My take :

• HP has made the right decision but there’s work to do with the Personal Systems Group
• HP needs to sort its strategy out
• HP needs to sort its board out
• HP needs to kill WebOS
• HP needs to rediscover the thrill of innovation

For the detail….

HP has made the right decision but there’s work to do with the Personal Systems Group

HP’s decision not to offload its Personal Systems Group (PSG) comes after a review announced by Meg Whitman when she joined the company in September. The press release quotes Whitman saying:

“HP objectively evaluated the strategic, financial and operational impact of spinning off PSG. It’s clear after our analysis that keeping PSG within HP is right for customers and partners, right for shareholders, and right for employees.  HP is committed to PSG, and together we are stronger.”

At this point, I think that industry watchers and HP investors are entitled to a little bit of snark. If as a result of an objective evaluation of the strategic, financial and operational impact of spinning off PSG the conclusion is that it’s clear that keeping PSG is “right for customers and partners, right for shareholders, and right for employees” what on earth possessed the company to announce its intention to do the opposite just a couple of months ago? But I’ll get to that in a couple of bullet points.

In fairness though, Whitman has done what she promised to do when she joined HP – I wasn’t blown away by her appointment at the time, but if she carries on with this whole “doing what she said she’ll do thing” then I’m going to warm to her.

HP is making the right decision. Yes, margins are being squeezed, and the consumer business is under pressure, but PSG is a huge revenue engine for HP, and should deliver well over 2bn in earnings to HP over the year. In HP’s last quarterly announcement the company reported that PSG  revenue had declined 3% year over year with a 5.9% operating margin. Commercial Client revenue grew by 9% and Consumer Client revenue declined by 17%.

HP can, and should, improve these margins, and it can and should deliver the kind of innovation and product leadership that can drive both revenues and profitability in this business unit.

HP needs to sort its strategy out

The key to HP’s strategy woes is “Invent” – One of my favourite analysts (and a very long standing friend of mine) once jokingly remarked “It really should be HP INK-vent, rather than HP IN-vent” and as they say, many a true word is said in jest.

A look at HP’s business shows that the Services Business (which I still like to call “EDS”) and the Imaging and Printing Group are the big profit drivers. The Services Business continues to deliver contract renewals, and a good pipeline of new business – HP’s senior leadership should really focus on not interfering too much with the services business right now.

The imaging and printing group continues to show a little growth in hardware sales, but it’s the “supplies” that really deliver the margin. “Supplies” (AKA “ink”) account for 2/3rds of HP’s Imaging and Printing revenues, and the vast majority of the profits that that group brings. HP has done a stellar job of innovation in the domain of printing, and again here’s an area where HP’s senior leadership should be really trying to support this part of the business, rather than interfering with it.

PSG does need attention, however. Yes, HP should be keeping this part of the business, but now it’s made that commitment HP needs to take some of the creativity and innovation that happens in Imaging and Printing and splash it over PSG. HP should be looking to the future – which is filled with smart consumer devices of all sorts (Think Home entertainment, set-top boxes and automation) and driving the group in that direction – Remember it’s called the “Personal Systems Group” not the “PC and Laptop business”.

The enterprise servers, storage and networking business is the third biggest driver of operating earnings. This is a cruelly competitive space, and where HP needs to do the most work. HP’s two biggest competitors at the high-end in this domain are IBM and Oracle – both of whom are much more able to come to clients with a holistic story that combines servers, middleware, database infrastructure and apps. HP’s software business isn’t able to compete with Websphere or Fusion and this is something I think the company needs to address. It doesn’t have to shop for an “equivalent” stack – HP should be majoring on cloud middleware, and pushing to offer hardware, software and services to cloud providers and very large enterprises. At least that way, HP can build on an area of traditional strength in terms of its software business (systems management and automation).

It’s a shame HP couldn’t back out of the Autonomy deal, in my view it’ll represent a very expensive diversion for management, rather than a strong complimentary addition to the HP software portfolio.

HP needs to sort its board out

HP’s board needs a big, big revamp. This is the same board  that thought the dumping the PC business was a good idea two months ago, and which now – after “objectively evaluating” the idea has concluded the opposite. Major changes need to be made, or there’ll be blood on the walls at the next shareholder meeting.

Well, there’s going to be blood on the walls at the next shareholder meeting whatever happens – but all the same, the contribution of the HP board to the company’s future prosperity has seemed a little hard to identify over the past year.

