The 10 Biggest HP Stories Of 2012

Another Rocky Year For HP

If you thought HP couldn't top last year in terms of the amount of drama and intrigue generated, you'd have been surprised by what has transpired over the past year. Financial struggles were first and foremost, as industry headwinds in HP's core businesses added up to headaches for investors.

CEO Meg Whitman sought to put her own distinctive stamp on HP, vowing to be a channel advocate and reorganizing HP business units to make them run more efficiently. Those efforts may yet bear fruit, but industry watchers see more changes ahead for HP as it continues to try to steady the ship.

As the dust settles on another tumultuous year for HP, CRN looks at 10 HP stories that surprised, shocked or simply had folks scratching their heads in bemusement.

10. HP's WebOS Unit Fades From Prominence

Whitman entered the year talking about webOS and how making it an open-source project would help it continue to develop. But after losing much of its talent, including former Palm CEO Jon Rubinstein, and being spun off as a separate company called Gram, the webOS unit is scarcely a blip on the HP radar.

HP did release Open webOS 1.0 in September, positioning it as a fully functional version of webOS that works with smartphones, tablets and PCs. But Whitman gave it nary a mention when she surprised Wall Street analysts by saying HP plans to eventually get back into the smartphone business. Meanwhile, HP has for the time being tied its tablet destiny to Windows 8.

9. HP Enterprise Services Runs Into Turbulence

While it was common knowledge that HP overpaid in its $13.9 billion acquisition of EDS in 2008, the company finally put a dollar figure on its folly when it wrote down $8 billion from the deal. Sources told CRN in September that HP had been looking for a buyer for EDS but was unable to find one, though HP denied this. Meanwhile, HP acknowledged that its Enterprise Services division has been suffering from outdated internal systems and slowing demand for IT services. HP replaced Enterprise Service chief John Visentin (pictured) with Mike Nefkens and revealed plans to implement Salesforce CRM and other IT upgrades. Whitman believes HP can fix its problems in Enterprise Services, but it's fair to wonder how much time the company has to pull this off.

8. HP Merges PC, Printer Divisions

Faced with slowing printer and PC sales, HP in March combined its Personal Systems Group and Imaging and Printing Group into a single unit, called Printing and Personal Systems. HP said the move would lead to cost savings due to the two units' shared supply chain and distribution networks,and claimed it would "drive innovation" in PCs and printers. HP plans to continue integrating its PC and printer businesses in the coming year and also will be expected to demonstrate the oft-mentioned "synergies" it promised would result from the decision to combine the units.

7. Whitman Meets The HP Channel

Whitman struck an ebullient tone in her channel debut at HP's Global Partner Conference in February, vowing to rid HP of the drama that had been hovering stubbornly over the company. "I want to be a steady hand on the tiller for this company," said in her keynote. "We're going to return to being the reliable, trusted partner you can count on to build your businesses."

Whitman pledged to bring the "swagger" back to HP and talked of boosting R&D and innovation in order to restore the company to its past glory. She also reiterated that HP is a hardware company first and she would not seek to follow the path to software that her predecessor, Leo Apotheker, had charted during his brief tenure at the helm.

6. HP Wins Itanium Case Against Oracle

In what amounted to a rare bit of good news for HP, a California superior court ruled in August that Oracle is contractually obligated to continue developing software for HP Itanium-based servers. Oracle is appealing the decision but said it will abide by the court's decision.

Turns out this may have been a Pyrrhic victory after all, as HP and Oracle customers have been gravitating to IBM's Unix server line, Gartner said in its second-quarter server sales report. Some customers are moving to x86 Linux alternatives, while others are staying with HP but ditching Oracle for SAP Hana and Sybase, solution providers told CRN.

5. HP's Big Data Story Takes Shape

HP is using Autonomy and Vertica as the basis for its budding big data analytics strategy. HP continues to pitch the combination of Vertica's high-performance columnar database, which handles "structured" data, and Autonomy's unstructured data capabilities as a powerful differentiator.

So far, though, that message has yet to resonate, as neither Vertica nor Autonomy has made any impact in the HP channel. With Autonomy and Vertica, HP has highly regarded technologies that could give it a leading position in big data, but sources told CRN HP still has a long way to go and will have to rein in certain types of entrenched sales behavior to reach its ambitions in the space.

4. HP's Return To Tablets

HP is ready to get back into the tablet market with its ElitePad 900 (pictured), a Windows 8 device focused on the enterprise and featuring a removable cover that allows it to be serviced and expanded with additional functionality. Despite the iPad's immense popularity in the business world, HP believes that this race has only just begun. HP is pitching its Envy x2, a Windows 8-based convertible notebook that carries a price tag of $850, as an iPad alternative.

HP also doesn't see Microsoft's Surface tablet as much of a threat. Todd Bradley, chief of HP's Printing and Personal Systems group, recently described Surface RT as " slow and a little kludgey" and suffering from limited distribution.

3. HP Shuffles Executive Leadership Of Software Unit

HP in May promoted Bill Veghte, who had been leading HP's software business in his role as chief strategy officer, to chief operating officer. At the same time, HP hired George Kadifa (pictured), a venture capitalist and former CEO of application service provider Corio, to run the software unit.

Kadifa is the latest HP executive tasked with taking HP's software business to the next level. Despite the unit's solid financial results over the course of the past year, software still only accounts for about 3 percent of HP's overall revenue.

In September, HP hired Robert Youngjohns, who had spent the previous five years at Microsoft, to run its troubled Autonomy business.

2. HP's Financial Struggles

Weakening PC and printer sales, a flat-lining services business and a tepid IT spending environment combined to hamper nearly all of HP's business units over the course of the year. It was also behind HP's decision to shed nearly 30,000 jobs by the end of next year as part of a corporate restructuring. The figures grew more dismal as the year progressed: In HP's first quarter, revenue fell 7 percent and profit dropped 44 percent. In the second quarter, when Autonomy's struggles became apparent, Whitman described the situation as "a classic enterprise company scaling challenge."

In the third quarter, HP racked up a quarterly loss due to its $8 billion EDS write-down, and in the fourth quarter the full impact of the disastrous Autonomy acquisition became fully apparent. HP still brings in a ton of revenue, but looking at its businesses, it's hard to find one that isn't facing serious problems.

1. HP Autonomy Acquisition Hits An Iceberg

When HP fired Autonomy CEO Mike Lynch (pictured) in May after what Whitman described as "disappointing" financial results, it was already clear that HP had made a big mistake in paying more than $11 billion for the company. But it wasn't until November, when HP took an $8.8 billion charge that included $5 billion from the Autonomy deal, that the full scope of the disaster became apparent.

HP is alleging that Lynch and other Autonomy execs cooked the books prior to the acquisition to make the company seem more valuable. Lynch, for his part, is denying any wrongdoing and challenging HP to come up with evidence to back up its claims.

Meanwhile, shareholders are baffled as to how HP's board saw fit to green-light the Autonomy deal, and have also named accounting giants Deloitte and KPMG in a class-action lawsuit.