Business Tech

Hewlett-Packard has scooped up a key Sun Microsystems executive, capitalizing on Sun's uncertain future due to a European Commission probe into the company's planned takeover by Oracle.

Randy Seidl

(Credit: Sun Microsystems)

HP said on Wednesday that it has appointed Randy Seidl as the senior vice president for the company's Enterprise Storage, Servers, and Networking unit. The company hired Seidl directly from Sun, where he was senior vice president of North American Regional Global Sales and Services.

In his new job, Seidl will report to Dave Donatelli, executive vice president of Enterprise Servers and Networking at HP. Donatelli himself is relatively new to HP, having joined the company in April after running EMC's storage division. Seidl at one time worked with Donatelli at EMC.

In announcing its new hire, HP made sure to remind people of Sun's tentative position.

"Customers and partners alike, especially those grappling with the uncertainty of Sun's future, need a technology partner that can eliminate barriers to business growth quickly," said Donatelli. "We anticipate that Randy's knowledge of the real business issues faced by today's CIOs, coupled with his high level of energy, passion for technology and a strong network of channel relationships, will expand HP's success."

According to Seidl's still-live executive bio at Sun, he was the vice president for financial services responsible for the growth and profitability of all Sun's offerings (systems, storage, software, services). The bio also says his sales team was the top global selling unit in 2008 and brought about strong annual growth in margins and sales from 2006 to 2008.

Oracle said in April that it would acquire Sun, the server maker and software company whose assets include the open-source MySQL database. The $7.4 billion deal has been approved by the U.S. Justice Department and by Sun's shareholders.

Sun's outlook has been cloudy since the European Commission opened an investigation into its acquisition by Oracle. As Sun continues to hemorrhage money, vendors such as HP and IBM have profited from the situation by trying to win over worried customers.

The Commission has until January 19 to make a final decision on the Oracle-Sun deal.

Hewlett-Packard is considering a reorganization that would see the company's printer unit combined with its personal computer business, according to a Wall Street Journal report Tuesday.

The plans, which are contingent on CEO Mark Hurd's final approval, would put both units under the leadership of Todd Bradley, the chief of the company's PC group, according to the report, which cited people close to the situation.

HP representatives declined to comment on the report, saying they don't comment on rumor or speculation.

The move would be an about-face for the company, which combined the printer and PC units before in 2005 when then-CEO Carly Fiorina was looking to boost the company's struggling PC business. The company's printer business was so successful that some were calling for the company to spinoff the division.

However, just five months after Hurd took over the HP helm after Fiorina's ouster by the board in 2005, he split them up again and appointed Bradley, former chief executive of PalmOne, as new leader of its personal systems group.

Last month, HP posted a 19 percent drop in profit for the third quarter of 2009, its third straight quarter of falling profit. For the quarter ended July 31, PCs accounted for $386 million in earnings, or 12 percent of HP's profits, while the printer business generated $960 million in earnings, or 30 percent of the company's profits.

This was originally posted at ZDNet's Between The Lines.

Hewlett-Packard is bullish on 2010.

CEO Mark Hurd said Thursday at a meeting with analysts that he expects the IT industry to return to growth in 2010 and went so far as to say that HP will outpace the market.

"Our broad product and services portfolio and global scale give HP a clear competitive advantage," he said in a statement. "As a result, we see tremendous opportunity to grow our business and improve earnings while delivering value to our customers."

The company provided HP's outlook for the year, with revenue expected to be between $117 billion and $118 billion, reflecting a year-over-year growth of 3 percent to 4 percent. GAAP earnings per share is expected to be $3.60 to $3.70, a year-over-year jump of 17 percent to 20 percent, and non-GAAP of $4.20 to $4.30, or 10 percent to 13 percent year over year. Here's a look at how that breaks down by segment:

(Credit: HP)

The company said it plans to improve margins, by leveraging a leaner cost structure, while continuing to invest for growth.

(Credit: HP)

In a Q&A with analysts, Hurd addressed projections for the printing division, once considered a cash cow for the company. HP sees strong growth ahead in printing and executives noted that more revenue will come from hardware than supplies. Hurd said he expects "strong, let me say it one more time, strong growth" in printing and will be aggressive about gaining market share.

"If the market is there, we'll be there to get it," he said.

HP Skyroom software

(Credit: Hewlett-Packard)

SAN FRANCISCO--Looking to take advantage of tightened corporate travel budgets, Hewlett-Packard on Tuesday showed the latest tech to come out of its labs, called Skyroom.

Unveiled together with Intel at the start of the Intel Developer Forum here, Skyroom is a real-time collaborative video conferencing and whiteboarding tool. HP CEO Mark Hurd hinted at the product when he spoke at Fortune's Brainstorm conference in July.