HP needs to kill WebOS

It doesn’t matter how good WebOS is. It’s a dodo, kill it. And never speak its name again.

HP needs to rediscover the thrill of innovation

In the late 90’s and early part of the 2000’s, it was always a little exciting to go and visit HP’s labs. There was always something happening that would make you go “wow”.

My last visit to one of HP’s “Cooltown” labs didn’t go awfully well. We were shown a laser keyboard that didn’t work, a touch sensitive coffee-table that you couldn’t put a coffee cup on (Seriously! I kid you not! Ask Eamonn Kennedy at Ovum, he was there too!) and then the piece de resistance was “HALO” – the most fabulously expensive video conferencing solution ever invented (which HP parted with not so long ago after disappointing sales).

If I were Meg, the next thing I’d do as CEO would be to double the research and innovation budget – get the “thrill” back.

There’s no shortage of talent and creativity within the ranks of HP, it just needs a little nurturing.

Well – a lot of nurturing.

This is probably not your fault, as I posted the bad link myself.

AAAnyway – Click here to go to the right post… http://www.thinkovation.com/blog/2011/10/ginniromettyappointedibmceo/

Here’s what I think…

• Ginni Rometty has been my front runner for the job for a long time, and last year I was certain she’d get the job
• Ginni is the right person for the right time for IBM
• It’s a healthy thing that Sam is staying on as Chairman
• IBM’s rejuvenation has been built on the shoulders of many giants
• IBM’s approach to succession management is something a number of firms can learn from
• Looking forward, IBM’s future depends not just on keeping the elephants dancing, but in getting them to dance in sync
• OH.. And one final thing (that really shouldn’t need to be said)

As usual, if you’d like to read more, then click on “More”

Ginni Rometty has been my front runner for the job for a long time, and last year I was certain she’d get the job

I attended IBM’s “Think”  conference in July[Correction - the "Think" Conference was in September], which was a gathering together of 750 current and future leaders (and the odd exception like me) and I was kind of expecting the announcement to be made then as the event had the feel of being the highlight of IBM’s centennial year.

Of course you’re entitled to say “yeah – sure you’d say that now..!”  But if you ask any of my analyst colleagues, or any number of IBM execs, they’d tell you that I’ve been opting for Ginni in the “CEO Sweepstake” for a long while now. The thing that really convinced me was Ginni’s participation in the IBM Start Conference last year. If ever there was an executive at the very top of their game it’s Rometty. The start conference was one of those (rare) occasions when I took notes in a format (evernote as it happens) that means it’s actually possible to dig out what I wrote afterwards. Here’s what I wrote at the time..

GR on top form.

Emphasising business outcome over tech

“HIPPO” decision-making (Highset paid person’s opinion) giving way to fct bsed dec-making (analytics)

System-of-systems

Taking techie gorp and positioning it in business terms

Partners!

So, no, I didn’t write “Ginni Rometty is going to be IBM’s next CEO”, and it may not be entirely clear from my awful notes what it was about Rometty that made me think that – so I’ll explain.

Ginni is the right person for the right time for IBM

Ginni Rometty is a rare leader. She can combine the “Vision Thing” with the “Doing it thing”. While she can talk in a compelling and engaging way on a stage about the future, and what that means, she’s also plenty capable of getting down and dirty when it comes to sales pipelines and opportunity management (Rometty is currently running Sales globally at IBM).

So she’s the right person.

It’s also the right time, IBM has gone through two fundamental phases under Gerstner, then Palmisano. Gerstner took an organisation that was suffering from a significant degree of dysfunction and made it more agile and responsive.

In his book “Who Says Elephants Can’t Dance”, Gerstner describes the extent of the management and structural change that he brought about. But Gerstner’s legacy wasn’t a single dancing elephant, it was several (At a minimum you could identify a Software elephant, a hardware elephant and a services elephant) and they didn’t always dance that well together.

I should say (because I was firmly corrected on this point some time ago by Steve Mills) that Gerstner didn’t have to “teach” the elephants to dance – he made them dance. Palmisano’s task was to begin the process of getting these elephants to dance in sync – Because as I see it, the big belief underlying Palmisano’s strategy is the Globally Integrated Enterprise (a topic that Palmisano has evangelised a great deal during his tenure).

