Hewlett-Packard's analyst meeting on Tuesday will feature significant questions beyond the most obvious one revolving around Mark Hurd's replacement. Analysts will specifically be looking for HP's take on the converging enterprise market and how the company will play ball in analytics, integrated systems, data warehousing, mobile and cloud computing.
The questions for HP's management team will be inherited by the company's new CEO, who is likely to be an internal candidate like Todd Bradley. Analysts want to know how the moving parts of HP will fit together in an integrated hardware, software and services approach. Stifel Nicolaus & Company analyst Aaron Rakers sums up the data warehousing issue:
With a focus on HP’s Converged Infrastructure strategy and the M&A activity going on in enterprise hardware/software, we expect HP’s competitive positioning and desire to remain a consolidator to be of much investor interest. Does HP have all of the assets it needs to compete longer-term; what about automated/dynamic data mgmt (software), data warehousing, etc.? Cisco’s ramping UCS (~1,700 customers; ~80% of customers using in existing data centers) and Oracle’s Exadata, and new Exalogic are increasingly competitive focal points, in our opinion.
Given the recent acquisition activity, what pieces of the converged/cloud strategy (or rather the evolution of the next-generation data center) does HP lack? We are particularly interested in data/resource management and data warehousing (post IBM/Netezza, EMC/Greenplum, and Oracle’s Exadata push) as areas of potential focus.
Those questions are definitely worth asking in the case of HP. IBM last week bought Netezza to highlight the point. Analytics isn't a mature market just yet, but the question looms. HP has the services to sell analytics, but lacks the business intelligence portfolio and integrated analytics boxes.
Among other key issues:
What is the cloud strategy? Wells Fargo Jason Maynard said:
The recent spate of enterprise centric acquisitions further reinforces our point that HP has been late to adapt their strategy to the rapidly transforming and consolidating datacenter market. We are concerned that if they don’t successfully pivot and lock down their existing market share they are at risk of slower growth and margin deterioration. The pace of data center change is happening even faster than we had contemplated, and in our view time is not HP's friend.
Does HP need to be in the PC business? Barclays Capital analyst Ben Reitzes said in a research note:
HP believes it should be in the PC business. The company believes it helps the printer business while also providing scale and relationships that can be leveraged in the server business. In the past, HP has said the PC and printer businesses could not be separated from HP given the global brand across divisions, shared facilities and synergies around shared components. Well, now that tablets are clearly hurting notebook sales, it may be time for HP to dust off its rationale for being in this business once again.
Enterprise margins. Analysts across the board expect HP to be upbeat on servers, storage and networking. HP is likely to raise revenue growth for the enterprise hardware business.
What is the mobile strategy? At HP's printer powwow last week, executives talked more about Apple's iOS than the Palm WebOS, which the company owns. And then HP added a detachable Android tablet to its high-end consumer printer. Maynard wants to hear more about HP's mobile plans:
HP clearly has both challenges and opportunities given its incumbent PC market share and recent acquisition of Palm. We would like to hear more about how HP plans to position its webOS especially considering its Microsoft relationship and the synergy between smart phones and tablets. It is not entirely obvious to us how HP prioritizes its own native webOS tablet versus its machines that will run Windows 7. Can HP gain enough share against Apple iOS and Google’s Android when it is supporting two very different mobility strategies? Would they consider licensing webOS to other hardware manufacturers in order to expand the market opportunity and built a critical mass of application developers? Will they re-consider the smart phone market? The overall thread here is that with the momentum around Apple iOS and Google Android and the incumbency of Microsoft it is hard for us to imagine how HP breaks through and gains any material share in the category of sub $700 mobile internet devices.
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