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Cloud Native/NFV

HPE: Can the New Boss Bring Back the Magic?

Innovation will be key to HPE's future. But that will be challenging, given that the company has divested the sources for previous innovation. "Given that the vaunted HP Labs is not what it used to be, it'll be tough to turn that around," Conde says. "I bet they are going to either partner or acquire technology from outside if they can't create that internally."

HPE is not completely devoid of innovation; the company is continuing development of The Machine, an in-memory computing system first conceived 13 years ago. (HPE Cranks Up The Machine at Discover.)

Also, HPE developed the Spaceborne Computer in conjunction with NASA, a supercomputer designed to operate in the ISIS space station. (See HPE Blasting Spaceborne Supercomputer Into Space.)

Acquisitions and divestitures
As a result of one acquisition, HPE last week launched HPE InfoSight to detect data center infrastructure anomalies before they become problems. (See HPE Adding AI to Data Centers Courtesy of Nimble Storage Acquisition.)

That technology was as result of HPE's $1 billion Nimble Storage acquisition in March. (See HPE Buying Nimble Storage for $1B.)

HPE kicked off the year by acquiring Cloud Cruiser, which provides analytics and software to help vendors measure, and then bill, the cloud services, in January for an undisclosed sum. (See HPE Expands Cloud Offerings With Cloud Cruiser Acquisition.)

HPE acquired cloud consultancy Cloud Technology Partners in September; financial terms were not disclosed. (See HPE to Acquire Cloud Consulting Business.)

It acquired Niara, which provides behavioral analytics for security, for an undisclosed sum, in February. (See HPE Acquires Security Analytics Startup Niara.)

And while HPE was acquiring it was also divesting. HPE spun off its enterprise software division to merge with Micro Focus in September for $8.8 billion. (See HPE Sets Date for Software Spinoff.)

Revenue in decline
In April, it spun off its Enterprise Services business and merged it with CSC to create DXC Technology, delivering $13.5 billion in value to HPE and its stockholders. (See HPE Spins Services, Cuts Outlook.)

Long-term HPE revenues are declining, Conde noted. HPE's net revenue for continuing operations was $28.9 billion For fiscal 2017, ending October 31, representing a 5% year-on-year fall. (See HPE Enterprise Sales Sluggish in Q4.)

"People would have bet on software as a higher margin growth business, but HP never did well in that area," Conde said, citing Helion, HP's cloud platform, as an example of HPE software plays that proved problematic. HPE's acquisitions, including storage vendors Nimble and SimpliVity this year, and Aruba earlier, point the company toward hardware. "I expect this focus on hardware to continue, with software playing a supporting role," he said. (See HPE Buying Nimble Storage for $1B and HPE Buys SimpliVity for $650M in Hyperconverged Cloud Play.)

Whitman's departure was a surprise. Three months ago, when her name was bandied about for the CEO spot at Uber, she denied having any plans to leave. (See HPE's Whitman Says She's 'Not Going Anywhere'.)

But she's done this kind of thing before -- said she wasn't going to make a particular career change, and then done it, Conde notes. In a 2015 interview, she said she didn't want to become CEO of HP in 2011, after losing the California gubernatorial election. And in the same interview she said she didn't want to become CEO of eBay in 1998 either; she had been successful previously at the toy company Hasbro, where she oversaw the Playskool division, including Mr. Potato Head, and brought Teletubbies from the UK to the US.

Was Whitman a successful CEO? HPE itself says yes, noting that under her leadership, HPE generated nearly $18 billion in share repurchases and dividends, with 89% shareholder return since the company was created in 2015, more than three times the S&P 500, according to a statement announcing the leadership transition.

"Righting the wrongs of the past is a tall order," Conde says. "In that respect, she has been successful. But creating a spark to create a new invigorated HPE is something that's still in the works. It seems that she is leaving before that is complete.

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— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Follow me on Facebook Editor, Enterprise Cloud News

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kq4ym 12/8/2017 | 9:11:39 AM
Re: Cloud It will be interesting to HPE go from it's employee shedding phase to the so-called innovative phase under Neri. Whether the downsized staffing and new innovation in thinking and services will make a profitability advantage remains to be seen.
Phil_Britt 11/29/2017 | 7:20:41 PM
Re: Cloud The timing of the announcement still seems a little "off" to me, HPE doing OK, nothing has emerged about boardroom issues....Maybe Whitman needs to separate herself for a certain length of time before going to a competitor.
mhhfive 11/29/2017 | 3:12:21 PM
Re: Cloud I assume there may be a more telling book in the future about this transition. Maybe not as popular as the Steve Jobs biography, but I think someday, many people will wonder what really happened. But perhsps the true story is just too boring? (eg. HPE simply didn't perform as well as it was expected to, and innovation didn't happen fast enough...)
Mitch Wagner 11/28/2017 | 2:06:12 PM
Re: Cloud IBM seems to do pretty well selling cloud to existing IBM shops. Whether they can expand significantly to a new base remains to be seen. 
danielcawrey 11/27/2017 | 11:34:08 AM
Cloud It would seem the cloud was totally missed by this company. I feel like HPE and IBM are in similar spots where they are still trying to figure cloud out. Amazon, Microsoft and Google are clearly ahead in this space.
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