Whenever Palmisano talked about the GIE, I got the impression that he wasn’t just preaching some apple pie – He was making it very plain that in the future businesses will have to organise themselves in a fundamentally different way. Here’s a quote from a paper written by Palmisano in 2006 (Another “must read” that can be found here – http://www.ibm.com/ibm/governmentalprograms/samforeignaffairs.pdf )

Real innovation is about more than the simple creation and launching of new products. It is also about how services are delivered, how business processes are integrated, how companies and institutions are managed, how knowledge is transferred, how public policies are formulated

Underlying the GIE vision is a collection of pretty simple ideas –

- The globally integrated enterprise will require fundamentally different approaches to production, distribution and work-force deployment – This doesn’t just mean “labour arbitrage” it means actively finding the best place to do things (including R&D – something that US multinationals have traditionally kept largely within the borders of the USA)

- Collaboration is a key component to the future success of organisations, not just within markets, but across multiple borders and between multiple actors (including Government)

And when you look at the work the IBM has done over the past decade and a bit, you should be able to recognise these goals at the core of IBM’s strategy, and the values expressed in the idea of the GIE are what under-pin IBM’s “Smarter Planet” vision.

Indeed, I’ve been talking for a while about the “Smarter IBM” project that I believe has been underway as Palmisano and his leadership team work towards the goal of making IBM into a GII (Globally Integrated IBM). Ginni will be taking the helm at a time when a great deal of progress has been made towards that goal, but there remains a great deal to do.

The next evolution of IBM’s journey towards global integration will centre on how well IBM can continue to take its significant competencies in software, hardware, technical services and business services and present them as a joined-up, synchronised proposition to clients.

I think that Rometty was made for this job.

It’s a healthy thing that Sam is staying on as Chairman

I don’t think that Ginni has any need of a “guiding hand” or a “friend to phone”, but the combination of President, CEO and Chairman isn’t necessarily a healthy one (although in fairness Palmisano managed to juggle the potential conflicts well). While IBM traditionally expects CEO’s to retire at 60, Palmisano is a long way from being too frail to make a contribution, so I think it was a good call to retain him in the role of Chairman as part of a mature long term succession strategy.

IBM’s rejuvenation has been built on the shoulders of many giants

While Gerstner and Palmisano deserve a bucket of credit, and while Ginni Rometty’s contribution to IBM’s strategy (and the execution of it) is a matter of record there are quite a number of senior executives at IBM who deserve a share of the credit for IBM’s current position. The one I know the best is Steve Mills who has transformed IBM’s software business and is now in charge of both Software and Hardware. Steve, at 60, was “timed-out” of the running for the top job but has played a huge role in driving change within IBM.

IBM’s approach to succession management is something a number of firms can learn from…

During the two days of IBM’s Think Conference, there was a flurry of rumour (later confirmed) that HP was about to fire its CEO Leo Apotheker. I couldn’t help tweeting at the time :

@thinkovation: Ironic to be at an iBM event discussing the next 100 years of leadership while HP appears to be struggling with the next 10 days

The fact that HP’s board had to flail about to find a not entirely perfect fit for the job should be a cause of deep embarrassment in the face of other companies that manage to develop an executive team that contains several potential candidates.

Looking forward, IBM’s future depends not just on keeping the elephants dancing, but in getting them to dance in sync

So, I’m back onto dancing elephants. Sorry if the metaphor seems trite – but I think it’s fundamental to IBM’s future. So much so that I commissioned a couple of drawings from a wonderful local artist Karen Reed (http://www.karenreedart.com). So here’s the pitch. Gerstner took on an IBM that consisted of a bunch of Elephants, that were busy doing their own thing. They needed to dance though, so he culled some and organised the rest. Palmisano’s mission was to get those elephants to dance in sync. And while Sam has made excellent progress, it’ll be up to Ginni to continue the elephant wrangling

OH.. And one final thing (that really shouldn’t need to be said)

The fact that Ginni is a woman, really, really isn’t the point. Yes, it’s another milestone in our slow progress towards common sense and it’s important in that context. But IBM shareholders can rest easy knowing that if there were a better candidate for this job at this time, the board would have appointed that person.

I’ve been indulging my inner-nerd for some time, by playing with Microcontrollers. Why have I taken up such a geeky passtime? Well these things are flipping magic! For a few dollars you can build a little computer that is capable of doing stuff!

If you’re still shaking your head, then maybe this post isn’t for you, but if you have an interest in embedded development and microcontrollers do read on.

For some time now I’ve been doing “silly little projects” using Pic microcontrollers – Burglar alarms, power supplies, a couple of battery chargers (including a solar battery charger), and some radio controlled stuff.

