Whitman defends HP: Dings Surface, Cisco, pledges innovation

HP CEO Meg Whitman on Wednesday moved to allay fears of enterprise technology buyers, ensure the company will be around for the long-haul, stick with the services business, develop groundbreaking hardware and invest in innovation.

In other words, Whitman had a tough to-do list and had to counter some FUD laid by Cisco CEO John Chambers on Tuesday. "I want to instill in you confidence that HP will be here for the long term and that we will lead," said Whitman.

The CIOs at Gartner Symposium have a lot invested in HP. HP's troubles become tech leader headaches.

And Whitman had a tough set-up. Before the keynote there were a bevy of questions from Gartner Symposium attendees via video. The questions revolved around a potential HP breakup, health of the PC business and whether it can compete. In other words, Whitman had one helluva sell job ahead.

Whitman said she had to figure out what HP did well and that's engineering and a commitment to quality products. "It's hard to kill founder DNA," she said. Overall, Whitman said HP is a solutions company that's broader than just hardware or software. "We invented that idea of converged infrastructure," she said.

She was asked about Chambers and his take that HP faces long odds. "In certain areas we compete and we aim to win," said Whitman, referring to networking. "Don't bet against us. I'd rather have my hand than John's hand right now. We are the No. 1 networking company in China."

That China dig is notable given Cisco and Huawei are duking it out.

Here are the key points from Whitman on HP's priorities and my take on whether she was convincing:

• On whether hardware is being commoditized, Whitman said the "demand for compute power is not going down. It's going up." HP needs to have the best engineered hardware and stay ahead of the innovation curve. "Look at our new ARM-based server, which will be delivered next year. This will be revolutionary to the server business," she said.

My take: HP does need a Moonshot so to speak. An ARM server could be disruptive. Overall, HP seems behind in the server race---especially when using the latest Intel processors.

• "Next year is going to be a fix and rebuild year," said Whitman. "I want to build this for the long term."

My take: It will take a few years to believe in HP.

• Whitman said she spent 9 months understanding the services business and that it will be on the right path. Gartner has told clients that customers should aim to renegotiate and get ahead of contract changes designed to boost HP margins. "Take another look at HP services," said Whitman. "There are trouble accounts---all services businesses have them. We will not leave anyone hanging. We will have an adult conversation." The translation here is that HP signed some deals that aren't profitable and needs to get out of them.

My take: This services rebuilding effort will take time. HP is No. 2 in services, but isn't high on the food chain. Customers and HP will have to renegotiate terms and that won't be fun.

• Regarding 2014---the year HP is supposed to be on the right path and showing financial returns---Whitman said the company has to deliver better results. "I want to set this company up," she said. HP will invest in R&D, move the back office to the cloud and build momentum. "I think we're going to be fine in 2014."

My take: Whitman was convincing, but a payoff two years from now won't allay current concerns.

• Security is a big focus for HP and could ultimately be its software secret sauce. HP talked TippingPoint, enterprise security and building in protection into infrastructure.

My take: Whitman was convincing and has good security assets. The story needs to be refined.

• Whitman talked information optimization---HP's take on big data. Here Whitman highlighted unstructured data, talked the importance of chief marketing officers and customer information and real-time analytics. "Autonomy does this better than anyone else," she said. Whitman said marketing chiefs matter, but HP "will also work through the CIO." "As CEO, I don't want everybody buying technology. I want to control that. If someone is buying technology I want it in the context of the CIO office," she said.

My take: Whitman sounds old school regarding the centralization and CIO riff. At least, she didn't run off with IBM's CMO pitch.

• "We're ahead on cloud," said Whitman, referring to 2,000 public cloud beta customers and a bevy of private cloud efforts. Whitman said HP has centralized its cloud on one architecture.

My take: HP can talk cloud, but it'll take time.

• On unconventional competitors, HP said there are whole set of new logos. We have to look beyond the normal competitors.

My take: That would be a non-answer.

• Best acquisition for HP was 3Par (and plugs for others). The worst: "There have been challenging acquisitions," said Whitman not naming names. "You'll have to remember I ran for Governor of California."

My take: Cheeky non-answer.

• "We're reinventing this company to win for the next 75 years," she said. HP needs more R&D, go-to-market strategies and a lot of change. "It's risky, but doing nothing is a bad strategy," she said.

My take: Whitman's long-term focus is nice to hear.

• Biggest challenge HP faces is to articulate what the strategy for the company is and what role they play.

My take: There's also a strategy messaging issue outside the company.

• On smartphones, Whitman said:

We have a tremendous set of personal devices. We have to go from the workstation to desktops to laptops to the hybrid devices and ultimately if we do a smartphone we'll decide what OS we use. We won't have a smartphone in 2013, but will beyond that. If we are in the personal compute business the smartphone is the primary device in many parts of the world. The mobile move will require pacing and sequencing.

My take: Whitman is absolutely correct. It needs to be a mobile player.

• On tablets, Whitman said that it will focus on hybrids that are enterprise grade. She also said that HP's wares will compete well with the Surface, "which doesn't function like a laptop." "It lacks a keyboard you can do real work on," said Whitman. She added that HP's hybrids will be enterprise friendly as the Surface is more consumer focused.

My take: HP has a point. Ultimately, HP will be judged on its enterprise tablet sales.

• HP is staying in the PC business, said Whitman. PCs are in the company's history. There are supply chain synergies.

My take: Whitman had to talk PC stability. After all, HP still has to sell PCs.

Bottom line: Whitman served up a good deal of detail and was very credible. What's unclear is whether she'll have the time to set HP up for decades to come.