IBM's Palmisano: HP 'used to be inventive'

IBM's Palmisano: HP 'used to be inventive'

Summary: IBM CEO Sam Palmisano knocked Big Blue's primary rival---Hewlett-Packard---as well as Mark Hurd, who is now taking aim at the company at Oracle.

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IBM CEO Sam Palmisano knocked Big Blue's primary rival---Hewlett-Packard---as well as Mark Hurd, who is now taking aim at the company at Oracle.

In a Wall Street Journal interview, Palmisano said:

"H-P used to be a very inventive company. Hurd cut out all the research and development."

The R&D remark refers to HP $2.4 billion purchase of 3Par. Palmisano argued that the 3Par acquisition means HP hasn't invested in R&D. He also noted that HP botched the Hurd departure. Meanwhile, Palmisano gave Oracle props and said Larry Ellison & Co. will become IBM's biggest rival.

The Journal story appeared to be a tease to a much longer Palmisano interview to come later. Palmisano doesn't talk much, but when he does it's worth a listen.

Now let's examine the motives here.

  • IBM has been touting its R&D and smarter planet initiative as its trump card against HP. Palmisano is just relaying what Big Blue reps often say---that HP is losing its innovation edge and can't hang on R&D.
  • Palmisano noting that Oracle is IBM's biggest threat is interesting. In the war of perception, IBM is minimizing HP to focus on a rival that's down in the standings. The subliminal message is that HP is cooked.
  • At a time where HP is in flux, it only makes sense for Palmisano and IBM to play a little offense. Palmisano is looking to put some doubt in the minds of HP customers. It's a playbook that worked nicely when Sun was in the process of being acquired by Sun. To that end, IBM last week announced that it would offer lease terms and credit for used gear if Oracle and HP customers dumped servers for Big Blue's Power Systems.
  • The more fear, uncertainty and doubt Palmisano can plant about HP the more customers IBM can poach. By the way, Palmisano said he's not retiring any time soon---another comment designed to make IBM look like the picture of stability as HP hunts for a new leader.

Related: Palmisano outlines IBM's 2015 roadmap; Earnings to double; Consumerization mocked

Topics: Hewlett-Packard, Enterprise Software, IBM

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16 comments
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  • ... used to be inventive...

    HP was a great company that was driven into the ground by Mark Hurd. He was brought to HP for the sole purpose of cutting people. The fact that HP is no longer inventive is simply because the best and brightest people, who also happened to be the most expensive, were let go as a cost cutting measure. It was a quick and easy way to save money and enhance the bottom line, but it has hurt the company in the long run.
    MikeBlane
    • Hurd may cut the workforce(s)

      @MikeBlane <br><br>but he gives new hopes to mistresses worldwide.<br><br>Let's keep things in perspective.
      klumper
  • RE: IBM's Palmisano: HP 'used to be inventive'

    "It?s a playbook that worked nicely when Sun was in the process of being acquired by Sun. " Is this from the Department of Redundancy Department? You must have meant Sun being acquired by Oracle
    EdKett
  • RE: IBM's Palmisano: HP 'used to be inventive'

    Yeah, but Carly started it all. HP BC used to be inventive. Then she arrived.
    artful@...
  • My HP experience

    I quit HP because Mark Hurd and I won?t ever buy HP products, I feel sorry for Oracle people having this kInd of CEO?s. Becoming a CEO theses day it?s so easy you just have to cut people.
    Jaime69
    • Hurd @ Oracle

      @Jaime69

      Given Hurd's track record, would you care to lay odds on how long it will take Hurd to demoralize, and possibly decimate Oracle???

      Me, I give it 3 years tops!
      fatman65535
  • RE: IBM's Palmisano: HP 'used to be inventive'

    Are we all becoming spin-doctors, while our civilization disappears? What happened to making contributions?
    arwalker@...
  • IBM and glass houses

    IBM should not be throwing stones. Their Business Software is a collection of old acquired technologies resulting huge complexity which of course keeps their consultants busy..... They do not innovate they cynically buy customers and revenues which keeps the stock market happy - but for how long? Around the corner is the step change in Business Software Technology that grealy simplifies application build 5 times quicker, 5 times cheaper, agile software where core code never changes - even Bill Gates sees as the future. IBM will be left with a massive legacy write off - it is just a question of when.
    David Chassels
  • RE: IBM's Palmisano: HP 'used to be inventive'

    So what are we to make of IBM's XIV purchase a couple years ago. Seems very similar to HP's 3Par purchase to me. IBM just like HP couldn't compete technology wise with the EMC's and Hitachi's of the world, so they bought small inovative companies
    Turd Furgeson
  • RE: IBM's Palmisano: HP 'used to be inventive'

    HP is acquiring this and that now. Isn't it the ONLY way giants innovate these days, including the Big Blue?<br><br><a href="http://learnbysoft.blogspot.com/" target="_blank" rel="nofollow">http://learnbysoft.blogspot.com/</a>
    joan lim
  • HP used to mean "Quality"

    Back when they focused mostly on test equipment. Then they launched into (personal) computers, and started cutting corners.
    The test equipment section got renamed to Agilent, to distance itself from the debacle. HP computers, rather than be inventive, bought out Compaq (and got Digital as a result).
    Funny thing about quality: if you don't grow it in-house, but try to buy it from others, it withers.
    alan_r_cam
    • The rise and fall of "Growth By Acquisition"

      @alan_r_cam@...

