Lynch mob
Mike Lynch's imbroglio with HP could have profound implications for the UK tech industry. Doug Woodburn asks how
In February this year, Mike Lynch took to the stage in Las Vegas (below) to showcase Autonomy's augmented reality technology in what was arguably the highlight of HP's Global Partner Conference.
No one in that room could have predicted that, just three months later, the man dubbed the UK's answer to Bill Gates would be given the boot over "disappointing" sales, and six months after that he would be sucked into a bitter legal wrangle with his former employer.
Last month, HP announced it had called in the US SEC and the UK's Serious Fraud Office after taking a $5bn (£3.1bn) charge relating to alleged "serious accounting improprieties" it had uncovered in Autonomy's finances prior to its £7.1bn acquisition of the firm.
And although Lynch has since hit back - painting himself as a scapegoat for HP's recent woes - commentators have argued the imbroglio could have a damaging impact both on his own fundraising efforts and the wider UK technology sector.
Tarnished case study?
Ian Spence, founder of analyst Megabuyte, said Lynch's set-to with HP could be bad news for local tech firms looking to secure funding from his $1bn Cambridge-based tech fund, Invoke Capital.
"One of the areas in which it is hardest to raise funds at the moment is [the] early stage and growth phase," he said. "There is lots of money chasing the next Facebook, but if you have developed enterprise technology, it is a lot harder. Lynch's fund was a big deal, and if that has in any way been compromised by events - regardless of whether the accusations are proved to be correct or not - you can see it having an impact on what he is trying to do."
More broadly, there are concerns the episode could land lasting collateral damage on a UK tech scene that counted Autonomy as its poster boy, said Spence.
"Autonomy is a great example of how a tech company can thrive on the London market. But if that is proved to be all smoke and mirrors, it is a tarnished case study," he said.
Richard Holway, founder of analyst TechMarketView, said HP's statements relating to how Autonomy ran its finances amount to the "biggest accusation I've ever known in the industry", including similar charges that have been levelled against Oracle in 1990 and iSoft in the middle of the last decade.
Vote of confidence
"I live by the rule that you are innocent until proven guilty," he told CRN. "I don't know if he's guilty or innocent. All I know is that Mike is a good friend and a great supporter of the UK technology industry. He has been a flagbearer for us and I hope that continues. But [this] does rather affect your day job, and no matter how bright he is, he only has 24 hours in the day and if he puts some of that time into fighting this case, that is fewer hours to spend on the things that are important.
"I hope it does not have an impact on the UK industry because if it does, all our futures will be affected."
Terry Burt, chief executive of UK-based IT services firm and HP Gold partner 2e2 (pictured, above right), said: "Naturally, I have sympathy with Mike as I come from an entrepreneurial background. I have no idea where the truth lies, but I do know Autonomy was a good company and
Mike did a great job building it up. I think the Americans love to cast Brits as villains and there is a bit of that in here."
Computacenter chief executive Mike Norris (pictured, left) claimed the outcome would have very little impact on the "real world".
"In the event that anybody is found guilty, it will lump more bureaucracy on everyone else," he said. "That is the only thing that bothers me."
HP partners call for action plan
HP claims it remains "100 per cent committed" to Autonomy but the rift only adds to the impression that the company has not yet got over the identity crisis that engulfed the reign of previous chief executive Léo Apotheker.
HP's efforts to push into software and high-end services, combined with the indecision it exhibited over its Personal Systems Group (PSG) business last year, have seen the vendor take its eye off its core hardware business, partners claim.
Kieran O'Connor, sales director at HP Gold partner Total Computer Networks, urged HP to devise a clear plan and then "get on with it".
"It seems it is playing at lots of different things and it needs to decide what it is, and just go for it. It was not clear what HP wanted from Autonomy and now the whole thing has just evaporated," O'Connor said.
"PSG has fallen behind over the past three years. It has about 100 SKUs for laptops and it all feels a little bit out of control. You don't look at PSG kit and think that's a well-built bit of kit. They need to go back to what they were good at, and become good at it again."
Burt agreed: "Looking at those [Q4] results, something needs to be done. HP has become very big and needs more focus and a degree of reinvention, in the same way that IBM was reinvented. We are beginning to see the start of that in our relationship with HP but it will need to decide if it is into software or not, and act accordingly."
Norris at Computacenter was more philosophical. "HP continues to make great products and I hope it continues to do so. That is all I care about. I care about the hardware business. Then again, I cared about IBM's PC business and since it went to Lenovo, it has been good. Whatever happens, my job is to make the most of it."