CRN Interview: Whitman's Plans To Get HP Back On Track

Meg Whitman In The Driver's Seat

When Meg Whitman was named CEO of HP last Sept. 22, the company was mired in one of the most tumultuous periods in its 72-year history. The questions hanging over HP when she came on board cut right to the heart of the identity HP has carved out over decades.

Customers and partners were still in shock over HP's decision to ditch the TouchPad and put its PC business up for sale. And they questioned the business acumen of ex-HP CEO Leo Apotheker, whose zealous crusade to transform HP into a software and services company led to the controversial decision to spend more than $10 billion on Autonomy.

Since taking the helm, Whitman has methodically sought to restore stability to HP. In a recent interview with CRN, edited excerpts of which follow, Whitman discusses the rationale behind the decisions she's made so far, as well as HP's tablet plans, its rivalries with Cisco and Oracle, and the future role she sees for partners.

You've been CEO of HP for about four months now. What are your impressions of the channel so far?

I have been mostly in a learning mode when I have met [with partners]. I start off the conversations saying, 'I want to know everything you know. I want to know what you think about HP, what you think about the state of our industry, what you think we could do better.' It's been more conversation to me [rather] than the other way around.

In a funny way, this feels very comfortable to me, because FTD was an association of independently owned florists who distributed all of FTD's products. eBay sellers, much smaller businesses than many of our channel partners, but the same thing. eBay would not have been successful without our seller community. So this feels comfortable to me. Before I came to HP I didn't understand the power of the channel to this company -- it's pretty cool. Partners are an essential part of our history, and also our future. Because this is how we get incredibly broad distribution for HP products.

What types of decisions have you made since joining HP?

Every two weeks we do a call with our senior leaders to bring them up to speed on what's happening, which I think is incredibly helpful. … [And] we’ve settled our executive team -- a few people left, a couple of new people came in -- and I feel great about our leadership team.

Another thing we had to do was to make the PSG decision right away. Uncertainty was not our friend in the marketplace, particularly with our channel. We made that decision as fast as we could, which was about 35 days. We made a lot of people in our industry anxious over what we announced on Aug 18.

Then we had to get Autonomy integrated and up and running. It's easy for a big company to roll over a little company in an acquisition. HP is so huge that we could have overwhelmed them, so we tried to do a really smart job of setting that up. We also had to make the webOS decision. We had to set our budget for 2012. And we had to give Wall Street guidance for 2012.

Have you made any symbolic changes at HP so far?

We decided to move out of our executive suite. I thought it was too 'Old World,' and it didn't make for teamwork. I could sit in that executive suite all day and not see [HP CFO] Cathie Lesjak, who sits right next to me, all day. How does that work?

So I said, 'OK, we're going to do a more open-seating framework,' and you can see the teamwork already. The conversations over the cubicle are the conversations that really matter. If we're going to succeed, we're going to have to be a team at the executive level, senior leaders, employees, partners and customers.

We've also eliminated the executive parking lot. It used to have commando fence with barbed wire on it. We took all of that down, and now everyone can park in that area. And when our executive briefing center is done, we'll just go in through the front door like everyone else.

Your predecessor was very focused on building HP's software capabilities. What's your view on the role software should play in HP's technology portfolio?

We are in the software business. Not to transform ourselves into a software company, but to actually solve customer problems.

We have staked out three areas that we want to be terrific at. First is the software that differentiates our hardware -- orchestration, monitoring, etc.

Second is security. I know from my eBay days that it's an arms race -- the bad guys get better, the good guys get better, etc. And every CIO I have talked to, even medium businesses, is worried about security. Third is Autonomy, and Big Data/analytics. It probably won't go beyond that, at least in the near term. We may make some acquisitions, orchestration and monitoring and other things, but as I told the Street, don’t look for any big acquisitions from HP, at least for the foreseeable future.

HP's $10.3 billion acquisition of Autonomy confused some shareholders, and the size of the deal was alarming to HP's hardware-focused partners. What have you done to counteract this?

Right out of the gate, the question I was getting because of Autonomy was: What is HP? Who is HP?

And in all of those meetings, I reinforced, first and foremost, that HP is a hardware company. Seventy percent our revenue comes from hardware. The DNA of this company is product engineering; printers, computers, servers, storage, networking are our bread and butter.

We’re in the software business to address customers' problems, and services wraps it all together so that we can deliver those products and software to our customers. And of course, many of our VARs are service providers as well.

Is Autonomy a channel play and, if so, how is HP enabling partners to sell it?

The main thing we're going to do this year is open up HP's distribution system to Autonomy, and help them grow faster than they otherwise would have with their main core Autonomy product, faster than they would have on their own. We have some work to do here because our sales force is just figuring out how to sell it, too. Autonomy is about a billion-dollar company in the scale of $129 billion HP. And what I don't want to do is flood them with leads that they can't fulfill in a very high-quality way. Ultimately, whether it's sold by the channel or sold by HP, they actually have to do the work with service providers.

So what I'm trying to do is not end up in a situation where we have sold so much that we don't deliver in a really high-quality, thoughtful way. So I've got a throttle on this right now. And we're just figuring it out. As soon as we figure it out, then we'll figure it out with the channel.

