Can HP innovate?

If everyone buys cloud services, what will happen to the hardware makers? The reality of cloud computing is finally sinking in – at least for HP, which unveiled its “hybrid” cloud strategy this week.

According to IDC’s latest market share data:

HP continues to hold the top spot for the 12th consecutive quarter in EMEA, supported by strong traction of ProLiant systems on the market. It grew overall server revenue by 16.2% year on year in EMEA to $ 1.5 billion.

Any move in cloud computing will inevitably cannibalise server sales. For HP’s largest customers, EDS (now called Enterprise Services) offers traditional hosting, managed services and outsourcing. HP’s hybrid cloud  aims to give customers a choice, but over time, if cloud computing succeeds, it will not make economic sense for HP to develop and support certain categories of servers. It is therefore quite telling that HP has not increased R&D spend. And without R&D, how can a hardware maker continue to innovate?

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