Waiting for HP’s Other Shoe to Drop

Last week, at the HP Summit 2011 in San Francisco, the tech industry waited with bated breath for HP CEO Leo Apotheker’s first presentation as CEO. Surely, the theory went, he would make a startling pronouncement describing a twist in the company’s strategy — say, a greater focus on developing its own integrated software stack, as opposed to its current strategy of relying on partners.

But no. Instead, Apotheker focused on cloud computing, Internet-connected hardware, and a plan to embed webOS in PCs, printers, tablets and smartphones, along with plans to develop certain new applications such as business analytics and security.

All of which is fine, but the market can’t seem to get out of its head that some kind of dramatic announcement from HP is forthcoming. Following Apotheker’s lead in focusing on cloud computing, it has settled on a dramatic acquisition in this space. Salesforce.com, for example.

A Stick Right in Ellison’s Eye

“A Salesforce.com acquisition would certainly be intriguing for HP,” Charles King, principal of Pund-IT, told the E-Commerce Times. “Salesforce.com has a good many assets that would be of value for HP. It could certainly bolster HP’s software strategy and serve as the basis for any new cloud offerings.”

Salesforce.com would also support HP’s weak spot, which has been its own software development.

Plus, said King, a Salesforce.com acquisition would be a real stick in the eye to Oracle’s Larry Ellison, who has been publicly lambasting HP for some time, most recently over its ouster of former CEO Mark Hurd — whom Ellison promptly hired.

Finally, a Salesforce.com acquisition would satisfy the market’s demand for some kind of dramatic gesture from HP, which it didn’t receive last week, King said.

A Hardware Play

There are other areas where HP could make a splash, King continued. Over the past year, it has acquired 3Par and Vertica, deals that King considered underwhelming. With those two firms in house, HP is unlikely to feel it has to make additional acquisitions in the storage or data acquisition space, “but it will need to prove quickly why those deals were smart, either through new offerings or partnerships that further enhance the acquisitions.”

Another way HP might wow the market would be through some kind of organic development with its integrated software stack. “That is something that HP has tended to rely on partners to deliver,” King said, “but it if it is to move effectively against its competitors, it will need to come up with a strategy in this area.”

More Reactive Than Proactive

HP’s stance may be more reactive than proactive — it may be waiting, in short, to see what its competitors will do, suggested N. Venkatraman, a business professor at Boston University.

“I expect to see more cloud players to be in play as IBM, Microsoft, Google, Oracle, SAP, Dell and HP jockey to build out in this space,” he told the E-Commerce Times. As such, “acquisitions will be an integral part of HP bolstering its market position.”

Right now, HP’s software acquisitions are tied to the concept of HP as the cloud platform and are focused on management, reporting and ecosystem, Rob Enderle of the Enderle Group told the E-Commerce Times. “So far, it is avoiding business applications and appear to prefer to partner to get there.”

That could change if any of these companies were to be acquired by Oracle, IBM or some other competitor, but in the near term, that appears to be unlikely, observed Enderle.

The bottom line, he said, is that “buying this class of company remains remote for now.”