Investors celebrated yesterday as tech giant HP confirmed that it would split its hardware and enterprise solutions divisions into two separate companies. The company’s hardware division (PCs and printers) will become HP Inc. while the enterprise solutions, including its cloud and server offerings, will become Hewlett-Packard Enterprise.
“CEO Meg Whitman believes the split will allow the two companies to better compete and focus on the markets they serve,” says Gartner analyst Neil MacDonald. “In the long term, that should enable a shorter and more nimble response by these companies to market trends and challenges.”
A smaller, enterprise solutions unit means HP has a chance to finally find the focus and resources to become a real competitor, especially in the marketing cloud space. HP’s marketing solutions are built around Autonomy, the big data company it acquired in 2012. That acquisition has since caused HP a world of pain and lawsuits after it was discovered that accounting fraud inflated the price it paid for Autonomy by almost 80%.
Despite the setbacks, HP Autonomy is a robust data platform that has the ability to gather real-time customer analytics across several different digital channels, including email, the web and social. In addition, it offers integrations with most of the big marketing solution names in the market, including BlueKai, ExactTarget, Experian Marketing Services, Kenshoo and Marketo.
However, in its first Wave Report on digital experience delivery platforms, research firm Forrester criticized HP for not offering enough outside of data and analytics:
HP Autonomy is a vendor in flux, trying to absorb multiple acquisitions and attempting to remain relevant in a market where many of its implementations are legacy. Its strategy increasingly focuses on data and analytics built from multichannel customer behavior, but it does not have sophisticated integration to its content management and delivery capabilities. Its partner story is weak.
In a nutshell, HP needs to provide quality content delivery tools in order to really compete with the other enterprise marketing clouds such as Oracle, Adobe and Salesforce. The quickest way to do that would be through acquisitions. HP hasn’t made on in two years, understandably still scarred from the Autonomy debacle. But with the split company, it could finally have the cash and the investor backing to go after the companies it wants.
There aren’t too many marketing automation vendors left in the market for HP to snap up, but according to a report by Bloomberg Businessweek, Dayton, Ohio-based Teradata could be a potential target:
Teradata, a $7 billion information-warehousing company that counts EBay Inc. and Coca-Cola Co. as customers, may also entice HP, said Todd Lowenstein of HighMark Capital Management Inc. While Teradata has more of an “old-school” approach to big-data management, it’s been expanding into next-generation technology. HP could use it as a platform to make other acquisitions and build out its own offerings, said Lowenstein, whose firm oversees about $16 billion and has owned HP shares in the past. Plus, it’s cheap. Teradata trades at a discount to the median earnings multiple for similar-sized U.S. peers, according to data compiled by Bloomberg.
The only question remains whether HP has the cash to buy itself a place at the marketing clouds table, much the same way Oracle did. The original HP was sitting on a record pile of cash, but now that the company is split, it’s unclear how much of that fund will be available to the enterprise division. But if Whitman and co. truly expect to build out HP’s marketing services, they’re going to have to convince everyone to get over their fear of acquisitions and put that money to good use.