You have a reputation as someone who builds bridges and consensus. Does HP plan to reach out to Oracle and patch up that relationship?

Historically, the HP-Oracle relationship was one of the great software-hardware partnerships in the industry [pictured, Oracle CEO Larry Ellison]. We used to be on stage with them at Oracle World demonstrating their software on our hardware, and vice versa. Obviously the relationship is strained at the moment.

Listen, I would love to get this behind us. That's one of the benefits of being the new CEO -- I wasn't party to all of this, and so I would love to get this behind us. But obviously we've got to protect the legal rights of this company. They obviously feel the same.

So we're in a series of legal tussles with them around the world. I hope these can be resolved without going all the way to trial, but we'll see.

HP has made gains on Cisco in networking. Are you going to keep the pressure on them?

Enterprise storage, servers and networking are three great businesses. And in networking and storage, we're the disruptor -- we're the ones that are challenging the status quo. And often we're on the other side of that. We've got a great networking product and a great networking organization, and you can see the results in how well we're doing.

Frankly, our view is that we've got a better product that is more architecturally consistent and can offer customers a real value relative to the Cisco gear.

So that's the overall strategy -- and by the way, we can also provide servers and storage and networking in a converged infrastructure environment. I feel good about our position here. Obviously they are the leader, they're the big dog, but I think we can grab a big share of this market by providing the Holy Grail of business, which is better quality and lower cost.

Can HP remain atop the global PC market without a tablet?

We have to have a tablet offering. We will be back in that business. We're coming back into the market with a Windows 8 tablet, first on an x86 chip and then maybe on an ARM chip. We'll see. I'm pretty sure we'll be able to do that. Windows 8, we don’t know when the delivery is for that software on an ARM chip.

I think our sweet spot has to be around security. This whole security thing is a big worry, not just for big enterprises but also for medium enterprises and small and medium businesses.

So if we can provide devices that consumers really want -- and by the way, employees are consumers, too -- and we can provide a tablet offering, then we have an opportunity to solve problems for the enterprise and small- and medium-business segments, with products that their employees like and are also secure in terms of protecting the enterprise's data.

Apple has started to get some channel religion. Some of your partners have begun to pick up on that. What would you say to them in terms of what HP's Windows 8 tablet will have that the integration with the iPad will not?

I would say first and foremost, security, security, security, a long and trusted history with the enterprise. I do think for businesses, in the end, it may well be that it is also about an ultrabook-like product.

My son once lived in the city and commuted to a start-up in Silicon Valley. He got an iPad so he could [work on the train]. Two weeks later, he gave it back to [me] and said, 'I can't do what I need to do here. I need all the productivity tools, I need PowerPoint. I can't actually be head of business development for this company on an iPad.' This notion of these ultrathin, very lightweight, very powerful machines that have backward compatibility, that you can do real work on, I think have a real role in the future of the enterprise -- particularly if we can get them down to a price point that's a bit more affordable for an enterprise.

Can you talk about the reasoning behind promoting HP Software Chief Bill Veghte to chief strategy officer?

He and I are going to work very closely not only to plot the long-term strategy of HP, along with our business unit heads, but also to make sure we are on top of every trend of our business units. As we set the objectives for this year, we're making substantial investments -- in R&D, innovation, in go-to-market -- that we haven't made for quite some time.

My view was, 2012 needs to be a reset, rebuild and reinvest year, to get HP set up for the next 70 years. I came to this company not for next week or next year -- I want to set HP up for the next 70 years.

With regard to the cloud … we will be coming out to the marketplace in the next several months with a more coherent and internally consistent cloud strategy because it's been a little bit all over the map.

Competition in the mobile space is fierce. What's HP's message to the remaining people on the webOS team?

This has been a very rocky period for the former Palm team/webOS team that we built. And this was not a happy set of occurrences over the last six to eight months. So we have lost some people.

But one of the reasons I wanted to get back to that group with a plan forward is [that] people can then make an informed decision -- OK, I like this vision, or I don't. Between August and November, there was no plan. So if you're an employee, you’re sitting there going, 'Wow, this is hard.'

So now there is a clear vision of what we're trying to accomplish. There will be some people who will not love that vision, and then there are people who are very excited about this vision, and what it can mean for an alternative, open-source operating system that has some real strengths to it.

A number of high-profile webOS people have left for positions elsewhere; is this a concern?

I think people will sign on. Some are going to sign off, and that's OK, because we actually now have a way forward. What I said to all the employees is, 'We need each of you to decide whether this is something that gets you excited. Here’s the way forward.'

We're going to build a new business together. We're going to build another operating system that has huge advantages, in my view, over iOS, which is a closed system, [and] Android, which is incredibly fragmented and may ultimately be more closed with [Google's] acquisition of Motorola Mobility.

We're great partners with Microsoft and Intel. But the fact is, the world can probably use one more operating system. So we're going to support it in a very big way and I'm excited about it. You can give us a grade in about a year, and I think the proof will be in the pudding in about two or three.

Get more exclusive coverage of Meg Whitman and HP from CRN:
HP In The Meg Whitman Era
Whitman's Plans To Get HP Back On Track
Whitman's Pledge To The Channel
10 Challenges For HP Partners