HP on Opsware deal: ‘We were losing’

Also read and comment on breaking news blog: Glory days for IT sector in Canada, claims report

Hewlett-Packard’s announcement that it will acquire Opsware Inc. is a good move for the Palo Alto, Calif.-based company which, as yet, hasn’t made significant inroads in the data centre automation space, analysts said.

HP said Monday it would buy the Sunnyvale, Calif.-based vendor of data centre automation software for US$1.6 billion. Opsware CEO Ben Horowitz will join HP’s business technology optimization group.

“It’s a fit for HP. It’s a fit for any large organization who’s not doing well [in this space] – and they’re not,” said Ronni Colville, research vice-president for enterprise management in the research advisory services of Stamford, Conn.-based Gartner, Inc.

The move is also in line with HP’s strategy to expand its software business, said Colville, which it will have to do through “big acquisition with big revenue streams.”

Besides growing the bottom line, there is the recognition that the data centre is key to getting into large organizations, said Colville. “And Opsware brings the story around data centre automation. It’s a very compelling marketing message,” she said.

The move was a leadership play, said David Gee, vice-president of marketing for HP Software: “You either build it or you buy it. We didn’t think that the plan we had in place organically was going to get us to a leadership position fast enough.”

Gee acknowledged that although HP had had success in the IT service and business service management areas, it had yet to make a statement in the area of data centre automation. “We’ve begun to enter that market with some homegrown capability, but we were losing,” he said.

Having strength in that area, said Gee, is “really a game changer for the industry.”

At times, the two companies have competed for a piece of the data centre automation business, and at others, have co-existed. Just in 2003, the companies forged a partnership, giving HP customers integrated access to Opsware software.

There is currently a macro trend where infrastructure consolidation has been prevalent among organizations, said George Hamilton, director of Yankee Group’s enabling technologies enterprise group with Boston, Mass.-based Yankee Group Research Inc.

“A lot of companies are pulling infrastructure out of branch offices. They don’t want all their print and e-mail servers and storage systems in branch offices. They want to pull all that back and use a central data centre and use the network to deliver them,” said Hamilton.

HP does have data centre resource provisioning tools as a result of recent acquisitions in this space, such as network management software vendor Novadigm Inc. in 2004 and automated software quality assurance vendor Mercury Interactive Corp. in 2006.

Despite this, the company hasn’t made as strong a presence as it would have liked – although that might change as HP will be more competitive with IBM and others for data centre management, said Hamilton.

Colville notes that although Opsware has been selling the story of data centre automation, there haven’t yet been that many takers. “Nobody knows if their technology really gets you there. The promise is there for sure.”

Acquiring Opsware will no doubt leverage HP’s position in the data centre automation space and give it the credibility it’s been trying to earn, however, the company needs to overcome certain challenges if it wants to make this move successful, said Colville. “I think [the acquisition of Opsware] will help but I don’t know that the execution will come as quickly and easily as they’d like it to be.”

According to Colville, the company is still figuring out the messaging to customers around the acquisition of Mercury.

She said maintaining the expertise that Opsware has in the field will be a hurdle. “How do you do it if you haven’t been good at it before?”

Colville doesn’t foresee immediate benefit to customers as a result of the acquisition, however, notes that HP should follow through with Opsware’s promise of new functionality in a Windows platform and around compliance to ensure competitive posture.

With the acquisition, what was once a boutique market could become commoditized and potentially bring the price point down for users, said Colville.

Hamilton said he doesn’t expect a significant impact on competitors in the data centre automation space. “Opsware was more multi-platform support and now HP owns them. I’m sure HP will maintain some openness to it. I don’t think it’ll make it proprietary. In the short term, I don’t think it has much impact on other environments.”

“[The acquisition] gives Opsware access to more R&D, more engineers,” said Hamilton.

Also read and comment on breaking news blog: Glory days for IT sector in Canada, claims report

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Cybersecurity in 2024: Priorities and challenges for Canadian organizations 

By Derek Manky As predictions for 2024 point to the continued expansion...

Survey shows generative AI is a top priority for Canadian corporate leaders.

Leaders are devoting significant budget to generative AI for 2024 Canadian corporate...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now