Analysts: HP Must Communicate Strategy at HP Discover, Then Execute

In Part 1 of our coverage of this week's HP Discover event, we took a look at Hewlett-Packard's difficulties during the past year, ranging from management reshuffling to layoffs and more. In Part 2, we ask analysts what the vendor should focus on this year

LAS VEGAS--While many analysts who spoke with Network Computing said the perception of Hewlett-Packard's woes is likely worse than the reality, they were quick to offer advice for HP on the eve of HP Discover 2012.

Rob Enderle, principal analyst at Enderle Group, says the company needs to showcase its advantages this week, as well as the accomplishments of HP President and CEO Meg Whitman. This could be an uphill battle, he warns. "Whitman has two recurring weaknesses: She doesn't seem to get image management or marketing, and she isn't known for creating and maintaining mutual loyalty, even though she appears to be better at it than Fiorina or Hurd were, suggesting a recurring problem tied to truly understanding politics."

If Whitman doesn't aggressively mitigate these faults, her term at HP will likely mirror that of former CEO Carly Fiorina, he says. "Her assets are a good business head, good at building consensus, and she is actually a pretty good leader," he says. "But her weaknesses cost her the election in California and are likely to cause her efforts at HP to fail if she doesn't mitigate them."

Enderle says enterprises seem to like HP's "very capable" Dave Donatelli, executive VP and general manager of enterprise servers, storage and networking for the enterprise business. "Most of the recent drama has occurred outside of that group--software is largely new; PCs and printers are mostly considered non-strategic, commodity-purchasing department products; and networking is a market expansion group mostly targeting Cisco," he explains. "The services executive transition appeared to be elegantly handled, and I haven't seen any new concerns other than it was clear that [previous CEO and President Mark] Hurd overcut that organization, which now needs rebuilding."

Overall, he says, the company hasn't done badly--although Oracle is another area of concern. "Even though IT buyers tend to like HP more than Oracle, who regularly scared the hell out of them, it is easier for them to switch hardware than to migrate off of Oracle platforms, putting HP at continued risk until they can fix that," he says.

HP's enterprise opportunity is in cloud and big data, says David Vellante, founder and consulting analyst at Wikibon. "It has a great opportunity to go to market with assets like Vertica, Autonomy and HP's core infrastructure business--servers, storage and networking," he says. "HP has a phenomenally broad portfolio, and that's appealing to customers. Its enterprise group is strong [under Donatelli], even though last quarter was not great. The 3Com acquisition got HP into the networking business, and it has a complete portfolio. But again, the turmoil inside of HP has slowed the company down."

Vellante says he'd bet that Whitman will get the company's act together, but it's going to take some time. HP will have to cut costs, which it's doing, and build up cash again to continue acquiring companies, he says. For Discover, HP has to demonstrate its greatness in the enterprise.

"Last year at Discover the company got lost on devices and the Always On messaging, which missed an opportunity. HP has to show CIOs that it has a strong vision for cloud and big data, and it has to put forth proof points," he says, adding that the company must reaffirm its commitment to its partners and its channel. But if it gets its cloud messaging together and demonstrates to the channel that it is a good partner, "HP can become the GE of tech--with a large, diversified portfolio of largely independent businesses that can live and succeed on their own."

Next: What HP Should Focus On at HP Discover?Arun Taneja, founder and consulting analyst at Taneja Group, says HP has historically been missing a few critical storage ingredients--primarily a mid- to high-end NAS product and a deduplication offering. "This meant that EMC and NetApp were moving into HP accounts, and HP couldn't do anything about it. All that has changed recently and will change even more dramatically at Discover."

A slew of storage products will be announced at Discover, and Taneja says he thinks storage has the potential to lead HP out of its hole. "Heads-down execution is what is needed," he explains. "I think on the product side they are looking quite pretty. And they have a strong leader in Donatelli. The next three months will be very telling, indeed."

The company's most recent executive shuffle (elevating senior VP of software Bill Veghte to chief operating officer and hiring George Kadifa from Silver Lake to run software) should have allowed the company to present a united front at HP Discover, says Charles King, principal analyst at Pund-IT Research. "But comments by Mike Lynch [founder and CEO of Autonomy, who was fired on Wednesday] suggesting that HP was planning to shift its focus away from software have cast something of a pall. If Lynch's comments are true, HP is heading in a direction that's effectively opposite that of all of its major competitors. If Lynch is incorrect, Whitman needs to do a superstar turn explicating HP's software strategy."

Kadifa's hiring is likely to complicate things--his experience in software pales in comparison with Veghte, who was at Microsoft for nearly two decades, says King. "Ideally, HP should be heading into Discover with a unified story and a strong, revitalized executive team. Instead, I expect they'll spend much of the week facing difficult-to-answer questions."

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