Year In Review: The Good, The Bad And HP

As we wrap up another year of doing more with less--too often, a lot more with a lot less--it's time to look back at the highs and lows of the vendors of IT products, services, panaceas and placebos. Based on the latest quarterly earnings, HP ($32.3 billion) had a comfortable lead over Apple ($28.27 billion) and third-place IBM ($26.2 billion). Microsoft ($17.37 billion) held down fourth place, followed by Dell ($15.4 billion), Intel ($14.2 billion), Cisco ($11.3 billion), Oracle ($8.4 billion) and EMC ($4.98 billion). Depending upon whose forecast you use, the top vendors accounted for more than a third (IDC) or a fifth (Gartner) of the total IT pie this year. Here are some of the news they made in 2011.

Back in the late 1980s, just prior to Lou Gerstner taking control of a beleaguered IBM, a noted analyst said Big Blue was facing two options: shoot itself in the foot or wait until the market shot it in the head. In other words, make the painful choices before customers and competitors made them for you. Fast-forward to 2011, and a long-recovered IBM must have gotten a lot of enjoyment--and new customers--as HP appeared to get a garbled translation and tried blowing its own head off.

Trouble in paradise first came to light in June, when HP ousted two executives and gave a third a seat on its board. Out after 29 years at HP was Ann Livermore, head of HP Enterprise Services, as well as Pete Bocian, executive VP and chief administrative officer, and Randy Mott, executive VP and CIO.

Ex-SAP CEO Leo Apotheker's reign of terror as president and CEO of HP came to a close a month after he announced that the company was considering spinning off its Personal Systems Group, its PC business that accounts for almost a third of its total revenues. He was replaced by former eBay CEO Meg Whitman. In late October, she announced that HP had decided to stay in the PC business.

According to a Dell-sponsored study from IDG Research Services, 64% of current or potential HP customers with more than 500 employees were concerned by HP’s changes in business strategy and leadership. Another recent survey of 130 HP customers in the United States with at least 500 employees, by Technology Business Research, found that respondents were concerned with the direction the company was taking.

On a more positive note, this year IBM was focused on making things work better or cost less. What struck Janelle Hill, VP, business process management research, Gartner, as most significant at the kickoff to Impact 2011 was IBM's emphasis on helping business transformations, to position companies for growth and optimization of performance results with a much lower amount of emphasis on IBM technologies and product brands. "There is a significant amount of emphasis on the need for leadership and cultural change, not just technology," she says.

Microsoft tossed a curve ball in May when it pledged wider support for open source software. "Microsoft continues to work on becoming more open in how we develop solutions and work with the open source communities," wrote Sandy Gupta, general manager of the open solutions group at Microsoft in a blog post prior to his keynote address at the Open Source Business Conference (OSBC) 2011.

While Microsoft was talking about changing its spots, Dell was actually doing so. At its inaugural Dell Storage Forum in June, the company that originally started off as a storage vendor in Michael Dell's college dorm highlighted its evolution from a storage reseller--mainly EMC--to a storage OEM. Dell is becoming a technology leader, at least as far as storage goes, says Terri McClure, senior analyst, Enterprise Strategy Group.

In October, Dell and EMC ended their 10-year multibillion-dollar OEM relationship, during which Dell accounted for 8% to 9% of EMC's annual revenue, while EMC contributed approximately half of Dell's storage revenue. At the time of the split, Dell's own storage platforms grew revenue 15% year over year and represented nearly 80% of its storage revenues and more than 90% of its storage profits.

Like HP, Cisco also stumbled this year, announcing a major restructuring and reporting disappointing financial results. At the start of May, the networking giant announced it would streamline its sales, services and engineering organizations, and would focus on five areas: core routing, switching and services; collaboration; data center virtualization and cloud; video; and architectures for business transformation. A week later it announced income of $1.8 billion on net sales of $10.9 billion.

Chairman and CEO John Chambers said that the company has acknowledged its challenges: "We know what we have to do. We have a clear game plan, and we are a company with a track record of market-shaping innovation," he said in a statement.

Parting ways with Dell didn't seem to slow EMC down at all. The company made a number of announcements in 2011, including announcing a focus on big data and the cloud. Charles King, principal analyst, Pund-IT Research, was impressed by EMC's focus on partnerships, as well as with the lack of "acrimony" that seems to increasingly characterize HP, Oracle and IBM. "They really made an effort to talk about the channel and their partners," he says.

The storage giant also boosted its SMB (Iomega) portfolio, expanding from its usual 25-to-50-user segment to the 100-to-250-user range, while still clearly differentiating itself from its entry-level VNX family. EMC's previous network solution offerings have been mainly SOHO-focused, says Liz Conner, senior research analyst with IDC's storage systems and personal storage teams, but with its latest products, it is really looking to move full steam ahead into the SMB market, and bring with it enterprise features, but with the simplicity and price point more akin to personal storage.

Finally, Oracle continued to reinvent itself following its acquisition of Sun's hardware and software assets and its acquisition in July of Pillar Data Systems. Oracle President Mark Hurd, Apotheker's predecessor at HP, said we think we can run applications 10 times faster using a 10th of the storage capacity. For its last quarter, the Sun hardware business brought in $1.2 billion, and while non-Sun storage was down significantly, Sun storage and tape grew very well.

See more on this topic by subscribing to Network Computing Pro Reports Strategy: Unified Computing Stack Wars (free, registration required).