The Four Big Things HP Really Needs To Turn Itself Around

Meg WhitmanHP CEO Meg Whitman

Photo: AP

Six months into Meg Whitman’s reign as Hewlett-Packard’s CEO, the jury is still out on whether she will stop its decline.She is warning that HP’s transformation could take three to five years. But HP doesn’t have years.

In its fiscal first quarter, year over year revenue declined in all of the company’s major businesses. Software was the only winner and it is one of HP’s smaller businesses. Total net income fell by 44% to $1.5 billion, and revenue fell 7 per cent to $30 billion.

Whitman and other execs have started to explain a unit-by-unit strategy for turning the company around. But they aren’t saying anything shocking, innovative, or inspiring. She is basically promising to stopping lagging behind the times.

“There are ongoing issues in each business,” Whitman said during a call with Wall Street analysts. For instance, with the personal computing group, she says, “We didn’t make the investments we should have in the past few years to stay ahead of cost expectations and trends.”

To recover, HP has to come up with winning strategies for the for big trends that are shaping the IT industry now: Big data, cloud computing, mobile, and social.

“Social is hardest for HP, other than selling infrastructure to power social companies,” says analyst Crawford Del Prete, executive vice president of IDC. “But three of the four trends they can be a big participant in.”

Big data: Going big with acquisitions.

BUT: Is HP just fashionably late ... or is the party over?

Big data weakness: Although software was HP's only shining moment in its last quarter, it's still a small business for the company.

There's plenty of competition for big data apps and services. IBM and Oracle are the most formidable.

Cloud computing: HP makes the tools for everybody else's clouds.

BUT: Its own cloud service is still in beta? Puhleese!

Cloud weakness: As far as providing its own cloud service to customers, HP is woefully behind the likes of Amazon's AWS.

'There is no doubt in my mind that they are going to try to play cloud both ways here: provide the cloud infrastructure and be a cloud service provider,' says Del Prete. 'There is brand equity associated with HP. It is a trusted brand known for high quality. Why wouldn't you try to create a cloud service like all those data centre hosting provide and at a lower cost?'

In fact, HP has exactly those plans. But it's cloud is still only in beta.

Meanwhile, IBM has rolled out a multitude of clouds. So have Oracle, Rackspace, Microsoft and many others. Enterprise cloud customers are also likely to use a company's other products and services as they build 'hybrid clouds' that lets them move data between their own private data centres and a hired cloud.

Employees told Business Insider that HP's glacial pace in cloud has caused some of its best cloud engineers to leave the company for Microsoft and other up-and-comers.

Mobile: Leave it to Microsoft.

Mobile: HP's mobile plans are all about Windows 8 devices.

It plans a Windows 8 tablet aimed at business users by year end, when the new OS becomes available.

HP insists that it will find ways to be cool with PCs and proudly points to the glass-covered utlrabook, the HP Envy 14 Spectre. It won a Best of CES award.

BUT: We still own a mobile operating system ...

Social: Not very

Social strategy: What strategy?

HP Labs is working on some interesting technologies. For instance, HP scientists created an algorithm for measuring influence on social networks and are studying how Twitter could be used in predictive ways.

HP's commercial plans for this stuff is unclear, although some of this research has found its way into HP printers. Projects include HP ePrint that lets you print, store, share documents from you phone, and HP Gloe, an experiment for finding Web content.

HP doesn't need an overhaul, it just needs a refresh.

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