CRN Exclusive: HP CEO Whitman On Dell, Autonomy, And Future HP Acquisitions

Whitman Speaks Out

HP CEO Meg Whitman spoke with CRN in a wide-ranging interview about Dell's channel moves, the Autonomy deal in hindsight, future acquisition possibilities and how channel partners will benefit from HP's split into two companies. Here is an excerpt from the no-holds-barred conversation.

Compare the HP channel commitment to the Dell channel commitment.

Well, they are talking a lot about it. It is not the history of that company.

This is our history. This is our DNA. This is who we are. And the channel is a unique ecosystem. It is different than Dell Direct. I understand what they are saying. We'll see what they can deliver. I think they talked a lot about turning over 200,000 customers to the channel. It didn't really happen. This is the kiss of death. If you do not deliver on your promises to the partners, they have a very long memory and they really understand.

How important is it to follow through on channel commitments?

When you say you are going to do something, you better do it. That is what I am really proud of over the last three years. We said we were going to deliver more partner focus, Unison, SmartBuy, DirectQuote, deal registration, and we have done it. You have got to mean what you say and say what you mean.

Does HP starting to repurchase shares mean a big blockbuster acquisition by HP of a large company is over, done and finished?

What we of course announced is that we were back in the market buying shares. We have been out of the market for four months. So we are back in the market buying shares and we are no longer in possession of material nonpublic information. But we will continue to think through acquisitions. Remember, one of the things we have done is we have repaired the balance sheet of this company. When I came [to HP] we had $12.5 billion of debt on the operating company. Now we have $4.7 billion of a net cash position. We generated a lot of cash. So we have massively rebuilt the financial profile of the company. So that gives us lots of degrees of freedom.

What will be the net cash position of Hewlett-Packard Enterprise and what are you going to do with it?

We'll probably have more than $7 billion in cash for Hewlett-Packard Enterprise. More than $7 billion, for sure. And HP Financial Services will live in Hewlett-Packard Enterprise.

We will be in a financial position to do M&A, to make more investments in R&D as we streamline our costs even further in ways that I think will help the company.

What is HP's acquisition strategy?

What I have said to investors is we are returns-based. So we are not going to do dumb acquisitions. We are not going to do dumb deals. We are pretty financially astute. I am all about returns. This is shareholders' money. This is not my money. It is shareholders' money. And we have a shareholders' mentality here, which is: OK, if you are a shareholder of HP is this good for you?

Was the Autonomy acquisition at the price it was done a stupid deal?

I would say it was not the right deal. I think if you look back on it, everyone thinks that was probably not the right thing to do. And it was totally not the right thing to do as we uncovered the [Autonomy] financial situation. But I think even regardless of that, that was a big bet on a category that was different than what the core of HP was.

Where do you see HP potentially using cash to be successful with M&A?

We are not walking away from infrastructure. So many companies are walking away from infrastructure. Even in the software-defined world you do not want to be limited by your infrastructure. We think it is a big business. We think it is a continuing business. And we are making investments. And we may make acquisitions there as well.

Is security an area where we may see HP acquisitions?

You might. Yeah, you might. There are a ton of new security companies popping up all the time. So I think that is a potential area for us. We think it is a big opportunity.

Talk about the potential for acquisitions in the cloud computing market.

Cloud is another area. Cloud won't be a big acquisition because we are doing it almost all organically. But there are like little tuck-ins like Eucalyptus. We got [Ecualyptus CEO and former MySQL CEO] Marten Mickos, which was huge. And we got AWS being able to be pulled on-premise, and a lot of companies want that.

How big a strategic advantage is it to be able to pull Amazon workloads into the HP cloud?

I think it is important. Eucalyptus was two things: We really liked their ability to pull Amazon on-prem for customers and into the HP cloud. And it also was an ’acqui-hire' [move]. We got Marten Mickos (pictured) and we got 80 to 100 Python developers. Python developers, of course, are the future. So that is a really important element of our overall strategy. So we are excited about it. We'll see. But I feel good about it.

Why is HP the better company than EMC?

We have a fabulous storage offering. So if you think about the core of EMC it is storage. And we have a fabulous 3Par offering that is the same architecture from top to bottom, high-end, midtier, and then our introduction ultimately of our low end. Today we OEM [our entry-level] MSA but we are crafting a 3Par low-end offering. It is one architecture. It really is for the new style of IT. And we have got a very good software-defined storage offering coming.

Do networking and servers within Hewlett-Packard Enterprise help against EMC?

Our networking business every year gains a little bit more share. What I want to do is I want to increase the share gain of our storage and networking business under Hewlett-Packard Enterprise.

And then, of course, we are the king of the server business. And we ought to be able to win in converged infrastructure. I think we are doing a good job there. I think we will get even better.

Listen, we will have the R&D engine. We will have HP Labs. We will have the go-to-market. We will have the partner community. I think we will be focused and streamlined.

What is the EMC challenge as they look out on a marketplace where they are battling a separate Hewlett-Packard Enterprise?

We all see the same challenges in the marketplace whether it is EMC or IBM or Cisco or Dell. We all face the same challenges, which is the market is moving at lightning speed. We have to be better solutions sellers. And we have to have better connections to our collective go-to-market, including the channel. And how we each solve that is going to be different. We'll see what they do. I think we are ahead of the curve here. My sense is we have a sixth sense on the right timing of this. First is better than last.

Can HP retain a strong relationship with VMware after all that has gone on [with the reported HP-EMC merger off the table]?

We do a huge amount of VMware business because when we sell a server. there is a hypervisor that gets attached to it: It is either a VMware hypervisor or Hyper-V or KVM. So we do a lot of business together. This EVO: RAIL [deal with VMware] we think is a big opportunity for us. By the way, it is not only VMware [that we have a strong relationship with]. It is Microsoft, SAP. We have got to have, I think, much closer alliances, perhaps maybe, a little bit back to the future.

Talk about some of those partnerships.

One of the great all-time partnerships was HP and Oracle back in the day. At the field level, it works great. But we have got to rebuild these relationships so that they are best-in-class. I would like Microsoft to think of us as their best go-to-market partner. I would like SAP to think of us as their best go-to-market partner. I would like VMware to think of us as their best go-to-market partner.