HP’s Real Crime

Lost in the media feeding-frenzy about “pretexting” and other I-Spy shenanigans that have encircled Hewlett-Packard recently is the real question: five years after the now disgraced Carly Fiorina first proposed the acquisition of Compaq, is HP any better off now than it was before the merger battle began?

If you’ve read my musings on Sun and its missed opportunities in the software market – which I believe have doomed the company to ignominy – what I’m about to say will sound familiar. Because HP is really too much like Sun to be anything more than another minor bump in the road for IBM, and HP’s enterprise software strategy, or lack thereof, is directly to blame.

Why the comparison to IBM, and why talk about HP in an enterprise software column at all? Because IBM’s triple-threat presence in the industry – hardware, software and services – is not only helping drive competitors like HP and Sun underground. IBM’s three-fer is also a major contributor to the strategic thinking – positive and negative – in the enterprise software market. It’s hard for SAP, Oracle, and Microsoft to think about big, paradigm shifting strategies without the WWID – What Would IBM Do – factor being taken into account as well. Want to change the relationship of ERP software to the database market? WWID? How about reduce the complexity and service requirements for enterprise software? WWID again. Want to create a new market for composite applications? WWID? And so on.

In other words, everywhere the enterprise software market wants to go, IBM’s presence is felt, and its opinion is either solicited or divined. Do you think there’s a WWHPD factor? Not a chance.

Why? It’s simple: HP has no enterprise software strategy, and no services presence. There’s no strong partnerships with software companies, no strategic position in the ERP market, no leadership position in services or on-demand, no compelling reason why the demise of HP tomorrow would wreak havoc on the fortunes of the top enterprise software vendors – or even the smaller ones, for that matter.

What does HP have to show for leadership in enterprise software today? OK, so they’re on target to finalize their acquisition of Mercury Interactive, which could definitely bring them more software revenue.

But even this “blockbuster” deal doesn’t look that great, at least to me: HP’s track record with making these kind of acquisitions accretive is dismal, and I don’t see how the “new HP” means that a troubled Mercury has at last found a good home.

Instead, the HP brand is more and more associated with commodity products, like printers and laptops, that the smart money (WWID again) has left behind. And flagship products like OpenView look ripe to have their lunch eaten by open source and start-up companies, who are circling the OpenView customer base like sharks in a chum-filled pool.

It’s funny that the one big fish that got away from Fiorina, whose various speeches defending the Compaq deal are still all over the HP website, was the one that eventually cemented WWID in the industry firmament. That big fish was PriceWaterhouseCoopers, or PWC, which HP tried, and failed, to buy in 2000, and passed on a second time right before IBM acquired its 30,000 high-end consultants in 2002.

That would have been the deal. Top-end consulting, brand-name entrée into executive suites all over the world, some really smart people who could actually help figure out how to win the big deals and eke out big margins out of the hodge-podge of hardware and software the HP still sits on top of four dismal years later. Coulda, woulda, shoulda – didn’t.

So, when you read about all legal and illegal things HP’s chair Patricia Dunn allegedly did in the midst of the merger with Compaq, bear in mind that the real crime was the thing she didn’t do: shepherd HP towards a strategic role in the market worthy of this company’s sterling pedigree.

I’ll leave it to the California Attorney General to rule on whether some violation of the state criminal code has been committed. Because in my mind, the evidence that really matters regarding the activities of the HP board has been floating around for a while. And it doesn’t take hiring a private investigator to find the crime – or the smoking gun.