Skyroom allows colleagues in separate locations to make video calls and share videos, 3D applications, documents, and more in real time. Using an advanced video codec, rich applications and video are compressed and shared over a standard network, and intended to run as smoothly as if they were hosted on the user's local desktop. Cisco offers similar software with its WebEx brand.

Some of the more advanced teleconferencing software used now requires special equipment and often a specific room. Skyroom is supposed to work "more like a phone call or IM," Jeff Woods, the head of marketing for HP's workstation division said Tuesday.

At $149, and no subscription fee, it costs less than a round-trip airplane ticket from pretty much anywhere, as Woods noted. It's available immediately to both business users and consumers as a download on HP.com. But customers who buy an HP workstation notebook or desktop will get the software included for free. Commercial notebook buyers will get a 90-day free trial version.

Two years after selling his software company to Hewlett-Packard, Marc Andreessen has joined the PC giant's board of directors.

Marc Andreessen

(Credit: Ina Fried/CNET)

HP announced the appointment, effective immediately, on Thursday. In a statement, HP's chairman and CEO Mark Hurd described Andreessen as "a software pioneer whose leadership has helped shape the Internet...Marc's entrepreneurial background and industry expertise will be a welcome addition to the HP board of directors."

Andreessen and HP's relationship goes back several years, culminating with HP's purchase of Opsware for $1.6 billion in 2007. Since then, Andreessen, best known as the co-founder of Netscape, has helmed social network creation service Ning, and a new venture capital firm Andreessen-Horowitz. He also sits on the boards of eBay and Facebook.

The addition of Andreessen will bring the board up to 11 members.

With revenue down across almost all of its businesses, Hewlett-Packard posted a 19 percent drop in profit for the third quarter of 2009.

For the quarter ended July 31, HP recorded earnings of $1.6 billion, down from $2 billion the same quarter a year ago, and earnings per share of 67 cents. A year ago the company earned 80 cents per share. Excluding $568 million in one-time items related to restructuring and acquisitions, HP earned $2.2 billion or 91 cents per share.

Analysts had been expecting earnings between 82 cents and 92 cents per share, and revenue between $26.8 billion and $27.7 billion.

HP's sales for the quarter were in line with expectation at $27.5 billion, but still saw a 2 percent decline in the last year. Revenue dipped, however, in its computer, storage, financial services, software, and printing businesses. The one bright spot was its services division, whose 93 percent increase in revenue to $8.5 billion is due mostly to the company's acquisition of EDS last year. But in total, it was the third straight quarter of falling profit for HP.

Despite that, executives did not sound worried. "I'm pleased with our execution in a tough market climate," Chairman and CEO Mark Hurd said on a conference call with analysts and media Tuesday afternoon.

Hurd said HP saw better-than-expected growth in its sales in China, but the same was not true for the other major regions. "The U.S. remained stable for the second quarter in a row, but we have yet to see the same trend in Europe," he said.

Sales in the Americas were up 8 percent, while they were down 12 percent in Europe.

As the largest supplier of PCs in the world, HP is considered a bellwether for the technology industry. Analysts peppered Hurd with questions about when he sees sales to large enterprises picking up again, which would indicate a healthier overall economy. But he didn't provide the most calming outlook.

"I think what we've seen so far this year is what we'll see for the rest of the year," he said. "I'm encouraged by the stability we see in the market, but we're not ready to call it a turn."

For the next quarter, HP anticipates earnings per share of 97 cents, compared to the 84 cents per share during the same quarter a year ago. But CFO Cathy Lesjak was careful not to create any heightened expectations, saying that revenue growth would be "slightly below historical expectations." Again, Europe was fingered as the reason for the uncertainty. Lesjak said that normally there's a significant increase in sales to Europe during the fourth quarter, but that she doesn't anticipate that this year, saying any increase would be "muted."

HP's shares were down 2 percent to $43.09 in after-hours trading.

This post was updated at 3:30 p.m. PDT with information from the earnings call.

This story was updated at 3:57 p.m. PDT with information from the analyst call.

For the second quarter of 2009, Hewlett-Packard announced Tuesday its revenue and earnings all took a tumble.

HP's net earnings of $1.7 billion for the quarter was down 17 percent from $2.1 billion earned the same quarter a year ago. Quarterly revenue of $27.4 billion was down 3 percent. Earnings per share amounted to 86 cents per share, on track with what analysts had been expecting, but came out to 70 cents per share due to a $382 million (16 cents per share) after-tax charge the company took for acquisitions and restructuring that took place during the quarter.

It's the second straight quarter of declines for HP. Chief executive Mark Hurd tried to put a positive spin on the results.

"HP executed well in a tough market environment," Hurd said in a call with analysts Tuesday afternoon.

