HP’s PC and printer businesses account for half its revenue. The other operations need to grow quickly so that HP can pull away from its crippled legacy business, one that have been hammered by Dell, Lenovo, Apple and other, smaller PC companies. The progress of its other operations has stalled as well. Enterprise Group and Enterprise Service revenue dropped in HP’s most recently reported quarter. Software sales rose 4%, but revenue from this operation is only 3.5% of HP’s total.
Outside experts argue that global IT spending has slowed. That has been proven to some extent by the revenue setbacks International Business Machines Corp. (NYSE: IBM) has had. IBM’s services businesses should be the envy of HP management. However, to grow in a sector in which there is no growth, HP would need to increase market share — something it has not been able to manage.
Microsoft Corp.’s (NASDAQ: MSFT) business and enterprise systems have a number of advantages over HP. Microsoft has a large cloud computing operation, which has become ever more popular as data storage has moved from inside companies to remote locations. Microsoft’s position in the server market is huge. And Microsoft’s business in these areas continues to grow. Again, HP would need to increase market share to improve its revenue standing.
The enterprise software industry’s top company is Oracle Corp. (NYSE: ORCL), which has also released an array of cloud options. Oracle remains a dominant force in database systems. And these products, most of which carry multiyear licenses, allow Oracle business and service consultants access to its customers. With this comes opportunity not only to renew old licenses, but to get new ones.
For the past year, HP has not only had to add products and services to grow. It has also had to shake a bad board and go through management restructures and M&A problems. Those periods are over. HP has pressed to compete in markets that are already very crowded and in which it is behind.
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