      "Funny thing about quality: if you don't grow it in-house, but try to buy it from others, it withers"

      Well said!

      This is how one can howitzer your share price, which is fine if have the sense to get out at the top of the trajectory.

      First, identify best-of-breed vendors in the segment into which you want to buy. You'll pay a premium, because they work so well, and they work so well, because they contain excellent and well-motivated minds.

      Announce the aquisition, watch your stock price go up... and start the timer on the stock's sell-by date.

      Next, "integrate" the new acquisition; merge staff and branding, impose your standard business practices. Even if this doesn't demotivate or drive out the great minds you paid the premium for, you'll be losing some of the uniqueness that made the original company worth buying.

      Eventually, you'd end up with Symnatec "grey goo".
      cquirke1
  • RE: IBM's Palmisano: HP 'used to be inventive'

    HP does a lot of R&D. But I can't think of the last time when HP had a significant invention. Both IBM & HP each have their strengths. IBM is able to compete on many levels. So this makes them a much more agile competitor. HP is a very product centric company, but they have rely to much on PC's and servers.

    As for Oracle their management is much too top down. So this will make it very difficult as they become more of enterprise company.
    randall.shimizu@...
  • RE: IBM's Palmisano: HP 'used to be inventive'

    There are several points to make...
    1) IBM has been averaging $6.1B per year over the last 3 years in R&D. By comparison, HP has been averaging $3.1B and Oracle/Sun has average $2.8 over roughly the same time(income statements with different dates). Dell has averaged $600M.

    2) a good portion of the mid-range market has been disappearing over the last 10 years...with some going to the x86 arena and some going to consolidation(read larger servers). For Sun and HP, this will impact their bottom line more than IBM or Dell.
    Since the margin for a midrange server is higher than the margin in an x86 box.

    Both Dell and HP have ceded their server hardware R&D to Intel and AMD. This will make things more challenging for them to respond to what IBM and Oracle have coming in the high end server market, as IBM has already announced a new generation of mainframes and Power systems. Both IBM and Oracle have also announced updates to their flagship UNIX OS's and IBM always updates their mainframe OS, yearly.

    The real questions on R&D is not how much you spend, but what you spend it on and how much return you get from it and where you are positioning yourself if you DON'T spend any money.
    Personally I don't think HP is well positioned to compete over the next decade. Anyone who thinks that HP can rest on their laurels... really needs to take a look at what happened to Sun over the last decade. Back in 2000, Sun was #1 in server revenue with 33%... now they are #4 with 8%.
    scotth_z
  • IBM has P*H*U*C*K*E*D up too!!

    Do you peeps remember when IBM bought Lotus 123 and totally screwed that ip?? What about when they purchased Samna Ami word processor which was waaaay BETTER than MS Word at the time?
    And don't get me started on their desktop PC "f-ups." They made excellent ThinkPads and sold em off to the Chinese. Oh, the BIGGEST screw up of all time was dropping the ball on OS/2 Warp. Remember that folks?? People were craving for an alternative to Windows and OS/2 was vastly SUPERIOR.
    IBM brain trust don't know Jack Squat about MARKETING. They got killed in the desktop revolution and had to retrench to their safe "big iron" environment, which, I must admit, earns them a ton of cash. But Microsoft ate their lunch for almost 20 YEARS making more MILLIONAIRES than any company in the history of the business world. John Akers got played by Bill Gates. Lou Gerstner came from Gillette and brought in the profits but IBM lost some key strengths since they had a large PC production capacity. WHY did they not port Lotus 123 and Lotus Ami Pro to Linux to fight Microsoft?
    So, if I were Palmisano, I'd shut the phuck up before historians publicize even more his company's complicity in World War 2 selling hardware to the Nazis (see: http://bit.ly/bu7txR ).

    At least HP came out with the iPaq, DeskJet, and owned the market in laser printers. I'll give DB2 props though, but WHAT has IBM done for the SME marketplace? Nada!! Their prices are too EXPENSIVE! Hence why Microsoft's SQL Server (7, 2005, 2008) has made major inroads. So, Sam, put a lid on the IBM trash! Your company is lucky to have braindead Fortune 500 CIOs buying your OVERPRICED wares.

    - Max "The IT Pro"
    http://MaxTheITpro.com
    maxtheitpro
  • RE: IBM's Palmisano: HP 'used to be inventive'

    HP used to be innovative until Carly Fiorino was in charge. Under her leadership, they started making garbage, and now she wants to become a US Senator?!?!?!
    Roc Riz