HP could boost mobile business with next CEO

With Mark Hurd’s sudden resignation, Hewlett-Packard Co. has a golden opportunity to hire a CEO with business savvy in mobile, wireless and smart phone areas, helping give the mature technology behemoth a needed and vital strategic direction.
Hurd oversaw the purchase of Palm Inc. and its WebOS for US$1.2 billion in April, so clearly HP sees the value of smart phones and tablets in its future plans.

But some analysts have openly questioned whether the Palm purchase is enough to give HP the leg up it needs for a coming group of handheld and wireless products that are expected to gradually replace desktop and laptop computers for many uses.

It isn’t clear how high a priority smart phones and tablets are at HP, given the company’s enormous product portfolio, which includes an enterprise servers and storage division that was worth $15 billion in 2009 revenues. Smart phones are a small part of a group, Personal Systems, that overall hit $35 billion in 2009 revenues, although that group also includes consumer electronics, desktops and laptops. Printers are in a group all their own, reaching $24 billion in 2009 revenues, while consulting services were $35 billion and software hit $4 billion.

Several analysts said that while a CEO with a clear focus on smartphones and tablets sounds like a smart strategic direction for HP over the long haul, it could undercut HP’s broad base of products and services in its current and near-term operations.

“HP’s board needs to focus on getting a CEO that can run the entire company, not just focus on mobile,” said Jack Gold, an analyst at J. Gold Associates. “HP is very diverse, and I think they would be best served with a general manager who could get all the various divisions running smoothly.”

Focusing on mobile products would be “way too far down the stack,” added Gartner Inc. analyst Ken Dulaney. “A networking CEO would be better. Their big battles are with Cisco going forward.”

HP acquired networking products maker 3Com in late 2009 for $2.7 billion in HP’s quest to be a full-fledged networking products company that would be number two to networking king Cisco Systems Inc.

Ramon Llamas, an analyst at research firm IDC, said he doesn’t see HP hiring a “mobile wiz” as its next CEO, partly because of HP’s product diversity and the nascent nature of smart phones and tablets both at HP and elsewhere. “As a mobile analyst, I’d like to see HP go whole hog in mobile, but they need to look at their entire business, too.”

Llamas noted that the role of the Palm WebOS is still not set at HP, and it is so far unclear in which products it might appear. The products could range from smartphones to printers.

Even though it might not make sense to focus on a mobile expert as the next CEO, at least two names keep surfacing that would give HP gravitas in the mobile space.

Todd Bradley, head of the Personal Systems division at HP, is said to be a top candidate for the vacated CEO spot, along with several others. He came from Palm and would be capable of setting a mobile and wireless strategy, if the HP search committee wants to go in that direction, several analysts said. On the other hand, Gold said it might make sense to keep Bradley in his current role, just to keep the proper focus on mobile.

Another name from the wireless world has been thrown out by recruiters as a possible CEO is that of Michael Capellas, former CEO of Compaq Computer Corp.,which HP bought in 2002. Capella is also the former CEO of telecom provider MCI Inc.

HP already has prominence in the technology world, not just for its products, but also for acting as an influential force in markets with its suppliers and customers, as well as in political circles, regarding matters such as technology standards and Internet policy.

With the right CEO, HP could avoid the kind of criticism that another mature company, Microsoft Corp., received last year because of problems with its Windows Mobile OS . Microsoft is set to launch a revision of its mobile operating system, Windows Phone 7 , inside new smart phones that should appear before the holiday selling season this fall. Microsoft CEO Steve Ballmer has linked the coming smart phones to his company’s broader cloud computing strategy as well.

Without a clear long-term focus on mobile technologies, maybe HP will be fine as it continues to manage its diverse porfolio, but the lesson from Microsoft might be worth holding close: Does HP plan for one year or two? Or would it be valuable to think in terms of five years or 10 years as mobile devices become more vital and function as the client endpoint to a cloud-oriented world built on millions of servers and switches?

Without a clear long-term focus on mobile technologies, maybe HP will be fine as it continues to manage its diverse porfolio, but the lesson from Microsoft might be worth holding close. In searching for a CEO, should HP plan for one or two years and hire an executive with a broad view of all the company’s products and services? Or would it be more valuable to look five or 10 years ahead as mobile devices become more vital and function as the client endpoint to a cloud-oriented world built on millions of servers and switches?

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Jim Love, Chief Content Officer, IT World Canada

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