IT Investment Research

Thousands of HP Employees Get Autonomy

This could have been you California: HP Cuts Headcount 8%

(Looks like Meg found what I predicted when she got a look at the dog that was Autonomy.)

-- Dennis Byron

Ariba: Two Decades of Patience Pays Off

I'm coming out of retirement for the announcement that SAP (SAP) is buying Ariba (ARBA). 

Sonofabitch! Ariba is still around! And is a "cloud computing" market player?  What a market-messaging coup.

My first reaction was to email CMO Mike Schmitt at Ariba and congratulate him. 

But I found Mike has moved on.

Sonofabitch! e2Open is still around! e2Open was created in the late 1990s by participants in the electronics and technology supply chains — including Hitachi, IBM, LG Electronics, Lucent Technologies, Nortel Networks, Matsushita Electric (Panasonic), Seagate Technology, Solectron and Toshiba. And now it's a "cloud computing" market player too? 

And e2Open (I may have some of those characters upper case when they should be lower case and vice versa) wants to go public.

Either everything in supply chain management is happening as I predicted, except that I was years ahead of time.  (The link is back to a five-year-old SeekingAlpha post but the research dates back to 1997.) 

Sonofabitch! Maybe I should un-retire.

Or maybe... just maybe... there's another stock bubble in progress.

-- Dennis Byron

Enterprise Software in 2012: Plus C'est Le Meme Chose

I took 2011 off from researching the enterprise-software market. (Actually I had a big project in the winter that took all my time and then I took the spring and summer off and then I had a hard time getting back into the swing of things because fall golf was great here on Cape Cod this year. But why bore you with all that detail?).  

Thankfully, a quick year-end Google tells me I didn't miss anything by taking 2011 off from enterprise-software market research. It looks like:

• 2012 will be the year of cloud computing (just like 2010 was going to be!). Now, this time, we will surely see the end the half-century reign of on-premise software providers such as Oracle (ORCL) and SAP!
• End users like Montclair State University are still spending four or more times the license fee of enterprise software such as from Oracle to install the software "turnkey" (just like in 2010 and for a half century before that).  And the end users keep failing. A Hershey kiss anyone? (Speaking of which, where is Leo Whatshisname these days?)
• IBM has a "new" enterprise software acquisition strategy for 2012. Unless Steve Mills buys back Mapics, this sounds like the same old same old to me.(But, really, where is Leo Whatshisname these days?)
• openoffice.org -- the weird word with the dot in the middle, not the actual product -- can't find a home and the Open Source Initiative still can't settle on a license it likes.
• HP (HPQ) can't decide if it wants to be in the enterprise software market. But it will waste a lot of money to find out if there's a market there. In 2011 it was $10 billion on a hodgepodge of decades-old search/BPM technology HP wasted. [But Adobe (ADBE) is bailing out.  That makes sense.]
• Microsoft (MSFT) is going all out for its Dynamics ERP line in 2012 according to  product analysts.  Just like in 2008.  And in 2004. It must be a leap-year thing because investment analysts are actually thinking that Microsoft might be shopping around its failed ERP line but can't find a buyer.  Maybe Doug Burgum will buy it back?  (More likely he's making another fortune in the North Dakota oil fields after shopping SuccessFactors to SAP.)
• In 2012, enterprise software should be like social networking software.  In 2010, that was the mantra of salesforce.com (CRM).  In 2012, all you have to do is add the word "suck" to this tired message and the press repeats the same old BS.
• Suckers sunk a half billion dollars on this idea for a company that grossed less than $50 million in the first nine months of 2011 and lost just about the same amount, giving new meaning to the "we'll make it up in volume" business model.  The usual suspects cashed out as the pension funds, who have to invest prudently, came in. 

That last bullet sounds more like 2000 than 2010 but for enterprise software in 2012, the saying is still true:

"The more things change, the more they stay the same."

The only year-after-year repeating enterprise software headline that I didn't see: 

 "2012 will be the Year of the Linux Desktop."

The headline that gave me the biggest laugh:

"NetSuite (N) is Pushing into Enteprise Software."

-- Dennis Byron

Apache Sorry That OpenOffice Put It in the Middle of Old-fashioned Open Source Catfight

No sooner had I said I missed the good old days when the Free and Open Source Software (FOSS) movement went ballistic over silly things (like too many electronic document standards when there were already a couple of hundred standards for paper documents) , it turns out the good old days are still here. Based on today's statement by the Apache Software Foundation (ASF) to the effect that

"openoffice.org is doing just fine in its new home, thank you,"

I guess I've been missing a good old-fashioned "Microsoft (MSFT) sucks," "Microsoft is like the Soviet Union," "Massachusetts Chooses ODF" legitimate open source culture vs. FOSS catfight.

Only Oracle (ORCL) has replaced Microsoft as the bad guy. The thing is that when you have a movement like FOSS (or Occupy Wall Street or "Hope and Change"), you have to have bad guys.  Neither your message nor your substance can stand on their own so in order to get attention, you have to attack someone or something else.

openoffice.org is a decade-plus-old, crippled Microsoft Office wannabee, turned over to ASF by Oracle.  Oracle had inherited it from its Sun acquisition  -- and probably would have preferred to just dump it deservedly into the dustbin of history -- but must have made a promise to the European Union (EU) to keep it alive in return for EU approval of the acquisition.  Sun had inherited it from a long-ago acquisition of a miniscule European company.

