HP Betting Big on Data Analytics, Cloud for Turnaround

HP's turnaround strategy involves the cloud and Big Data just as much as PCs.

Following a turbulent two years marked by CEO resignations and strategic confusion, Hewlett-Packard is betting heavily that the cloud and data analytics will help it restore some former luster.

The company also plans on shedding some 27,000 employees, via a combination of early retirement packages and, presumably, layoffs.

But HP’s primary strategy for righting itself involves more funds poured into research and development, including an acceleration of its cloud, security and data-analytics abilities. Executives plan to take advantage of the assets brought onboard with HP’s Autonomy and Vertica acquisitions.

“These initiatives build upon our recent organizational realignment, and will further streamline our operations, improve our processes, and remove complexity from our business,” Meg Whitman, HP’s president and CEO, wrote in a statement tethered to the layoff announcement. “While some of these actions are difficult because they involve the loss of jobs, they are necessary to improve execution and to fund the long term health of the company.”

There’s some minor irony in HP so publicly betting its future on services and cloud. Whitman’s predecessor, Leo Apotheker, faced enormous amounts of criticism for trying to remake the storied technology company into more of a business IT shop. During his brief reign, he spearheaded the $10 billion takeover of U.K.-based Autonomy, with an eye toward muscling up HP’s enterprise software portfolio.

HP needed to make some sort of B.I. play, given its rivals’ interest in the space. Oracle’s purchase of Endeca, and IBM’s recent acquisition of Vivisimo and a few other data-analytics firms, are just a few of the deals being made in the name of more robust and further-reaching B.I. platforms. But even as he announced the Autonomy deal, Apotheker also indicated that he would seriously consider selling or spinning off HP’s PC manufacturing unit—and that proved a bit too much for many both inside and outside the company.

B.I. and cloud services offer the tantalizing prospect of higher margins than hardware manufacturing. That alone won’t alleviate HP’s current woes; but those segments will definitely play a considerable role in the company’s future—provided HP can scale and develop its products in a way that succeeds with businesses.

 

Image: Digital Genetics/Shutterstock.com