Since becoming chief executive of Hewlett-Packard four months ago, L?o Apotheker has remained mostly silent about his plans for the world?s biggest technology company.
He finally unveiled his strategy to investors on Monday, saying that HP would build out its tiny software business and expand into the cloud ? a term used to describe products and services delivered online.
Apotheker?s plan is not so much to reinvent HP, but to help it evolve. Apotheker said he planned to use the company?s relationships with corporations that already bought its hardware and services to also sell them software and host their data so they could gain access to it from anywhere.
HP?s strategy is closely watched because of the company?s status as the largest technology company in terms of revenue. The stock market deems Apple the most valuable tech company. But recently, Wall Street analysts have raised concerns about HP?s direction and loss of momentum as industry growth shifted from hardware and personal computers, sectors that HP dominated.
?Yes, HP is strong, but we also recognise that the world around us is changing faster than ever,? Apotheker said at an event in San Francisco. He said that although he had seen areas of ?extraordinary strength? in the company, some other areas ?need additional focus.?
Apotheker replaced Mark V Hurd, who was forced out last August after an inquiry by HP?s board into accusations, never substantiated, that he sexually harassed a former contractor.
The hiring of Apotheker, who himself was forced out as a chief executive of the business software maker SAP, was widely seen as a sign that HP would push into software. Apotheker did announce some new twists in his plan. He wants HP to open an app store where HP and other companies can make their services available to Internet users to download. The idea follows similar successful initiatives, most notably by Apple.
The strategy outlined by Apotheker is intended to lift HP?s profit margins. Although personal computers are a big source of revenue for the company, they are a low-margin business, about 6.4% in the latest quarter. Personal computers and laptops accounted for 32% of HP?s revenue in 2010. Software, which has much higher margins of 17.6%, accounted for only 3% of HP?s business.
Two months ago, Apotheker shook up the HP board, including replacing four members. At the time, the company said that the new blood ? which included executives with experience in global business and technology ? would add breadth of talent to the company?s leadership.
The challenge for HP will be to win customers from established rivals like IBM, Oracle and SAP. Persuading large companies to go with a relative newcomer, however, can be difficult, even one the size of HP.
To accelerate HP?s shift into software, Apotheker raised the possibility of acquisitions. However, he said the company would be ?disciplined,? implying that blockbuster mergers were unlikely. Apotheker said the company?s software division would focus on security software and business analytics ? the crunching of big sets of data ? areas where its rivals already excel.
But HP is hardly in the forefront in terms of business analytics or the cloud, which has been an industry buzzword for several years. Asked whether HP was late, Apotheker said, ?We are not playing catch-up to anyone, particularly IBM.? He said that no company had a truly powerful offering in business analytics.
Apotheker made clear that he was departing from Hurd?s legacy of cost-cutting to invest more in HP?s once-celebrated R&D programs. He said financing for HP?s lab would increase faster than the company?s overall growth in revenue this year and focus on marketable innovations.