Hewlett-Packard squandered a chance to become a leader in software
used for automating business processes and other services over the
Internet. The failure was highlighted by HP's recent disclosure
that it plans to stop developing its middleware products, industry
analysts said.
HP said earlier this month that it planned to "retire" its
middleware line, as part of an effort to make its software group
profitable. Besides its family of Netaction software, which
includes a J2EE (Java 2 Enterprise Edition) application server, a
transaction server and developer tools, HP's middleware also
includes e-Speak, a technology that lets devices such as printers
share services over networks.
HP has sought to downplay speculation about its middleware plans,
saying it will detail its software strategy at a customer event
later this month. However, industry sources have said HP is trying
to sell off all or part of its middleware business, and rely
instead on partnerships with vendors such as BEA Systems and
Microsoft to provide the middleware for systems that it sells to
customers.
Whatever the strategy, many analysts agreed on one thing: HP blew
an opportunity to stake out a leadership role in middleware, an
increasingly important area of IT and a focus for much of the
development work around Web-based computing.
Some analysts said a partnering strategy is the right course, while
others said it raises questions about whether the new HP can
achieve its goal of being a "complete provider" of enterprise IT
solutions.
HP laid out a vision for using software to create Web-based
services at least as early as Sun Microsystems, Microsoft and IBM.
In 1999, it proudly opened the doors to HP Labs, its renowned
research division, to unveil the CoolTown concept in which
technologies such as e-Speak could be used to link people,
computers and even objects in a distributed computing model.
In 2000, HP built on its vision when it acquired Bluestone Software
for an estimated £320m, which became the company's Netaction
product line. But while Sun, Microsoft and IBM worked hard to
develop their software platforms for Web services, HP let slip its
early advantage, industry analysts said.
"They had many of the key pieces early on and didn't execute or
project a vision," said Dana Gardner, an analyst with Aberdeen
Group.
"HP has shown some real leadership in terms of ideas, but they
really have not executed," agreed Martin LaMonica, a senior analyst
at Nucleus Research.
HP's problems can be traced to the time of its Bluestone
acquisition, said Shawn Willett, of research organisation Current
Analysis. While IBM and BEA solidified commanding leads with their
application servers, HP never built on its acquisition.
The company's middleware ambitions once appeared substantial. In
November 2000, a few weeks after announcing the Bluestone deal, HP
chairman and chief executive officer Carly Fiorina took the stage
at the Comdex trade show to declare that HP would be a leader in
software for Internet-based computing.
"By adding Bluestone's XML-based Web application server and tools,
we're creating the richest development environment for the
services-based model that I'm talking about," she told the Comdex
crowd. She also highlighted e-Speak and other HP software.
Unfortunately for HP, on the day that Fiorina touted the new
software to the Comdex, the company also announced it had missed
its financial targets for the quarter.
HP soon began work turning around unprofitable areas of its
business, and apparently felt that making substantial investments
in its money-losing middleware division was not the way to go,
Willett and other analysts said.
Apart from middleware, HP has considerable strengths in software.
Its HP-UX operating system survived the merger with Compaq and is
being tuned for Intel's latest Itanium processors.
OpenView is among the most popular software for managing IT
environments, and the company said its OpenCall software for the
telecommunications industry is also profitable. The company is
developing software for the emerging "grid computing" model, and HP
Labs continues to experiment with new types of applications.
Nor will a middleware strategy based on partnerships necessarily
hurt HP or its customers, some analysts said. For customers who
favour Java, HP can offer an application server from BEA, while for
Microsoft advocates it can exploit Compaq's close ties to the
software giant to offer its .net products. HP could, potentially,
benefit from the strategy, winning customers by positioning itself
as a neutral vendor that favours neither software platform, Willett
said.
However, HP's partnership strategy may also have a downside.
"If you're hawking your hardware with someone else's software, you
lose an interesting part of the relationship with the customer,"
Aberdeen's Gardner said.
"Customers tend to choose software strategically and hardware based
on cost, performance and availability, so if you've lost that
relationship and it's your partner's software you're selling, then
your partner may have a stronger relationship with the [customer]
than you."
The partnering strategy also raises questions about the new HP's
ability to live up to its own billing as a complete provider of IT
systems for large corporations, he added.
"Part of the rationale [for the merger] was that they needed to
combine forces in order to be a full solutions provider to the
large enterprise and to compete with Sun, IBM and Microsoft,"
Gardner said. "If they are throwing their [middleware] on the
[acquisition] market, then I'm curious how they are going to become
a full solutions provider."