HP New CEO With Apotheker at helm, HP signals new direction

The initial reactions to Hewlett-Packard's appointment of Leo Apotheker as its new CEO has been double-takes.

Late on Thursday, HP named Leo Apotheker, a former CEO of SAP, to be its new president and CEO.

Apotheker, a former chief executive at SAP, doesn't have much in the way of hardware or consumer technology experience, which account for much ofHP's revenue.

And after former CEOMark Hurd's departure last month, the thought among industry analysts was that HP would name one of its well regarded division chiefs as its next CEO.

Instead, HP has again turned to an outsider. Apotheker, whose appointment was announced after the close of markets on Thursday, brings to HP a strong background in enterprise software, a worldview that is less U.S.-centric, and an ability to navigate the global economy in five languages, English, Dutch, French, German and Hebrew.

In picking Apotheker, analysts believe HP is telling the world that its future, in both its consumer and enterprise products divisions, is in software.

The appointment of Apotheker also includes a message to its emerging nemesis, Oracle Corp.

With its acquisition of Sun Microsystems earlier this year, Oracle moved into hardware. And to help shape this direction, Oracle quickly hired Hurd as a co-president after he exited HP in the wake of an odd scandal involving expense reports and a B-movie actress.

SAP, a company that accounted for more than 20 years of Apotheker's professional life, is Oracle's toughest ERP competitor.

To further drive home the point that Oracle is in HP's sights, HP also said that Ray Lane, a former COO and president at Oracle and now managing partner at Kleiner Perkins Caufield & Byers, is a new member of the HP board, designated as non-executive chairman.

HP, as the world's largest IT company by revenue, has more than Oracle to worry about. But Apotheker's appointment will give rise to much speculation about HP's future acquisition strategy, and whether it may aim more for enterprise software companies to not only challenge Oracle but IBM as well.

Analysts believe software will be the focus of HP's strategy.

"One of the fastest growing and highest profitable parts of HP has been its software business," said Frank Gillett, an analyst at Forrester Research. "Software is where the magic and differentiation get created."

Apotheker "is really versed at running a very large software company, a global software company, at scale," said Crawford Del Prete, an analyst at IDC. HP's future will be using software to help customers solve business problems "and that's really what SAP did for 20 years when he was there," he said.

In its CEO announcement, HP pointed out Apotheker's record in driving software growth at SAP, as well as efforts on R&D, an area that some analysts believe was deemphasized during Hurd's tenure.

If HP's chief executive selection was a horse race, the odds would have heavily favored internal candidates such as Ann Livermore, who runs the enterprise business, and Todd Bradley, who heads its PC division.

Carly Fiorina, who preceded Hurd, was also an outsider. Hurd wasn't on the short list of candidates for the jobs, having come from NCR Corp., which had revenues that were only a fraction of HP's.

The one sure thing about HP and its CEO appointments is that the company hasn't lost its ability to surprise.

Source: Computer world @ Sept 30, 2010