Tough was an apt description. Revenue was down in all regions with the exception of North and South America, where revenue increased 9 percent from a year ago to $12.1 billion. Revenue fell 11 percent in Europe, the Middle East, and Africa and 10 percent in the Asia Pacific region to $10.6 billion and $4.7 billion, respectively.

The main bright spot appears to be the services division, whose $8.5 billion in revenue was up 99 percent. But it's an unfair comparison since the main portion of that business is derived from the EDS acquisition, which took place in August last year.

Chief Financial Officer Cathie Lesjak noted that HP is pleased with the integration process related to EDS. Roughly half of the 25,000 positions HP pledged to eliminate after the acquisition have been removed so far, she said. An additional 6,400 jobs will be cut this year, but she did not say which departments they would come from.

All other business divisions--storage, computers, imaging and printing, software, and financial services--saw revenues drop. It's not unexpected that the economy is catching up to HP, despite the company's emphasis on strict fiscal discipline.

There were some positive signs, like some stronger demand in China and incremental improvements in the U.S. consumer market, according to Hurd. But he was hesitant to say he sees any sort of overall improvement in demand from corporate customers or a general turnaround in the economy--yet.

"You can view this as sort of 'steady as she goes,'" he told analysts. "The quarter behaved generally as we expected."

And looking ahead, he expects much of the same the rest of the year.

"Customers are telling us they are delaying (ordering PCs and servers) as long as they can," and he said he does not expect any dramatic change that will alter projected enterprise spending within the next few months.

"We need another quarter of data to make a meaningful statement about any upturn."

HP is forecasting earnings of 64 cents to 68 cents per share for the third quarter.

HP stock was down 4.9 percent in after-hours trading to $34.80.

Pouring water from a pitcher into a glass is not just about transferring liquid from one container to another--at least not to Phil McKinney.

Phil McKinney

(Credit: HP)

To the chief technology officer of Hewlett-Packard's personal systems group, it represents the challenge of doing the same with data. McKinney oversees research into the concept of "liquid media," in which data can be easily and effectively moved between different types of devices--in a way that is intelligent enough to tap the capabilities of each platform.

Known in HP as "the gadget guy," McKinney spoke with ZNet Asia on the sidelines of an HP media event on workstation technology. He discussed innovations for personal devices and why it "makes no sense" for HP to develop its own operating system.

Q: What area of your research focus is most challenging?
McKinney: The most challenging really would fall into the mobility and the economics--they are somewhat dependent on each other. If I can deliver a very compelling device that you can always carry with you and (that) gives you the most powerful PC experience--you're always connected and it's fairly simple to use--then I've hit the grand slam home run. But there are certain trade-offs you make--screen size, keyboard, input method, battery life, and connectivity.

Devices today are always some kind of a compromised device--never...perfect. I want a big screen, but it weighs too much. I want 50 hours of battery life, but I can't pick up the battery. Ultimately, it's how do you build a device that requires the user not to have to make any compromise.

Do you believe that will become a reality one day?
McKinney: The way we think about devices is...a chart, where the horizontal axis is what we call reach or mobility--size, shape, and battery life of a device. The vertical axis is richness--how rich an experience can you get, (factors such as) screen, color, video, and audio. On the upper-left corner (of the chart), you have the 50-inch LCD TV sets. On the (other extreme), you put a basic mobile phone. Now draw a line going from the TV down to the mobile phone, and there's a tradeoff between richness and reach. I'm giving up a little bit of richness (by changing) to a desktop...Then you move to the laptop and the (mini-notebook) and the smartphones. You're giving up richness for reach, and that's always a trade-off.

The ultimate objective is you want to get to the upper-right corner--ultimate reach, ultimate richness. There's got to be some fundamental breakthroughs to really make that happen. How do you get screens that can unfold, so I start out with a 3-inch screen but I can fold that out to a 30-inch so I can lay on a tabletop--those kinds of things.

Do you see current innovation for laptops as being skewed toward Netbooks?
McKinney: When we think about the mini-note or Netbook, depending on what term you want to use, we truly see it as a companion product. So it's not a situation where the mini-note is a replacement for an existing category. Prior to the mini-note's existence, people have a laptop and there's always this trade-off...(You want) higher performance and the ability to be mobile, but it's too heavy. And you couldn't afford to buy two notebooks to get you both options. But with the mini coming in, I can choose two different products solving two very different needs.

We think of the mini-note as really a step up from the smartphone--it's really that device that allows you to do things you can't do on your smartphone. For instance, I get e-mail on my phone, and certain e-mail (messages) that I read, I go "Hmm, that's going to be a long reply." So I'm going to wait till I get back to my PC to reply. Now with the mini-note, since it's small and light enough I carry with me most of the time, I can now simply crank up a reply.

