The Autonomy Opportunity
Partners are holding their breath following HP’s (NYSE:HPQ) multiple bombshells last week -- buying software vendor Autonomy for $10 billion, looking to sell off its PC business and abandoning webOS and dumping its Touchpad tablet and smartphones. While most channel experts expect the ripple effects to travel far with these moves by HP, it is still unclear how exactly they will rock the boat within the partner community
PC Business a Bust?
The water ahead is particularly murky when it comes to a potential PC divestiture about which HP has released few details. According to Jeff Hine, channel program analyst for Enterprise Strategy Group, it partially depends on how much of the business HP will cut.
"It depends on where they decide to make the cut. Is it way down at the retail level--just the stuff in Staples and Best Buy--or does it go deeper than that?" he says. "It is hard to say right now from a channel perspective what will happen. But it would be an opportunity for resellers to reevaluate their relationships."
He believes that companies such as Dell and Lenovo may be able to pick up some market share and new partners through the market confusion that this will cast on HP. He also thinks that partners who may not necessarily depend on PCs but currently leverage their HP relationship to bundle PCs into larger server and enterprise equipment deals may see a rockier road ahead.
"To the extent that there are some folks at the low end bundling mid-range servers with large PC buys, does this impact their ability to get the adequate pricing they need to bundle those deals? Maybe it does," he says.
While the move to get rid of commoditized PCs may seem out of the blue for HP at this point, it is hardly shocking, either. According to some partners, it was only a matter of time before the company moved in this direction.
"I think HP is a little bit late with this (PC business sale)," says David Choi, owner of Technology Express, a Bothell, Wash.-based HP VAR. "IBM sold theirs a long time ago. I'm honestly surprised HP hung onto it for so long."
Taken together with the deal for Autonomy, partners should see HP's actions as yet another sign that channel partners need to think about how to position themselves in a post-hardware world, says Michael Hall, president of San Diego-based Bravura Networks, a managed service provider.
"I think it is just another sign that things are moving to a model that is not going to be as hardware dependent," he says. "From my perspective it is a little bit of a paradigm shift for technology businesses, one that we have had to deal with. I think that some people are going to be left behind but I think for other people it is a pretty big opportunity. I don't know how HP is going to develop the channel with respect to this but I would imagine that the people that are nimble will profit and others stuck in older models may go away."
While all of this harrumphing by HP about wanting to dump commoditized hardware may make sense, Hines wonders at the consistency in logic given that even after getting rid of its PC business HP will still be suckling at the teat of its other commodity business: printers.
"There's a little bit of irony there in that they're capitulating
in the commodity market and saying they're moving up and the future of our business
is software and yet this company is still a company driven by printer and
printer ink," Hine says.
Autonomy: Opportunity for Big HP Partners
The upside of the pending blockbuster acquisition of Autonomy for $10 million is a lot clearer for partners, Hine says.
"HP’s larger integrators and reseller partners can maybe consolidate some relationships, and it certainly expands HP's cloud portfolio," he says. "They've got some new offerings there that they don't have to go off and build themselves and it gives them some other interesting software pieces from that they can then translate into other types of managed services and cloud services."
According to Junab Ali, president of San Antonio-based Mobius Partners, a long-time HP partner focusing on the enterprise market, the Autonomy buy is good news.
"It is going to be really good for our business. We had decided to concentrate on HP software just over a year ago and we've seen a lot of momentum in that space, "As hardware becomes less and less of a value to customers and software and services become more valuable, these types of acquisitions are going to be very helpful for us. I would assume HP is going to invest heavily in resources to make this work."
webOS, HP Hardly Knew Ye
At the same time that enterprise services and software partners cheered for the Autonomy deal, they were left scratching their heads with the simultaneous announcement that HP would ditch its webOS hardware efforts just a year after it paid $1.2 billion to buy Palm for the well-regarded mobile platform. Some partners believe that HP started licking its battle wounds over webOS before the first salvo even started.
"After all that time and investment and they decided to call it quits after the tablet was on the market for a month? That seemed a little premature; they didn't even have all the fundamental pieces in place yet," says Julien Bassan, owner of Shiva Media, a software-maker that builds a do-it-yourself mobile development platform for non-techies." They had a really great operating system and I was really hopeful they'd be able to do something big with it."
More importantly, though, by abandoning webOS, HP is also abandoning the opportunity to offer an end-to-end cloud and mobility solution stack, Ali says.
"I'm surprised that HP made the Autonomy acquisition but then decided to drop webOS and the tablet," Ali says. "I am a bit surprised that they'd acquire something that would give them more cloud capability and then do this, because tablets tend to work with the cloud."