by Rob Enderle

How IBM Beat Up HP in Las Vegas

News Analysis
Jun 14, 20135 mins
CRM SystemsEnterprise ArchitectureHigh-Performance Computing

IBM and Hewlett-Packard recently held events in Las Vegas. IBM went first and demonstrated how its customers will use Watson to change the world. HP responded by bringing executives on stage to talk about new products. HP can't let its competition keep winning.

IBM’s Edge event hit Hewlett-Packard in Las Vegas with a one-two punch before the executives at HP Discover even got started. These were more than the traditional shots pitting IBM solutions against HP products, and HP likely won’t know how hard Big Blue hit it until its reps talk to IT folks who attended both events.

EMC and Dell joined IBM in hosting events prior to HP. Each presented a similar story, one driven by marketing, showcasing financial customer benefits and largely playing down products, particularly hardware. But IBM’s timing and approach appeared particularly well-planned, much like a campaigning politician who anticipates a mistake an opponent had repeatedly made. This is pertinent—HP CEO Meg Whitman has a political background—but such skills were not evident in Las Vegas.

It Pays to Go First in a Debate

In any debate, there are advantages to going both first and second. Go first and you can set a high bar. Go second and you enjoy the advantage of foresight; if you’re talented and focused enough, you can tear your opponent apart. Technology companies rarely execute quickly enough to reap the benefits of going second. Steve Jobs was able to respond to a Microsoft statement in near real-time, but he was the exception to the rule.

It’s generally better to go first, then, because you can set the tone and make whomever goes second look stupid. This happened in Las Vegas. IBM said that pitching products was stupid, suggesting that companies are interested in solutions that meet their needs, and then HP announced a ton of new products.

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In addition, IBM engaged industry analysts, while HP didn’t invite many, giving the impression that HP doesn’t think analysts are important and forcing them to get secondhand news. Had HP invited the analysts and monitored IBM Edge, it could have better responded to what IBM did and positioned its offerings in a similar fashion. Instead, IBM trumped HP through its use of customer testimonials.

IBM’s Tactical, Strategic One-Two Punch

Rather than have CEO Ginny Rometty outline IBM’s progress and bring product managers on stage to pitch products, IBM divided the first two days of keynotes into tactical and strategic discussion.

The tactical conversation included a number of customers who spoke about how IBM helped them, more than any other vendor, exceed their expectations. Often these folks were CEOs. In each case, IBM, the third party and the customer sourced numbers supported IBM’s claims that Big Blue could save IT managers money. IBM ended the first day highlighting how it uses the same technology to improve its own bottom line, with cost savings measured in billions of dollars. Eating your own dog food is particularly powerful, as it shows how the company values its own offerings. This hasn’t always been the case at IBM.

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The conversations about strategic initiatives, meanwhile, focused on the idea of taking IBM Watson to the next level.

  • For example, the Chief Medical Officer from WellPoint argues that, using Watson technology, he can save thousands of cancer patients, potentially including members of the IBM Edge audience, and halt the trend of medical costs doubling every five years in the United States.
  • A cybersecurity presentation then demonstrated how Watson could be used to analyze government security threats in real-time and mitigate those threats through a variety of physical and cyber responses from IBM and third parties. This, essentially, is applied artificial intelligence.
  • Finally, Pew Charitable Trusts showed how Watson, coupled with other IBM technologies, could reduce state and national election fraud and increase both the number of eligible voters and the ease with which they voted.

Each Watson use case has significant global implications that could improve quality of life and prevent a variety of significant problems.

Meanwhile, HP Discovers It’s Overmatched

HP was overmatched because it didn’t see IBM’s move for what it was and accordingly adjust its event to appear competitive. This is the second time this year I’ve seen HP choose to ignore what IBM said to an influential audience and, as a result, appear out of step. Marketing, not individual product groups or the office of the CEO, drove the message at IBM Edge. IBM came to Las Vegas to do battle, while HP came to give executives face time. This was like bringing a knife to a gun fight.

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HP was simply overmatched—but even if the company stepped up, it’s not clear HP is ready to play at this level. IBM’s turnaround has been more than a decade in the making. HP is only two years into a five- to seven-year process, one which former CEO Mark Hurd crippled by killing R&D projects such as the HP Smartwatch and arriving late to the 3-D printing market. IBM isn’t positioned to counter either move, but HP can’t capitalize.

HP has nothing that compares to Watson. Yes, HP’s Project Moonshot is currently unmatched, but it’s not on the same level as Watson, which IBM has cleverly positioned as a product that’s poised to save the world.

Big Blue easily beat HP in Las Vegas, and HP needs to discover how to make sure this doesn’t happen again. After all, if you aren’t going to play to win, why bother to play?

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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