Is Apotheker The Rx HP Needs?

In some ways I feel bad for Leo Apotheker (although how bad can you feel for a guy who maintains residences in Paris and California and got a $57 million compensation package to take the top job at HP). Upon HP's announcement of Apotheker's appointment as its new CEO, HP stock dropped 4% after hours. Not exactly a vote of confidence.

And after Apotheker's first full quarter at the helm, HP forecast sequential and annual sales that missed analysts' projections -- HP's first disappointing forecast since Carly Fiorina was CEO.

If that wasn't enough, much has been written about Apotheker, the former SAP co-CEO who resigned amid free-falling sales in early 2010, and his combative style, quick temper, and aloofness.

Nearly five months in, both industry pundits and financial analysts continue to doubt his ability to lead a diverse $130 billion hardware and services company that derives a mere 2.2% of its revenue from software.

But putting the negatives and naysayers aside, the most important question is whether Leo Apotheker is the CEO tonic that HP needs right now.

Clearly, HP is in great need of a visionary leader who will empower its engineers to innovate, and drive the company into higher margin software and services businesses in areas such as cloud computing, big data, and real-time analytics. All while maintaining the operational efficiencies that Mark Hurd put in place during his tenure as CEO.

Although I've never met Leo Apotheker, I've read numerous interview transcripts that indicate he's a man who listens and learns. He has spent several months touring HP offices to talk with the rank and file. And he is wise to HP's biggest challenges -- slowing top line revenue growth and accelerating competition on both the enterprise and consumer fronts where HP is coming from behind.

HP competes with IBM and Oracle who each have rich software portfolios and are in far superior positions to intersect and influence strategic decisions within the enterprise IT space.

While in the consumer space, HP is battling Google, Apple, and Microsoft. Each of these behemoths have added significantly to their cash positions since the recession, and can easily buy companies to fill gaps in their respective portfolios. All have massive platforms for which hundreds of thousands of developer applications have been written, giving them a huge leg up over HP in the consumer market.

Leo Apotheker is certainly a man who feels he has something to prove. There is a powerful driver in the opportunity to rewrite his own legacy while simultaneously breaking with Mark Hurd's legacy of cost cutting at the expense of innovation.

Hurd is the kind of guy who's far more adept at talking about how he'll drive down SG&A expenses over the next 12 months than at articulating a vision and a strategic roadmap that excites and inspires. And this is where Apotheker could shine if he makes the right bets and executes.

HP's March 14th event before analysts where Apotheker and his leadership team outlined their vision around "Cloud, connectivity, and software" is a good start. Although it was light on details and a little lame with respect to its "Everyone on" tagline, it conveyed that HP's new CEO is well aware of the seminal changes occuring in the IT industry, and the gaps HP must fill to be a leader in this new 'Consumerization of IT' era.

Apotheker has already made his first acquisition in Vertica since taking the helm at HP. This was a smart play on the big data analytics theme that will gain him further credibility if he continues to add more analytics software tools to HP's arsenal over the next 6-12 months to more effectively compete against IBM, Oracle, Teradata, and to a lesser extent, EMC.

With respect to cloud computing and cloud services, Apotheker would be wise to buy versus build. This way he gets to market quicker, and buys a platform for which there's already an established developer community. Rackspace is likely among the targets on his list.

Turning an underused asset like WebOS could be Apotheker's biggest personal challenge since he's not a skilled practitioner in the consumer space. HP's Chairman, Ray Lane, who's also a partner at Kleiner Perkins (KPCB), clearly helps Apotheker get first dibs on any KPCB venture-backed start-ups that can be the glue between cloud, mobile, and social networking.

All-in-all, Apotheker has his work cut out for him. But if he moves quickly to fill the gaps in HP's vast portfolio that moves it up the value chain with near flawless execution, he'll be the CEO prescription for what ails HP.

Sun-Oracle Channel: We're Just Not That Into You

Similar to the 2009 movie about a Baltimore-based group of interconnected, twenty- and thirty-somethings navigating their relationships from the shallow end of the dating pool through the deep waters of married life, trying to read the signs of the opposite sex--and hoping to be the exceptions to the "no-exceptions" rule, a group of interconnected North America-based, legacy Sun channel partners are navigating their new relationships with Oracle, hoping to get exceptions to Oracle's "one-size-fits-all" (aka no exceptions) policies.

Oracle's response (assuming you ever get one)... NO, and BTW, We're Just Not That Into You.

It was very telling when I read an article today about HP's former channel chief, Adrian Jones, taking a new job at Oracle where he'll join his former boss and current Oracle Co-President, Mark Hurd. The telling part is that Adrian has nothing to do with the channel at Oracle. Rather, he's a senior vice president of Asia Pacific/Japan. I suspect he'll be spending a lot of time nurturing the relationship with Softbank since they were among Oracle's first public Exadata reference customers.

Exadata in general, and growing the $2 billion pipeline within Oracle's direct accounts in particular, is all the rage these days. And the channel isn't welcome in those accounts which are pretty much the only customers likely to pony up to Exadata's multi-million dollar price tag.

So there will be no channel renaissance like there was during Adrian's tenure at HP. That's not the Oracle way. The channel is merely part of the Oracle ecosystem to perform those messy, labor-intensive tasks like fixing Oracle hardware-software installations-gone-wrong. Oh, and soothing customers after they've experienced Oracle's sub-standard support at premium prices.

Yes, all you legacy Sun channel partners, you need to face the facts. Oracle Is Just Not That Into You. But take comfort in the thought that if things don't work out according to Oracle's plan, they may decide to Get Into You.

Oracle: You Lie!

I've been remiss in blogging of late, largely due to navigating the rough seas created by Larry Ellison's Oracle. You see, as an owner of an IT solution provider, I've been grappling with sustaining a once thriving and profitable business that's dangerously too-tightly-coupled to Oracle now that it owns Sun Microsystems.

Shame on me for taking Larry & Co. at their word during Oracle's January 27, 2010 unveiling of their new systems strategy post Sun acquisition. This was the Redwood Shores event where they emphatically stated to all the major analysts they would grow Sun to profitability rather than cut it to profitability. And would reinvigorate the Sun brand to prevent further defection of Sun's customer base.

It seems illogical now that someone as pragmatic as I would forget one of Larry Ellison's famously published truisms -- "We can't be successful if we don't lie to customers".

Both customers and partners alike can speak volumes on Oracle's strong-arm tactics and willingness to lie to close a multimillion dollar deal. Yet, as much as the company is universally feared and loathed, the money keeps rolling into the Oracle coffers.

That's because those evil geniuses at Oracle realized more than a decade ago that once a customer is running its core business functions on Oracle software, the cost of exit is extremely high -- so high, that it's nearly impossible to exit from Oracle's stranglehold.

You may not like it, but Oracle proves that it pays to lie!