HP reported their numbers, and they were somewhat par for the tech earnings course this season, meaning they missed in revenue, met guidance on profits, and were tepid in their expectations for the coming year. The Street has been all over the place on HP stock since the call, but I guess the trend is down. HP also replaced their Enterprise Group leader, which may or may not be related to the quarterly numbers—take your pick!
I said yesterday that HP needed some aggressive offense, but what the call showed me was a company playing defense and losing a couple yards every play. A little loss is better than a big one, but everyone who’s watched football knows that you can’t win games by losing only a little ground on each play. I think it’s time for HP to trot out the classic “Hail Mary” pass (if they ever get to offense), but it’s still a question of whether they know how.
HP software numbers were better than expected, and that to me suggests that HP still has enough software DNA to be able to trot out some good cloud-related tools aimed at boosting enterprise productivity and not cutting costs. Sadly, cost-cutting seems behind all the other successes they cited on the call. If you look at one of their hits, Moonshot, it’s a low-cost server underneath the skin. If you look at converged cloud, it’s OpenStack and cost-based IaaS. On the call, HP acknowledged the importance of mobility and cloud. That’s not enough; they need to differentiate in both areas, not just lay down an easy bet. If you extend their priorities along the lines of “empowermentware” as I suggested, you can get to some specific areas HP needs to address.
First, you have to link explicitly to mobility, because it’s what a mobile worker needs that creates the opportunity for a new productivity paradigm. Out in the trenches, as they say, things are totally different from the prevailing needs at the desktop. Can HP, who has failed to create a strong mobile device story, still create a mobile empowerment story? Who knows? They talked about it, but not much more.
The second critical point is that the cloud has to step out—beyond IaaS, beyond the basic precepts of OpenStack. HP did OK in software, as I said, beating expectations. Why not take some of their software and make it into an extensible platform, an added dimension to OpenStack? It would take very little for HP to create a framework to add platform and even software-as-a-service features to OpenStack, and doing that could be a differentiator for them. In addition, it’s obvious to most (even within the OpenStack community) that the Neutron approach to having almost release-based service model extensions just won’t cut it. If network virtualization is like all other virtualization—an abstraction/instantiation process—then there should be an easy path to defining new abstractions, new service models. HP should know that, and should be stepping up to address the issue.
The final point is application architecture. We have an architected application-driven model for software today in SOA, and the problem is that we achieved application goals at the expense of flexibility. We have a highly flexible model for binding components into services in the web or RESTful model, but it’s a model that makes virtually everything that should be fundamental (like security and governance) into an optional extra. We have emerging technologies that can model data and processes much more flexibly, and these models should be the foundation for the new age of empowerment, because they can handle the scale, the personalization, the diversity of resources and multiplicity of missions…you get the picture. Why is HP not leading with those technologies? We will never get the cloud totally right without them.
Competitors will eventually get this right, HP. If you want to revolutionize the IT model, look to Amazon. With razor-thin retail margins driving its planning, it’s hard to find even network applications that don’t look good by comparison. IaaS, which is a death trap for even many common carriers, can look like a rose garden to Amazon. Imagine how mobile could look? If Amazon becomes an MVNO, which many say it intends to do down the line, it could not only get a boost in TAM by leveraging all its connected devices, it could create a mobile-friendly PaaS cloud platform of its own, one that would then be a big headache for HP because it would be in place, an incumbent approach that HP would then have to batter out of the way. If HP moves now, they could still get out in front here, and that’s essential if they’re to gain full benefit from their stated goals and their own technology strengths.
But there’s a lesson for HP in EC2 as well. IaaS cloud services are a terrible business and HP shouldn’t be in them at all. Getting street creds in the cloud is one thing, but killing your margins to get them (even if you succeed) is another. Maybe that’s the final lesson for HP; you have to pick your street. Play to Wall Street and you’re as volatile as stocks are today; play to Main Street and you may have a long slog but you have a good finish. Step out, HP, and step out boldly.