Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Want Enterprise Growth, HP? Think Services.

Morgan Stanley analyst Kathryn Huberty published an interesting report about the potential for growth in Hewlett-Packard’s Enterprise business today, and how the company’s priorities may shift under new CEO Léo Apotheker. She makes a few provocative observations.

First is that HP’s Enterprise segment is by itself potentially worth more than the entire company’s current market value–which is slightly south of $99 billion as I write.

Second, she sees the potential for HP’s enterprise operation to add $16 billion in incremental revenue over the next few years.

Third, Huberty sees sales of HP PCs and servers to businesses as about as good as they’re going to get. She puts it a little more diplomatically than that, saying “exposure to server and PC sales opportunities is at or near optimal levels in most accounts.”

But it’s her next point that gets my attention. Huberty says that the combined revenue opportunity for HP in storage, networking, services and software amounts to triple that in servers and PCs. She further estimates that the average corporate customer spends about $160 million on IT hardware, software and services. Of that, HP captures about 12.5 percent, but stands a good chance of boosting that to as much as 25 percent, which would put it on par with IT services giant IBM.

Doing it would require a significant shift in how HP does business, she says. “We believe HP will need to evolve its enterprise selling strategy from hardware-led to more services-led. This requires a meaningful cultural shift that could take several years, and likely face several road bumps.”

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik