HP: We want to be software giant

With the Mercury merger finalized, Hewlett-Packard now wants businesses to place it in the same league as major software powerhouses.

Fresh from announcing a stellar full-year 2006 results, Hewlett-Packard says its eyes are now trained on a bigger prize--to become the powerhouse that businesses think of when they think software.

The IT giant reported net revenue of US$91.7 billion for its fiscal year 2006, ended Oct. 31, which is a 6 percent growth from the previous year. The company saw positive year-on-year growth across its key business units, including a 10 percent spike to US$7.8 billion for the personal systems group, a 7 percent increase to US$7.3 billion for the imaging and printing group, and 5 percent boost to US$4.1 billion for its overall services group.

Revenues from its Asia-Pacific business, including Japan, grew 6.8 percent this year to US$15.2 billion. In the fourth quarter alone, this region generated revenues worth US$4 billion for the company, contributing 16 percent of its total US$24.6 billion revenue for the quarter.

In an interview with ZDNet Asia, Tom Iannotti, HP's managing director for Asia-Pacific and Japan, said the fourth quarter results were the "first visible proof" that the company was heading in the right direction. Iannotti assumed the regional role when his predecessor Paul Chan stepped down in April this year. He is also the senior vice president of the technology solutions group for Asia-Pacific.

HP has been battling, over the last few years, to stay on top of a string of controversial issues including its much-criticized decision to acquire Compaq, its dramatic change of leadership which saw the ousting of former CEO Carly Fiorina, and more recently, the scandalous "pretexting" episode that resulted in the departure of former chairman Patricia Dunn, who is currently fighting felony charges in the United States.

The IT giant now seems ready to leave its past behind. In fact, CEO Mark Hurd had dubbed the latest financial haul to be "a definitive quarter", according to Iannotti.

But far from resting on its laurels, HP is now looking to secure a place in the software market and join the league of major players such as Microsoft and IBM, he said.

He noted that the acquisition of Mercury Interactive is a firm step the company is taking toward achieving this goal.

Iannotti said: "We want people to talk about HP as a software company [after Mercury is fully integrated]."

HP believes that software, along with services, play a strong role in enabling the IT vendor to help its customers "manage and transform" their IT environments, he said.

Iannotti said: "The HP of the future needs to be more software and services oriented. HP wants to be the best at helping our customers manage and transform, and you need great software and services to do that.

"That's why we're so excited about the Mercury acquisition," he said.

He added that, unlike the Compaq merger, there are very little overlaps between products offered by both HP and Mercury, which has its footprints in the application and quality management market--"not something you would buy from HP".

"So there isn't going to be a big rationalization plan because our products are largely complementary," he said, adding that the company will soon begin looking at finer integration details such as which product lines and resources to retain.

"I know there's going to be a meeting in Boston next February [to discuss the specifics]," he said. "Mercury is still waiting to close its final quarter (ending Dec. 31), so we don't plan to distract them just yet."

According to Iannotti, HP will also continue to ink more mergers and acquisitions, whenever necessary, to help the company achieve its ambition of becoming a software and services powerhouse.

"I don't think Mercury completes it," he said. "As we look deeper, there'll be holes and if it's strategic enough, we'll buy companies or otherwise, look at how else we can fill those holes.

"And I think there are also holes in services, where you can grow organically but it would take a long time."