HP Software: Investors should be thankful for servers and printers.
Posted on March 22, 2008
As we did with our look at the IBM Software Group, Research 2.0 analyzed the HP software business and published an detailed report (available at our website) looking at the business. Unfortunately for HP it paints a fairly grim picture.
Because HP has acquired and combined so many different pieces of software it’s not surprising that family may lack a coherence (think HP, Digital, Compaq, Tandem.) Between 30% and 50% of all existing HP software revenue has been acquired in the last 3 to 5 years. On of the latest, Mercury Interactive, was itself already the product of a few acquisitions.
At over $100B in annual revenues the $2.3B of software reported by HP is unlikely to get much attention from top management. As it stands the HP software product family is loosely concentrated around IT lifecycle management (ITLM) with products like OpenView and the Mercury offerings at the core.
Reading through the full report only makes one thing clear: HP Software Group is a substantial mishmash that lacks even the semblance of a strategy from other hardware manufacturers like IBM and EMC.
Fortunately for HP investors the company is doing well in servers, personal computers and the printer business. The risk may be that as the HP software business continues to lag overall growth management may again go out and look for a billion or two of revenue to bring in house.
If they keep to their circumstantial heritage of ITLM we would expect them to step up to a Symantec, CA or BMC size acquisition to really rock the boat. Otherwise they may nibble at smaller deals in places like storage management to add a few more bits to the mash.
– Kris Tuttle
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