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Hardware-happy HP has swallowed a Sun death pill

Doomed bid to get out of making actual machinery

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A time to buy

This happened to the MySQL team when they were bought by Sun Microsystems in 2008, and this brings us back to the dustbin of history.

There is a model for what HP is trying to achieve and how it's going about it: Sun.

HP is like Sun: it is a tech giant with a huge hardware manufacturing footprint looking destiny in the face and trying to buy its way out of the inevitable.

HP is no Sun, it's actually making money, but HP is rattled. There's been much talk about the death of the PC and the rise of the smartphone and the tablet. This has come just as the global economy and consumer spending seems to be weakening again. Is this a coincidence or are these factors connected? Is this truly a fin de siècle?

When faced with challenging situations, Silicon Valley's answer is to buy your way out into a maintenance business or to branch into a new market. Software has allure, because companies like SAP, Oracle and Microsoft make it look easy.

Faced with stagnation in 2005, Sun made an audacious $4bn acquisition for tape-store specialist StorageTek based on bold reasoning and amid talk of synergies. The reasoning went like this: the future is data, there's a lot of data living on legacy tape drives, owning a tape business with Sun's storage and server business would mean nothing but payoff.

The deal failed to re-float Sun's failing business, and the deal was cruelly described by critics – and reported here – as the sounds of "two garbage trucks colliding". MySQL failed to turn Sun into a software company. Finally, Sun was sold to Oracle in 2010.

HP, like Sun, has a bad track record of managing integration and achieving any material market share or sales boost from the results. The obvious example is HP's Compaq buy in 2001. Integrating smaller companies is potentially easier, but keeping people who made the company special is hard as they feel excluded, ignored or stifled by the new corporate parent so they leave.

Just as when Sun when bought MySQL, HP hopes to avoid crushing its new software asset by giving Autonomy plenty of room to breathe. It will operate as a separate company under founder and CEO Mike Lynch, with Lynch reporting to Apotheker. When Sun bought MySQL, it likewise insulated its acquisition from Sun's management bureaucracy. Sun's then chief executive Jonathan Schwartz said, too, MySQL's CEO Marten Mickos would report directly to him. It's a claim Mickos has disputed; Mickos contacted The Reg to say he did not report directly to Schwartz but to then software executive vice president Rich Green who reported to Schwartz.

"Autonomy... will continue to operate separately so we can keep them focused on their own market momentum, while at the same time they can play a key role in enabling the opportunities we see and the strategy we've outlined for HP," Apotheker said.

Room for differences

This will make for interesting management. Founders and CEOs of companies bought by Silicon Valley tech giants rarely stick around; in fact they are traditionally paid to go away. Keeping them on perpetuates the acquiree's unique culture, management and business style, factors that go against the playbook in the Valley.

Looking back, HP's re-invention as software company has been in the air; HP's board has been looking for bold solutions for the future and hoping to end their reliance on the PC. Former HP CEO Carly Fiornia said the board she fell out with had talked seriously about breaking up HP into three separate divisions.

It looks as though the time for bold moves is upon HP at last, and software is the new game in town. Albeit its finances and market share are healthier, it still appears that HP may have set itself on the same road trodden by Sun. ®

This article has been updated to include comment from Marten Mickos.

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