HP, Autonomy: Information Management, Cloud Computing, Big Data, Money

By David Roe (@druadh20) Aug 23, 2011

There has been speculation over the past five days as to the significance of HP’s announcement that it intends to buy UK-based Autonomy for US$ 10.7 billion. Questions over the wisdom of the deal are rife, but ultimately, the answer to the general question as to what it is all about was provided by HP CEO Léo Apotheker in the initial announcement.

HP’s New Business Strategy

The statement may have been short on detail — how much concrete detail can you give on a deal of this size and import? — but it did outline a medium-term strategy that will take the company out of consumer products and place it firmly in the world of information management and infrastructure.

There has also been some speculation about the wisdom of the direction HP took under the stewardship of former CEO Mark Hurd, but it is speculative, and ultimately pointless, as HP has now pinned its colors to the mast as it moves forward.

We say medium-term strategy here because the deal is not expected to close for another year at least, and then it will take a least that time again before the revenue streams that Autonomy will bring to the equation come on line.

In the announcement, Apotheker outlined what HP sees as Autonomy’s added value. It goes like this:

Autonomy brings to HP higher-value business solutions that will help customers manage the explosion of information.
Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected. Autonomy has an attractive business model, including a strong cloud-based solution set, which is aligned with HP’s efforts to improve our portfolio mix.”

There’s more, but it all boils down to: information management, cloud computing, data analytics and business opportunity.

HP, Hardware ?

Over the weekend, the British Financial Times gave Ray Lane’s take on it. Lane is non-executive chairman of HP and has the unenviable task of explaining the move to HP investors who have seen HP’s share price drop by 25% since the announcement.

The thinking behind it all, he is cited as saying, is quite simple: He says that the PC business was a drag on HP’s profit margins and it could thrive independently without it. Apotheker added that HP has to “…start running as an integrated company,” and that “… if HP did not make this move, we would be on the fringe."

So much for hardware. While it remains to be seen whether investors accept that, the move into key information management areas seems like a good bet for the future.

HP, Autonomy Together

So what is the future? IDC was quick off the mark to point out what that future is. In a commentary by Susan Feldman, Melissa Webster and Vivian Tero entitled HP to Acquire Autonomy: Bold Move Supports Leo Apotheker's Shift to Software, we get some idea of what that might be.

At the core of the deal is the realization by Autonomy and HP that the market is at a tipping point, the commentary says.

That tipping point will see a move from a legacy data-based software stack to a new IT infrastructure that can integrate both unstructured and structured data. The new technologies enable enterprises to find and create links between related data spread across different silos and present that data as a bundle.

This is particularly true with the ongoing data explosion across the information landscape. Already we have seen over recent years how IBM with its data analytics, as well as Oracle, Microsoft and EMC, have responded to that.

IDC says that the development of these technologies will, in the near future, eclipse traditional search, business intelligence and data warehousing with integrated modular information platforms.