Change and evolution are the only constants for companies that want to stay on top.
It's little wonder that HP never gave up in its bid to acquire cloud-computing company 3PAR, despite the rival bid by Dell
Cloud computing has the potential to change the way businesses store information. Cloud computing is not a new phenomenon. We already use it through services like Facebook, Gmail, Twitter, and blogs, but businesses have been slow to take it up.
It's the benefits that are immense. The mobility, scalability and cost-effective features that this service offers are yet to be exploited by businesses at large. HP is entering the market at just about the right time.
The competition heats up
The company plans to develop a platform rather than simply host a set of programs or provide storage space. This definitely looks exciting. The competition is going to heat up. Amazon.com
Still, what really caught my attention was how Apotheker, during a March press conference, sidestepped questions about competition. A new term was coined to deal with customers-turned-competitors -- coopetition -- from cooperation and competition. This is basically with reference to Oracle
The only thing that matters, Apotheker says, are his customers. The professionalism that he exhibited augurs well for the company. A leadership that knows where to draw the line in a cutthroat industry is what matters. Bear in mind that this was Apotheker's first public appearance since taking over as CEO last November.
At the event, the company also announced a 50% increase in dividend payouts from $0.08 to $0.12 per share. This is a good sign that the company wants to return profits back to shareholders. The steady margin gains the company has seen over the past few years has definitely played its part in this move.
It will take some time before HP can establish itself as the market leader in storage solutions. Since the company intends to bring out its own Internet "cloud" product, there will be research and development costs, which might overshadow its revenues in the near future. Yet it should not be interpreted as a weakness. Also, with plans to introduce its own application stores (to be launched sometime next year), the company is positioning itself to gain in the long run.
The final difference
The move into software and services from primarily being a hardware producer is an opportunity for unprecedented growth. It takes a bold CEO to be behind such a move. To move out of its core business requires courage. As aptly put by Isaac Asimov, "No sensible decision can be made any longer without taking into account not only the world as it is, but the world as it will be."
Isac Simon does not own shares of any of the companies mentioned in this article. Rackspace Hosting is a Motley Fool Rule Breakers choice. Amazon.com is a Motley Fool Stock Advisor selection. The Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.