HP CEO pushing into cloud, software

Aaron Ricadela and Cliff Edwards
16 Mar 2011

HP CEO Léo Apotheker, announcing his strategy for the first time since taking the helm, plans a deeper push into software and the expanding market for computing delivered via the Web.

The company is starting a cloud-computing service that will let developers create applications for consumers and businesses using HP tools and that run on HP servers, Apotheker said at an event yesterday in San Francisco.

HP also plans to put its WebOS mobile software onto a broader range of products, ramping up output to more than 100 million devices a year, he said. The company also announced a 50% increase in its dividend.

"Everything that we do in the future will be delivered as a service," Apotheker said. "It's the first time HP is trying to put all of the elements of what it's doing together."

Apotheker aims to get more HP products working in tandem, and expand in software markets dominated by rivals IBM and Oracle. The approach may make its machines more attractive to corporate customers, said Tim Bajarin, an analyst at consulting firm Creative Strategies.

Still, the CEO must guard against overspending on the cloud, which requires much computing power to deliver software broadly, said Jayson Noland, an analyst at Robert W. Baird & Co.

"To really take that market on, you need to make a big capex investment," San Francisco-based Noland, who has an "outperform" rating on the shares, said in an interview. "It's an asset-heavy approach."

From a competitive perspective, HP should be able to trade on its respected brand name, Noland said. Apotheker is breaking from his predecessor Mark Hurd by concentrating on revenue growth instead of cost-cutting, Noland said.

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