HP could make mark in mobile technologies with next CEO

But HP's portfolio may be too diverse to focus heavily on mobile

With Mark Hurd's sudden resignation, Hewlett-Packard Co. has a golden opportunity to hire a CEO with business savvy in the mobile, wireless and smartphone markets, and that would help give the mature technology behemoth a needed and vital strategic direction.

Hurd oversaw the purchase of Palm Inc. and its WebOS for $1.2 billion in April, so clearly HP sees the value of smartphones and tablets.

But some analysts have openly questioned whether the Palm purchase is enough to give HP the leg up it needs in a market where handheld and wireless products are expected to gradually replace desktop and laptop computers for many uses.

It isn't clear how high a priority smartphones and tablets are at HP, given the company's enormous product portfolio, which includes an enterprise servers and storage division that generated $15 billion in revenue in 2009.

Smartphones are a small part of HP's Personal Systems group, which includes consumer electronics and desktop and laptop PCs and overall accounted for $35 billion in 2009 revenues. Printers are in a group all their own, one that generated $24 billion in 2009 revenues. Meanwhile, consulting services were worth $35 billion and software hit $4 billion in 2009.

Several analysts said that while a CEO with a clear focus on smartphones and tablets sounds like a smart strategic move for HP over the long haul, it could undercut the company's broad base of products and services in its current and near-term operations.

"HP's board needs to focus on getting a CEO that can run the entire company, not just focus on mobile," said Jack Gold, principal analyst at J.Gold Associates LLC. "HP is very diverse, and I think they would be best served with a general manager who could get all the various divisions running smoothly."

Focusing on mobile products would be "way too far down the stack," added Gartner Inc. analyst Ken Dulaney. "A networking CEO would be better. Their big battles are with Cisco going forward."

With an eye toward becoming a full-fledged networking products company that would be No. 2 to networking king Cisco Systems Inc., HP acquired networking products maker 3Com for $2.7 billion in late 2009.

Ramon Llamas, an analyst at research firm IDC, said he doesn't see HP hiring a "mobile whiz" as its next CEO, partly because of the diversity of HP's product line and the nascent nature of smartphones and tablets both at HP and elsewhere. "As a mobile analyst, I'd like to see HP go whole hog in mobile, but they need to look at their entire business, too."

Llamas noted that the role of Palm's WebOS operating system is still not set at HP, and it's unclear which products it might appear in. The products could range from smartphones to printers.

Even though it might not make sense to focus on a mobile expert as the next CEO, at least two names keep surfacing that would give HP gravitas in the mobile space.

Todd Bradley, head of the Personal Systems division at HP, is said to be a top candidate for the vacated CEO spot, along with several others. He came from Palm and would be capable of setting a mobile and wireless strategy, if the HP search committee wants to go in that direction, several analysts said. On the other hand, Gold said it might make sense to keep Bradley in his current role, just to keep the proper focus on mobile.

Another name from the wireless world that has been thrown out by recruiters as a possible CEO is that of Michael Capellas, former CEO of Compaq Computer Corp., which HP bought in 2002. Capellas is also the former CEO of telecom provider MCI Inc.

HP holds a prominent place in the technology world not just because of its products, but also because it acts as an influential force in markets with its suppliers and customers, and in political circles on matters such as technology standards and Internet policy.

With the right CEO, HP could avoid the kind of criticism that another mature company, Microsoft Corp., received last year because of problems with its Windows Mobile OS. Microsoft is set to launch a revision of its mobile operating system, and Windows Phone 7 should appear in new smartphones that should be ready before the holiday shopping season. Microsoft CEO Steve Ballmer has linked the coming smartphones to his company's broader cloud computing strategy.

Without a clear long-term focus on mobile technologies, HP could be fine as it continues to manage its diverse portfolio, but it would do well to heed the lesson from Microsoft. In searching for a CEO, should HP plan for one or two years and hire an executive with a broad view of all the company's products and services? Or would it be more valuable to look five or 10 years ahead, to a time when mobile devices may be more vital and function as client endpoints in a cloud-oriented world built on millions of servers and switches?

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Copyright © 2010 IDG Communications, Inc.

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