Software is HP's fastest growing unit
Software has turned into a multi-billion dollar business for HP, becoming its fastest-growing and most profitable unit following several acquisitions the company inked in this space over the past two years.
But HP remains coy on going big with a cloud-computing strategy, which company executives say will not be a cure-all solution for businesses.
Once a loss-making business for HP, software clocked $3bn (£2bn) in revenue and $462m in operating profit for the company's 2008 fiscal year, ended 31 October. In 2005, this business division had bled $49m in losses and generated just $1.06bn in revenue.
In fact, software has been the IT giant's fastest-growing and most profitable business over the past couple of years, Tom Hogan, senior vice president of HP's software division, said on Tuesday during his keynote at Software Universe, the company's annual conference and exhibition for customers and partners, in Vienna.
HP attributed much of this growth to the various acquisitions it made in the software space in the past three years, totalling almost $7bn, which included Opsware in 2007, Mercury Interactive in 2006 and Peregrine Systems in 2005.
Coupled with its acquisitions in the services realm, notably the mega multi-billion dollar deal with EDS earlier this year, Hogan said HP offers a strong value proposition with its ability to deliver both software and services as an integrated offering.
To this end, he revealed that HP will be rebranding its software unit as 'HP Software and Solutions' to encompass the company's services portfolio. He said HP will continue to expand its footprint in these two segments, investing $500m annually on research and development work in software and services.
Hogan added that the company, with the EDS acquisition, is well placed to play in the cloud-computing realm, but said it is choosing instead to adopt a more cautious approach.
Cloud 'not a panacea'
He revealed that the company has been "very deliberate" over the past nine months in assessing the impact of the cloud. While it believes cloud computing represents "a real paradigm shift" and that there are compelling reasons to deploy services over the cloud, HP concluded that the technology "will not be a panacea" for businesses, he said.
Ultimately, Hogan added, a multi-channel strategy for service delivery will emerge, where enterprises will choose to have their applications hosted on-site, outsourced or delivered over the web.
"Given the work that we've done in the last nine months, I think you will see HP taking a much more visible position [on a cloud strategy] in the industry in the coming months," he said.
Darryl Dickens, HP Software's head of marketing for Asia-Pacific, said: "HP hasn't been prolific in making big statements about cloud [because] we want to build something credible and not built around hype.
"If you think about the parts that play in cloud, HP [already] has a lot under the hood," he said, noting that the company's newly released Quality Center 10 software, for instance, has the ability to monitor and provide visibility of the application infrastructure and delivery process.