Split decision
With the company now less than six months away from dividing in two, Jack Gilbert reports on the one theme that loomed large over this year's HP Global Partner Conference
On the lips and mind of every HP exec, partner and journalist at this year's Global Partner Conference (GPC) in Las Vegas one word was never far from the surface: split.
In every press briefing, keynote speech, and partner breakout, HP's impending division into two companies dominated the discourse in Las Vegas, and perhaps with good reason. When it was announced in October that HP was going to separate and become a PC and printing business, HP Inc; and an enterprise tech and services company - Hewlett-Packard Enterprise, there must have been some very shocked partners. This year's conference was all about HP trying to assuage any fears the 2,000 partner delegates in attendance might have had about the upcoming schism; along with a series of reassuring speeches, a host of partner programme changes were announced which aim to ensure that HP's resellers will see a smooth transition when the great divide happens on 1 November.
"Separating HP into two companies is absolutely the right step in the great turnaround story to further build our reputation as Silicon Valley's founder"
In her main address, chief executive Meg Whitman (pictured below) declared that the split is critical for the company to move forward and continue to distance HP from some of the problems that immediately preceded her appointment.
"I can tell you with pride that HP has turned the corner. We have done much of the hard work needed to keep us at the very forefront of the industry," she said.
"Separating HP into two companies is absolutely the right step in the great turnaround story to further build our reputation as Silicon Valley's founder."
Andy Isherwood, UK managing director of HP, echoed Whitman's tone when he spoke to a group of UK partners who were attending a breakout session.
"I inherited a business that was in decline, and what we tried to do was to take a step back and think what we wanted to do with this business going forward, how do we take customers on a journey through the new style of IT... [And] over the last year we have done a pretty good job in terms of growing the business," he said.
However its next move pans out, it could be said that HP has made some wrong steps over the past few years. Following its acquisition of Autonomy in 2011 for $11.1bn (£7bn), the vendor later suffered a writedown of $8.8bn, owing to what it alleged were "serious accounting improprieties, misrepresentation and disclosure failures" at the UK software firm. The Autonomy episode - the fallout of which continues in legal proceedings and newspaper headlines on both sides of the Atlantic - marked one of the snags of the tenure of former chief executive Léo Apotheker, who was replaced by Whitman in 2011.
Step in the right direction?
But Whitman's rule has not been without issue. Last month HP's latest quarterly results showed its non-GAAP net revenue fell five per cent year on year to $26.8bn in its first quarter of FY15 - figures which it blamed on the rising strength of the US dollar. This increasing strength has also prompted HP to raise prices on some of its kit to UK and European resellers, by up to 6.5 per cent.
"We intend to hit the ground running when we launch these two companies"
Looking forward, during her address in Las Vegas, Whitman was clear that HP will not let the split hinder the business.
"We intend to hit the ground running when we launch these two companies," she said.
"I believe [the split] positions us to better meet our customers' rapidly changing needs. It affects you [the partner], and it affects our customers, but we don't have the luxury of stopping our business while we sort out the separation. We have taken a lot of steps to maintain business continuity leading up to the separation, for example today with the introduction of the Partner Navigator Programme."
The conference was indeed dominated by partner programme updates. The Partner Navigator Programme to which Whitman referred intends to provide partners with resources including support centres and access to the HP Unison Partner Portal, to help with the transition. Also unveiled was the Partner One Alliance, which will provide HP's Platinum, Gold, Silver and distribution partners with business resources and joint marketing funds to help them to sell across both HP companies come November.
Partner thoughts
Andy Dow (pictured below), marketing director at distributor Tech Data UK, attended the conference in Las Vegas and came away feeling extremely positive about the noises HP was making.
"They really openly talked about the split and its implications and what we need to be doing, and it really looks like a well-thought-through process. With the partner programme and how it's dividing, clearly a lot of work has gone into it beforehand, which is always the key to success. All the pre-work they are doing looks very reassuring," he said.
Dow added that because the two sides of HP - the Printing and Personal Systems (PPS) group and the Enterprise group - are already running relatively separately, he does not envisage there being any disruption to business.
"You have always had one account manager from PPS and one from the Enterprise group. What they are doing is formalising it and building upon it, and I don't see it having any negative affect at all."
Martin Hellawell, chief executive of Softcat, was also very confident about the transition and the way HP is handling it.
"I have absolutely no concern about the split in the long term," he said. "As a partner we have a really good relationship with HP from the PPS side and the Enterprise side, and they are pretty much two distinct relationships, so it's already as if we are dealing with two different organisations as far as we are concerned.
"I am a believer, in fact, that having two organisations that are separate makes you more nimble and more agile"
"Over the next few months we have to be a little expectant that there might be some pinch points in terms of distractions from HP, until it's finished, so we might expect to get a little less attention than we normally do, but I don't think any of this will be significant to us," he said.
"I am a believer, in fact, that having two organisations that are separate makes you more nimble and more agile, so actually I think - certainly in the medium term - HP will be better off for it, and I am quite looking forward to it."
Mixed feelings
But not all HP's partners are so sure about the decision-making abilities of HP's leadership. Another of the major focal points at the conference was the acquisition of WiFi firm Aruba Networks for $3bn earlier this month, and Mike Dowson, commercial director at HP reseller Trust Systems, was sceptical of the purchase.
"I would have bought Aerohive [Networks]. It's a product that I resell and it is better than Aruba. They just have better technology, and it's the only product that is endorsed by Apple so if you go on an Apple website, they don't sell Aruba, they sell Aerohive - and that tells me something.
"Aruba is trying to do it on price and volume rather than getting the right technology, in my view," he said.
On the whole, however, partners seem to be happy with the recent news from the HP camp. Speaking at the conference, Ian Mobberley, technology director at OCSL, says he was initially shocked when HP announced it was dividing, but went on to say that the Partner Navigator Programme and the money HP is investing in support teams should make the transition "straightforward for us".
"HP is doing a huge amount with the channel to make sure there is consistency, it's well mapped out, we know exactly the time frames and the milestones they are working towards and I don't see it being an arduous process," he said.
And it's not just partners that have been reacting positively to what HP has been doing and saying over the past few weeks. During the conference last week HP's shares saw a spike on the Nasdaq, with its share price opening at $32.40 on 16 March before climbing to $33.16 two days later.
If HP's latest Global Partner Conference was all about calming nerves ahead of the nearing divide, it seems to have done the job. Of course, the real battle for channel hearts and minds begins on 1 November. And, until then, we may have to conclude that opinion remains split.