Why HP killed the TouchPad, said goodbye to WebOS and hello to Autonomy

Just before I took two weeks off from work I got an e-mail asking if I was interested in reviewing HP’s TouchPad tablet. I assume I’m a bit too late to get one now.

On Thursday HP shocked the industry with a decision to throw in the towel on the burgeoning tablet and smart phone market, stop making Web OS devices and purchase Autonomy, a relatively low-profile enterprise software firm. The Personal Systems Group may be spun off. As shifts go, this is the most strategic one HP has made since announcing its merger with Compaq almost 10 years ago. This is a company, under the leadership of Leo Apotheker, that has finally decided what it wants to be when it grows up.

For Apotheker, who toiled for years at SAP and was ultimately denied keys to the kingdom, there must be something gratifying about doing a complete 180 and turning HP into a more competitive threat to his former employer (and Oracle and IBM, for that matter). It’s important to realize, however, that HP’s new direction is more about an ambition to transform than a maturing of what it is today. When Carly Fiorina first announced the Compaq merger, HP was best known as a great printer company with a so-so PC unit that wasn’t keeping up with its rivals like Dell and IBM. In the time since then, Dell’s vertically integrated business model has stumbled to the point where it champions its reseller channel, and IBM has quit the personal PC business entirely. HP is still a great printer company with so-so consumer devices and, notwithstanding purchases of Mercury Interactive and others, is still finding its way in the software space.

Autonomy, which has Canadian offices in Ottawa, does everything from enterprise search and Web content management to “information governance” (read: data quality) and e-discovery. It will not necessarily turn HP into a leader in enterprise applications, any more than the acquisition of EDS turned HP into a leader in enterprise services. Put those two things together, however, and you have a company that looks a bit like a potentially more affordable IBM.

History will likely remember HP’s merger with Compaq as a failure, but it’s worth pondering whether that failure can be attributed to forces of change beyond its control – a shift away from devices and more towards apps – or poor integration and strategic execution. If it’s the latter, HP will face the same challenges in digesting Autonomy and restructuring the old EDS team around this new product and services portfolio. This will be Apotheker’s real proving ground as CEO.

It’s hard to let go of things that aren’t your core competency, especially in established firms. To scrap what didn’t work and start over requires a lot of courage, because now IT managers and CIOs will be asked to look at HP in an entirely new, more focused way. The company’s motto used to be “invent.” Today, the word that best describes it would be “reinvent.”

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