HP's split-up success will depend on its cloud unit

Along with storage and networking, the company needs cloud services for growth

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Credit: Reuters

Hewlett-Packard's break-up plan will give the company's cloud unit more room to maneuver, which it needs to make faster progress on private and public clouds. But success will still be hard fought because of a slow start.

HP will be split into two companies within 12 months: Hewlett-Packard Enterprise will get the enterprise hardware, software and services businesses and HP Inc. the PC and printing businesses, the company announced Monday.

Along with storage and networking, the company will depend on cloud services for its growth. Like other old-school IT companies, HP has had trouble finding its place in the cloud as services from the likes of Amazon Web Services (AWS) and Google have become increasingly popular. But the split could turn out be a good thing for the cloud unit.

"It reduces the amount of distraction for the HP Enterprise company. It will also allow the company to allocate a greater percentage of research and development or acquisition dollars to the cloud," said Crawford Del Prete, chief research officer at market research company IDC, via email.

The main goal with the split is to make HP's different units more nimble, according to CEO Meg Whitman. A successful HP will bring more choice and competition to the enterprise market.

HP has made a number of moves this year to boost its fortunes in the cloud sector. In May, the company announced the Helion platform and a US$1 billion bet on open-cloud products, including its own OpenStack distribution, and services over the next two years. It also announced services to help make OpenStack easier to roll out.

HP acquired Eucalyptus Systems, a company that offers open-source private cloud software compatible with AWS, in September. Former Eucalyptus CEO Marten Mickos, perhaps best known for his previous tenure as CEO of MySQL, is now the head of HP's cloud unit

"HP wants to accelerate its efforts not only in building private clouds, but also to the cloud management and security spaces. Marten brings credibility and focus to [those] efforts," Del Prete said.

Although Eucalyptus was an HP competitor, Mickos voiced his support for OpenStack in August not long before it was acquired by HP. While espousing its advantages, he also said that it faces very serious challenges.

"It's difficult to produce technically brilliant products when governance is shared among very large corporations, each one with their own agenda," Mickos said then.

Mickos is from Finland, so his European background will also help HP's cloud efforts in that region, according to Arnaud Gagneux, vice president at market research company CCS Insight.

"The cloud unit has been very, very active over the past year or so, especially in Europe. Where it has take the lead on EU initiatives A4Cloud and Coco Cloud," Gagneux said.

The European market is slightly trickier than the U.S. because local regulations in some cases force organizations to have data centers in Germany, France and so on. Also, enterprises have to be convinced that vendors will protect their data. The A4Cloud (Cloud Accountability Project) and Coco (confidential and compliant) Cloud initiatives both aim to increase confidence.

"HP has taken the lead in addressing local concerns of enterprises. I think that will help it become successful, especially in the SMB space" Gagneux said.

HP's biggest challenge may be that time is not on its side. It has a number of entrenched cloud competitors -- besides Amazon and Google, there's also IBM, Rackspace and Microsoft.

"HP needs to make faster progress in both the private and public cloud segments," Del Prete said.

While HP has made cloud a priority, it hasn't attracted large customers fast enough, he added.

Some think HP is already out of time.

"HP will do the best it can do, but I'm not sure it will find much left in the cloud market when all is said and done. Perhaps if HP had split a few years ago, the story could have been different. But that was then; this is now," cloud expert David S. Linthicum wrote in a column for InfoWorld.

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