It’s been on-and-off – it rather depends on my workload, but there’s a corner of my office that always has a breadboard with various bits hanging off it.

Then a couple of weeks ago, someone mentioned the Arduino project to me – he’d used an Ardiuno to create an awesome remote controlled BBGun. So I bought an Arduino dev board.

Then I discovered the mbed project – which uses a surprisingly powerful ARM-based processor at the heart of a surprisingly easy to use development board.

Well blow me down… there’s some very clever stuff going on, and I’m planning to get hold of an mbed board in the next couple of weeks and start playing.

My initial reaction is that the Pic microcontrollers still offer the best transition from prototyping into production, but the Arduino and the mbed platforms offer the best entry point to microcontroller development. The fact that the processor used by the mbed board is so awesomely powerful has also got me going more than a little bit.

Over the next few months I’m going to be tinkering with each of these devices, and I’ll keep you all informed.

While I know that analysts are meant to be above “snark” (ha ha) but this is a real “TOLD YOU SO!” moment for me, made all the more yummy by the fact that when I was demoed Halo by HP in 2006 I made two key comments -

• It was (and still is) horridly expensive (At $500,000 per room)
• It was utterly closed – I asked about interconnection with things like Microsoft NetMeeting, Skype and other video conferencing technologies

Neither of these comments seemed to go down well at the time, indeed my thoughts on openness actually caused a slightly patronising smirk to appear on the face of one of the executives who was briefing us.

There is an important lesson here, Tech companies have a very natural tendency to cherish the technology that they own, and this can lead to a degree of myopia when it comes to understanding how that technology will play out beyond the lab and the corporate koolaid.

It’s difficult when someone tells you that your baby is ugly (or in the case of Halo – fantastically expensive and not at all sociable), but success in the world of Tech depends as much on the products you were willing to can (or dramatically revise) as it does the ones that you run with.

All this leads me to HP’s latest “HALO” – WebOS.

Somewhat like HALO WebOS has much to recommend it – It’s a very very nifty mobile operating system, it has some open source street cred as it’s based on Linux. But it’s still going to fail in the market place.

Because the quality of your tech is only one ingredient in the souffle of success – Ecosystem, licensing, development support and “cool” are all equally important. Alas, its strength notwithstanding – WebOS has none of  these.

Alarmingly HP CEO Leo Apotheker has been quoted saying:

I happen to believe that WebOS is a uniquely outstanding operating system. It’s not correct to believe that it should only be on HP devices. There are all kinds of other people who want to make whatever kind of hardware they make and would like to connect them to the Internet.

Whoever briefed Leo (and I’m guessing he’s only ever used a Blackberry because while WebOS is very good – it’s nothing like “uniquely outstanding” when set against some of the best Android devices or the iPhone.) was being, at best, “disingenuous” in pitching WebOS that way.

My advice to HP is – “Step away from the WebOS koolaid”. Set aside any thoughts you have of WebOS taking over the world. If you think that the future of mobile operating systems lies with a Linux core (and there’s every reason to think it might well) then take that expertise and produce a kick-ass Droid variant.

As Glyn Moody says on his (excellent) blog here supporters of OpenOffice ought to be pleased – When Microsoft fires up the fud-o-matic it’s a sure sign that they are at least paying attention.

Here’s my take :

• Yes, it’s nice that Microsoft is paying attention
• But it’s not the point – as I’ve said time and time again the traditional “(Microsoft) Office Suite” is dying
• The OpenOffice guys have to confront the reality that they’re NEVER going to build a better “Microsoft Office” than Microsoft Office

Yes it’s nice that Microsoft is paying attention

Microsoft need’s a hug. The company is plainly going through the grieving process for Office… This (if you subscribe to the
Kübler-Ross model that describes the five stages of grief) shows the company in its transition between Anger and Bargaining.

It began with Denial – “OpenOffice is no threat to us at all, our monopoly is safe”.

Then Anger – “OpenOffice breaches a ton of our patents”

And now, with the remnants of some of that anger, Microsoft is entering the bargaining phase – trying to manage the discorse.

Depression will set in at about the time when Microsoft realises that no-one is using Word any more, and that they’ve not gone to OpenOffice (at least not in its current incarnation) but they’re just not using “word processors” any more.