There's a logical gap between the form factors, what we call "tweener" products--(such as) between a smartphone and between a laptop. There's an opportunity for lots of form factors and capabilities. These are the devices that are very user-specific--what's the function they are going to use (for or) what's their job. Are they simply (looking for) something that gives them a great browsing experience versus somebody that needs to run a number of applications.

There's a gap when you think about that dichotomy or range of form factors. The mini-notes or Netbooks are trying to be the first (to fill that gap) in their category. But we would anticipate there's going to be a whole variety of other kinds of form factors that are filling that space.

What are the chances of HP developing its own Netbook OS? There was a recent report about the company putting a customized Ubuntu version for the HP Mini 1000 Mi edition.
McKinney: (Laughs) I lost count of how many times I got asked that question.

When you think about...the amount of R&D, take for instance, Microsoft has put in over the life of the Windows operating system, there aren't many companies that can come out and fund that kind of an R&D level necessary. For HP, it's not about controlling all the pieces. It's about enabling the ecosystem...to drive innovation that matter to our customers.

In this case, we've got a phenomenal track record of working very well with (partners like) Microsoft. We delivered touch technology in the form of a TouchSmart product two years ago, and then worked with Microsoft on touch enablement for Windows 7...on the development of the capabilities and validating them. If Microsoft funds that R&D and puts those capabilities onto the base operating system, that's great, because now I'm going to refocus my touch R&D onto that user experience that sits on top of the operating system.

So, no, there's no interest in us creating our own operating system.

Nothing is compelling enough?
McKinney: Never say never, but let's put it this way. There's no interest today in developing our own operating system--it makes no sense given the amount of R&D.

Vivian Yeo of ZDNet Asia reported from Los Angeles.

Editors' note: This is a guest post.

Every time that I see an article touting how great cloud computing is, I always chuckle and think to myself, "been there, done that."

Those who remember the emergence of the Internet era as a mainstream venue (circa 1995 to 2000) may also recall a company called Loudcloud, founded by Netscape pioneer Marc Andreessen. It is my opinion that you can trace the road that led to the current cloud-computing era back to Loudcloud's founding.

It started in 1999, when four visionaries who met while at Netscape--Marc Andreessen, Ben Horwitz, Tim Howes, and In Sik Rhee--saw a pressing problem facing Web-based start-ups. If these emerging companies wanted to establish a presence on the Internet, they were forced to buy a lot of expensive hardware, diverting precious resources that they otherwise might have been able to invest in their core businesses.

Loudcloud thus started with the vision of various "clouds"--mail, database, network, application server clouds, etc.--so that any enterprise could fractionally rent out what it needed. Customers would pay based on what they rented and for how long.

The formula was an instant success in a valley full of impatient Internet start-ups waiting to show what they could do. And all that changed when the dot-com bubble burst, and the names of many of the companies that had been hosted by Loudcloud started appearing in the pages of F***edCompany.com.

Being an employee at Loudcloud at that time gave me a ringside view of the company, as we tried to aggressively reinvent ourselves toward selling the concept of managed infrastructure to the bigger enterprises when the Internet economy collapsed. However, the idea met quite a bit of resistance from companies questioning the effectiveness of security controls in a managed infrastructure environment.

This was not a valid reason then and is not the valid reason now. These enterprises resisted moving to a cloud environment out of fear that they would lose control over the data that was sacrosanct to them. Interestingly, many of these same customers were more interested in learning about the automation platform that ran our multiple data centers across Europe and North America.

In 2002, Loudcloud's founders decided that it was in the best interest of the shareholders and the company's longevity to jettison the managed-services business (fixed equipment costs played a huge part in this) and to move toward producing a data center automation software platform that would help enterprise customers run their own data centers efficiently. So they spun out a separate software company, Opsware, which Hewlett-Packard bought in 2007 for about $1.6 billion.

Other cloud-computing companies can learn a couple of valuable lessons from Loudcloud's example.

Convincing an enterprise customer to let you host its crown jewels (business data) is going to be the last thing you should attempt. Instead, focus on applications that are important to an enterprise but not in their "critical" path--as the first wave of cloud-computing adoption has shown us (such as with Salesforce.com and NetSuite).

Be prepared to adapt and adopt. Loudcloud survived--and then thrived--as Opsware because it was able to refine its message to enterprise customers when the bubble burst.

Finally, cloud-computing companies have one thing that is going for them that Loudcloud didn't have nine years ago: enterprises are now more "comfortable" with the concept of the Internet and the maturity of Web-enabled technologies, and that has made them more open and receptive to taking advantage of the flexibility, speed, and agility that cloud computing offers. So much so that the newly anointed federal chief information officer, Vivek Kundra, has embarked on a cloud-computing strategy for the federal government.

Cloud computing is getting its due these days, but let's remember that Loudcloud first proved the viability of the concept.