profitable and useful at the same time, they’ll be running on a “platform” set of tools that facilitate deployment and management to create efficiency and preserve utility. With one simple step, a step that HP could have taken easily a year ago, they could have jumped into the most relevant of all cloud/SDN/NFV players. Why? Because they, virtually alone among the vendors, have all the pieces.
I think, in fact I know, that there are people in HP who see all of this. I think that even a fair portion of HP management may see it. The problem for HP is that they’ve let themselves get to a point where exploiting the future will to a degree lose them traction in the present. They can’t jump to a mobile/behavioral vision of the cloud after all this time without having people say it’s another example of poor management decision. After all, it’s not like smartphones and tablets just came on the market! And HP has two other problems too.
Problem one is that they are inherently a channel player. Companies that have direct sales programs (like IBM) can push things through sales conduits even if they don’t market worth crap and they’ll still at least mine their base. Channel-dependent companies have to rely on their distribution partners, and few of these are strategic giants. Distribution is what companies like HP fall into during a period of industry commoditization; it’s logical to counter loss of differentiation by multiplying the chances prospects will stumble across your products. But distribution makes it hard to take control of your destiny when change is mandatory. To do that, you have to position and market.
Which is HP’s second problem. Perhaps they have not learned the art of strategic articulation. Perhaps they forgot it during their shift from a minicomputer company to a commodity PC company. Perhaps they did a little of both. The point is that you have to be able to make a compelling case for a revolutionary change, including the change in how your buyers perceive your skill set and your ability to transform their own IT applications. The Internet has given us the best direct channel to the hearts and minds of buyers that we’ve ever had, but it can expose a vacuum as much as a high level of insight. HP now has to choose, in my view. Will they risk a little now to gain a lot later, and sing a song of change that will threaten a PC business model that’s never going to be enough for them again, or will they hang on as the barrel goes over the falls?