Eyebrows Go Up as HP Hands the Reins to Former SAP CEO

October 4, 2010 Timothy Prickett Morgan

The war between Oracle on one side and Hewlett-Packard and SAP on what increasingly is looking like the other side heated up bigtime last week as headless HP, which ousted top exec Mark Hurd on August 6, replaced him with former SAP CEO Leo Apotheker.

Rather than give all three jobs to one person, HP’s board of directors decided to split up the titles, making Apotheker, who spent 20 years at SAP and helped it build up the world’s largest application software empire but who was let go back in February after some missteps at the German giant, HP’s president and CEO, while tapping Ray Lane, who was the president at Oracle a decade ago and who is now a hot-shot at venture funding giant Kleiner Perkins Caufield & Byers, as non-executive chairman of the board. Robert Ryan, one of HP’s board members involved with the executive search, said there was a wide field of candidates from both inside and outside of the company for the CEO post, and the field was eventually winnowed to six candidates. Once these were lined up–and Ryan would not say who the other five were–the HP board picked Apotheker unanimously and he was the only one offered the job.

A report in Reuters indicates that Steve Mills, who is general manager of IBM‘s Systems and Software Group, and Ginny Rometty, who is general manager of Big Blue’s sales and marketing operations, were both approached to fill in the HP CEO position, now that Sam Palmisano has decided not to retire next year.

Never one to shrink from an opportunity to make a snide comment–or 10–or to take a swipe at SAP, Oracle CEO Larry Ellison, who hired his tennis buddy Hurd to be Oracle’s co-president three weeks ago, sent an email to the Wall Street Journal saying, “I’m speechless.” Ellison was not the only one. Ann Livermore, who runs HP’s $54 billion Enterprise Business (everything but printers and PCs) and who has been passed over now three times for the CEO post, is no doubt perplexed.

After having two external CEOs, you’d think HP would pull from its own ranks and get back to its own roots as a matter of principle. HP is not the IBM of the early 1990s, which badly needed an injection of outside critical thinking and some enforced cooperation. Louis Gerstner, who had run American Express and RJR-Nabisco, was able to provide the fatherly tough love that IBMers needed after John Akers ran the company up on the rocks. If anything, HP needs to get back to its roots and so some real innovation in PCs and systems. The indications are that HP was making lots of progress in this regard.

But the problem that the HP board might be worried about might be different than shaking up a systems and PC business and trying to grow what is a pretty tiny software business, at least compared to the rest of HP. For all we know, HP has figured out that IBM’s control of databases, middleware, and some operating systems on its own machines gives it an advantage in the market, and now that Oracle has its own hardware thanks to the acquisition of Sun Microsystems, it can and apparently will create highly tuned systems running its own complete stack, from disk drives all the way up to applications. Oracle can offer better performance, easier maintenance, and lower costs to customers with its integrated stacks–something a crazy old machine called the AS/400 claimed to do and actually did in the late 1980s and early 1990s. IBM can replicate the AS/400 experience on integrated systems–minus the applications–on its mainframe and Power Systems and can fake it with Linux on System x boxes. But HP only has systems and operating systems, having ceded databases and middleware to others. And it does not have an application business, either.

Whoops.

The hiring of Apotheker, therefore, may be an indication of two things. One, no one who could do the CEO job in the estimation of the HP board was available or wanted it, and he was. And two, HP might do something crazy like trying to build up a systems and application software business. And wouldn’t it be funny if HP merged with SAP? I wonder what Ellison would say about that, and just how stupid IBM will feel after selling off its applications businesses decades ago should this come to pass. Crazier things have happened–like IBM almost buying Sun and leaving it to Oracle, which now controls Java.

The very thing that Oracle is trying to build and HP may have to try to build IBM had back in 1988 with the AS/400. It’s funny, in a way.

This Issue Sponsored By

Table of Contents

Content archive

Recent Posts

Subscribe

Pages

Search