HP

Big giant companies bore me normally. They tend to have more bad than good, so they rarely reach their potential. Having said that, since they are giant companies, reaching their potential doesn't usually matter because they tend to make lots of money despite themselves – at least until they go out of business.

Every company has dysfunction. Big giant companies simply have more of it, since they have more people. Of course Microsoft is the most hacked/attacked operating system, there is more of it to attack and hack than any other. Older, big companies tend to have the deepest dysfunction simply because human nature is such that people don't like change, so if they did something one way in 1975 they probably still do it the same way now. HP has been around for a long time.

In the HP Carly years, I looked at HP as the next DEC – clearly running themselves into the ground attempting to cling to the way things were instead of dealing with the realities of the way things are. The fact that people were still talking about what color Taurus they were going to get and how great it was that everyone is in a cube (really ugly 1970's looking cubes) instead of asking why the storage business went from 98% world domination in the midrange to just another marginal player or why Dell was squishing them in PCs had DEC written all over it. It's a good thing that HP tends to have 1-story buildings or people would have been tossing themselves off of them.

Then Mr. Hurd came along. I still haven't met him, but certainly have been watching him. When they first hired him I thought he was the "Bob Palmer" of HP – the guy to sell the place to the next biggest guy in line. He came from NCR. NCR? Cash registers? Aren't they in Nebraska? I was meeting one of our clients in NY, who is a hedge fund manager, when they announced Hurd was the CEO. I said "Who?" He said, "Wow, the guy is an absolute rock star." He was right.

So Mr. Hurd went about his business and in short order not only stopped the bleeding but righted the ship. He cut costs and grew at the same time – no easy feat. According to Randy Mott's presentation at their analyst day yesterday, HP is saving $2B a year in IT alone by consolidating data centers and implementing virtualized commodity hardware. $2B here or there can add up to real money. Yikes.

The server business turned around, the PC business turned upside down, the services business has been booming (although I personally think this is one area that hasn't even come close to reaching its potential and is the key area for growth in the new world order), and of course they still sell a few printers and ink cartridges. Storage, on the other hand, has been one business that has continued to perplex me.

HP StorageWorks was the undisputed king of midrange storage – and yes, it came from DEC. Tom Burniece built the business at DEC with a stellar cast that featured Richie and Ellen Larry (Richie is the guy who looks like Kramer you see at storage shows – mega genius, Ellen is the normal looking person next to him) and Mark Lewis (now an EMC mucky muck – which was a huge defection at the time), and many lesser known industry folks like all the newly rich people from Equallogic. Then, when sold to Compaq (and then HP), they added folks like Darren Thomas (Dell), Howard Elias (EMC) and more. Clariion was inside of DG and just starting to make a run at StorageWorks, but the DEC stuff ruled the world in the mid-market. When EMC bought DG it basically shelved Clariion for a year or two until Mr. Tucci took control, and StorageWorks kept on chugging, but people started leaving and engineering started getting cut, and some products started getting a bit old, and so on. When EMC decided to make a real run at the market, HP wasn't in a position to react, so Clariion ate up their share on the block side while NetApp continued to destroy any aspirations of a NAS business. Bob Shultz was able to slow the death spiral and stabilize the business, but it didn't grow. Last year Dave Roberson took the reins and growth is back on the agenda.

In the meantime, things have become a bit easier on the market attack front. Intel/Windows is the server to attach to. HP sells a few of those. Linux is the next, and yes, they sell a fair bit of those as well – on the same hardware. The world is moving to a commodity based, scale-out, low-cost, virtual infrastructure place – so who better to capitalize on that set of realities than HP? Roberson, a 547 year Hitachi Data Systems man (26, but it might as well be 547) who was running the show at HDS and definitely could have hung out there and retired, somehow got introduced to the opportunity and to Hurd, and a deal was done. I'd like to think that I would make a move like that if presented the opportunity, but I'm not sure I would. Most would probably have stayed put in a nice comfy job with big pay and a relatively easy ride (not to diminish the job or insinuate anything, but hell, after 26 years there can't be many secrets). I don't know Roberson well enough to consider him a pal, but certainly well enough to know he's one of the very few, very senior storage industry execs that has been through it all. He's not the "chase the shiny object" ADD type. He's sort of boring, really, and I mean that as a compliment. Thus it is an interesting situation all around. HP represents chaos compared to HDS – thousands of products versus three. In chaos, there is opportunity for sure, but to head into a great unknown like that is a risk I'm not sure many would take – which is probably why the job took so long to fill. Dave didn't take it for the money (I'm surmising) or for job security, so he must actually be looking for real change. Hurd is a change agent if nothing else, and HP has so many parts that are leveragable, that if they really want to do something different it has the potential to shake things up dramatically. Since I have ADD and love chasing the shiny object, I'm hopeful that we'll see some massive disruptive forces at play – but I'm also semi-realistic and don't expect to see Mr. T commercials at HP anytime soon. HP is boring. Hurd isn't a public, in your face, attention grabbing guy, and Dave isn't exactly Liberace, so if they are going to shake up the establishment, it will start behind closed doors and folks like me will have to try to piece together what's really going on and what it will mean. It would be cool if they can do it as it's pretty rare that big old companies ever reinvent themselves, but when they do, it gives us plenty of stuff to talk about.

The first sign of change hit me in the head last night. Dave now has German guys doing marketing. There are plenty of jokes and wisecracks to be made with just this line alone, and suffice it to say you should assume I made them. Having said that, I spent some time with Director of Marketing Patrick Eitenbichler last night, and had one of the most unexpected, interesting market conversations I've ever had with anybody at HP. The guy is nothing that one might expect (forget the German part, just think HP marketing) – he didn't even quote a market share number. He talked about Web 2.0. He talked about the fact that server virtualization is great, but needs to be connected into the virtual layers of the rest of the infrastructure. He talked about how people use stuff, not how fast stuff is. He talked about the market as it will be, not as it has been. It was quite surprising. And it made me think that it just might be possible for an old dog to learn a few new tricks after all.

Comments

[Stephen Foskett]

HP has always had the right stuff, it was just a case of putting it together. I sincerely hope the gallant old company can come back.

As for Patrick, I met him a few years back myself and was equally impressed. This guy knows what he is doing!

[Eitenbichler Ulrich]

As father of Patrick I feel proud to read this article and I hope things wil go on well!

------Now that is German efficiency! Cheers (Bitte?) - Steve