The longer they take to get to “Acceptance” the better it will be for choice and freedom, because the moment Microsoft figures out that it has to completely rethink it’s entire MS-Office strategy the company will get right behind the next era of productivity tools and will borrow, buy, and innovate (yes – contrary to popular myth Microsoft really, really can innovate when it’s motivated to) it’s way to what could very well turn out to be a shockingly good next-gen office productivity suite.

The OpenOffice guys have to confront the reality that they’re NEVER going to build a better “Microsoft Office” than Microsoft Office

Imitation is the greatest validation. If OpenOffice continues to chase Microsoft Office the outcome is inevitable – Microsoft Office will do all the innovating while OO does the chasing, and while the likes of Google, Prezi (awesome new approach to presentations) get on with defining the future, the OO community will still be a slave to Microsoft Office envy and the world will simply have changed.

In the meantime, if you care about Open Office look at the comments on this ArsTechnica article – I don’t know if the comments are all written by Microsoft stooges but I was surprised at the lack of shouting in the comments – Lots of criticisms of OO that I’m afraid to say I’ve heard from real end-users myself.

But it’s not the point – as I’ve said time and time again the traditional “(Microsoft) Office Suite” is dying

I feel a bit like a mad old-testament prophet when I go on about this – but I really believe this – The era of the bloaty fat-client, narrow-band internet, office productivity suite is ending. In the interests of not repeating myself here’s why I think that

Yesterday Oracle and IBM hosted an analyst call to announce that they’ve agreed to collaborate on the future development of the OpenJDK for java, In addition the two companies stated that they will continue to work together to enhance the JCP.

As usual, here’s the compressed version:

• This is good news
• It’s positive to see Oracle willing to collaborate with IBM
• Oracle still has to address some serious concerns surrounding the JCP
• Java ME is dead, the future of Java on mobile devices is Java SE

This is good news

This is good for Java, and the Java community. IBM has committed to take the work it’s done on the Apache Harmony project and put this into the OpenJDK effort which represents (as Bob Sutor explains in his typically excellent blog posting on the topic) a “reverse forking” that will make OpenJDK a focal point for innovation.

Let’s face it – Oracle (with its acquisition of BEA and Sun) now has two of the top three contributors to the Java platform. IBM is undoubtedly in that group (at the very least IBM deserves credit as the number two, after Sun and before BEA) the combination of Oracle and IBM on this project is genuinely compelling.

It’s positive to see Oracle willing to collaborate with IBM

It’s also positive to see Oracle showing willingness to collaborate with IBM in this domain. Oracle is over-prone to trash talk when it comes to its number 1 competitor in the domains of databases and middleware, so the company deserves credit for being prepared to play nicely on the OpenJDK.

Oracle still has to address some serious concerns surrounding the JCP

Let’s be clear though, this announcement does nothing to address the real concerns that the java community has over the JCP. When asked during the briefing, Oracle made some positive comments about changes to the JCP – but went to pains to make it clear that we shouldn’t expect every one of the community’s demands to be met.

Oracle has to take some really meaningful steps to liberalise the JCP. Indeed, Oracle was one of the leading critics of Sun’s approach to the JCP, and as far back as 2007 (Well 2007 does seem like a long long time ago!) Oracle and BEA jointly promoted a resolution to open up the JCP :

Resolution 1 (proposed by Oracle, seconded by BEA)

“It is the sense of the Executive Committee that the JCP become an open independent vendor-neutral Standards Organization where all members participate on a level playing field with the following characteristics:

• members fund development and management expenses
• a legal entity with by-laws, governing body, membership, etc.
• a new, simplified IPR Policy that permits the broadest number of implementations
• stringent compatibility requirements
• dedicated to promoting the Java programming model

Furthermore, the EC shall put a plan in place to make such transition as soon as practical with minimal disruption to the Java Community.”

(See the original here)

I believe that Sun’s unwillingness to open up the JCP while it was in charge limited the growth of the Java platform and stunted innovation. This may seem a little “bold” given the success of Java – but I think it’s true.

The problem with liberalising the JCP, of course, is “Licensing Revenues” – and I can’t help thinking that Oracle was moderately excited about the Licensing opportunities it had acquired – Especially in the domain of mobile Java.

I think Oracle needs to prepare itself for disappointment on that front.

Java ME is dead, the future of Java on mobile devices is Java SE

No, really. In fact, Java ME was always rubbish. Now that mobile devices have the computing power and UI characteristics that they do, it’s absurd to attempt to limit Java innovation and deployment by restricting these devices to the weedy and compatibility-challenged ME… It’s time to let go, and support SE on mobile devices.