HP draws up new battle lines

It was a busy September for HP as the company announced a change in direction and the significant purchase of enterprise information management vendor Autonomy.

The changes included the suggestion that HP would move out of the PC business, and would only remain involved in services in that area. HP’s services and hardware businesses bring in roughly the same amount of revenue as its PC arm, but analyst reports have shown PC sales slowing while services grow in popularity.

HP CEO Leo Apothekeralso announced that the firm was dropping its WebOS and Touchpad tablet devices. While these changes were alarming, others seemed understandable for a firm looking to increase its appeal in a rapidly changing technology and services marketplace.

The Autonomy purchase gives HP a foot in the important enterprise data and software knowledge business, and the firms have complementary technology that should appeal to enterprises.

However, Forrester analyst Brian Hill warned that the acquisition would not be easy. “Autonomy faced some portfolio rationalisation challenges... HP will face some tough choices in determining which of its product lines will receive corporate investment over the long term,” he said.

The analyst believes that CIOs will have to choose to move from, rather than move to, an HP or Autonomy product in this area.

Internally, HP will have its eyes on the Enterprise Information Management market, which is becoming increasingly important for CIOs.

“Autonomy brings to HP higher value business solutions that will help customers manage the explosion of information,” said Apotheker when he announced the deal. “Together we plan to reinvent how both unstructured and structured data is processed, analysed, optimised, automated and protected,” the CEO added.

Forrester’s Hill confirmed this strategy. “Upon completion, the deal will bring HP strong search and analytics capabilities and a broad portfolio of e-discovery, archiving and records management tools,” he said.

With these in place does HP need to keep working on hardware? The waters around this part of the decision are murky, and firms using HP’s hardware might be concerned about their future.

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