Saturday, June 05, 2010

Consolidation expected by HP chief

The technology industry faces further sweeping consolidation among makers of the hardware, software and services that underpin corporate IT systems, according to Mark Hurd, chief executive of Hewlett-Packard, the world’s largest computer maker.

His prediction comes in the wake of HP’s own recent ground-breaking acquisitions of networking equipment maker 3Com and IT services company EDS. Along with Oracle’s entry into the hardware business through its purchase of Sun Microsystems and Cisco Systems’ move into computer servers, the deals have broken down the specialisations that defined the IT landscape and thrown a group of companies that once relied on close partnerships into direct competition.

“We think this whole theory of converging of infrastructure is how the world is going to play out,” the HP boss said, indicating that this was likely to lead to a broader restructuring across the industry.

Hardware makers would need to have a presence in all categories of networking gear, servers and storage equipment, he said. “We think going forward you’re going to need to have intellectual property in all three of those categories.”

In addition, IT companies would need a strong presence in service and software. While saying that HP planned to boost its presence in software, which only accounts for 3 per cent of its revenues, Mr Hurd refused to comment on possible acquisitions.

Already the most diversified of the large technology suppliers, the changes have threatened to stretch HP, forcing it to fight on a number of fronts against many of the biggest players in its industry. Its agreement last month to acquire struggling smartphone maker Palm has now extended the list, opening a new competitive battle with companies including Microsoft, Apple and Google.

Mr Hurd said this would lead to a new era of “competition” between the big technology suppliers, making them into rivals in some markets while they maintain their traditional role as allies in others.

HP has called off a planned launch this month of a hotly anticipated tablet computer, based on Microsoft’s Windows operating system, that had been expected to represent the first serious competition to Apple’s iPad. The HP chief also expressed a negative view on the next version of Microsoft’s mobile operating system, due later this year, though he added that the two companies continued to have “a great relationship” and were “very close partners.”

HP’s business is also more broadly spread than most other large tech companies between both the consumer and corporate technology markets.

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