The ASF is one of the good guys. Its web server is probably the most popular piece of open source software in existence. "The Apache Way" is really a positive, populist and progressive (in terms of information technology) movement unlike anything else in the industry.   I'm sure this sort of notoriety is the last thing ASF wanted when it agreed to take over the code.  Sorry about that, guys.  

-- Dennis Byron

HP Fires Apotheker to Block Oracle/Ellison Takeover

When something makes no sense, you have to connect the dots.  That's why it's crystal clear to me that HP's board fired Leo Apotheker on September 22 in order to block -- or delay -- Larry Ellison of Oracle (ORCL) from taking a run at HP (HPQ).

Why else would the HP board hire Leo Apotheker as CEO less than a year ago (at the time the recently fired CEO of SAP, not that that was his fault), probably at a big signing bonus (I just don't feel like looking it up), OK HP's exit from the PC business of which it is the market leader, OK his acquisition of the mishmash of antiquated software called Autonomy (AUTN) to get into a market that is literally disappearing, OK his throwing away the value in the Palm acquisition (the acquisition itself happened before Apotheker's arrival), OK a list of other changes that fundamentally changed the world's largest information technology company (to the point that it would no longer be the largest), and then pay him $25 million in severance?

You might think that it is simply that HP's board is the most incompetent set of business people ever assembled. You might think there is clear and convincing evidence now for a true shareholder class action suit. You might think that the Buffett-types on the HP board wanted to help make President Obama's argument against corporate-jet deductions and millionairre salaries.

But it's simpler than that. I take Ray Lane's word for it, as reported by Eric Savitz, that this is a different board than the one that fired Fiona and Hurd and hired Apotheker. This board is smart.  It knows that Larry wanted to buy HP so that he could fire Leo on the steps of the court house at the next TomorrowNow trial in downtown Oakland. Now he can't.  Bravo!

-- Dennis Byron

SAP: You Still Need to Get Out of Dodge; Maybe HP Will Give You Half

You would probably be surprised to know that yesterday -- September 1, 2011 -- was one of the best days in Oracle (ORCL) CEO Larry Ellison's storied business career.  An Oakland federal court vacated a $1.3 billion award in Oracle's favor and awarded Ellison a mere $300 million instead.  

Now, in return for losing that measly billion dollars, Ellison and Oracle will get $10 billion in additional publicity as the case winds in two directions.  What a return on investment.

• First, Oracle will appeal the feds' decision of the appeal by rival SAP, which admitted wrongdoing in the original suit. The appeals will go up through additional court levels. As I said when this all started four years ago, SAP needed to bury this thing fast. It didn't to its lasting regret. Let's face it, SAP was wrong (wrong for even buying TomorrowNow, never mind the actual criminal behavior). I'm thinking Supreme Court here with Larry standing on the front steps. But eventually Oracle will lose in the appeals process because, let's face it, $1.3 billion was excessive. But at each level, Oracle can turn the PR machine back on.
• Then, Ellison will get to retry the case against SAP. Oracle can turn the PR machine back on again. It can keep pummeling SAP. Oracle can use the SAP retrial as a set up for the lawsuit against RiminiStreet (I assume that's still alive; I took a sabbatical this summer?). And this time, Larry can drive down the hill to Leo's house and drive the HP (HPQ) CEO over to the court house. Leo can't hide this time.

Like I said, in November, SAP, get out of dodge. But first ask HP if it will kick in half of the billion-three fine. HP can't want this to proceed any further either. 

-- Dennis Byron

Apache 2.2.2: Where is the Outrage? Where is the Bombast?

Jim Jagielksi announced August 30 release 2.2.2 of the Apache HTTP server, the latest update to the most successful yet least controversial open source project. This is THE Apache, the web server, not to be confused with the hundreds of other open source projects the Apache Software Foundation has spawned, dozens of which have reached relative stability.

This is the project/product that killed the standalone middleware market when IBM decided, "Why build our own.  Give these guys a few bucks to a have 'birds of a feather' meeting."

Congratulations but I sure miss the fun similar releases would have caused 10 years ago. BEA would tell you all the things that were wrong with it. Some open source zealot (not part of the Apache Software Foundation) would tell you that Microsoft (MSFT) causes world hunger.

From an investment point of view, starting with IBM's decision -- and Oracle's (ORCL) related decision to ship Apache with its app server -- increasingly the middleware market merged into the platform-software market and more recently the software market merged into the overall IT market. Today, all the IT leaders except SAP have declared they're in a business bigger than or different than the software business. (SAP's CEO made the declaration about 18 months ago and shortly thereafter was no longer SAP's CEO.)

Oracle sells servers.  Microsoft sells (or is trying to sell) telephones. EMC sells document management software. Intuit sells second mortgages. And ironically many of the smaller companies in the former software market that have not yet made their declaration have started calling themselves "open source" companies.  Looking for that Apache lightning to strike twice. 

-- Dennis Byron

HP's Wohl Kicked Upstairs for Killing WebOS, Buying Autonomy, Other Mistakes

The marketing communications business is a lot tougher than when I last practiced it 25 years ago. 

HP (HPQ) has had a bad week in the market because it admitted it wasted a ton of money on Palm, is planning to make another foolish acquisition, and has announced it is getting out of the consumer business. So HP canned its Marcom guy according to Bloomberg. Huh?

In a sense HP has a bad year with its then new CEO having to avoid going to headquarters, or apparently anywhere in the United States, for a while after he took the job.  In fact, let's face it, HP is having a bad century.

But back in the day, those were not the kinds of decisions that Bill Smith and Dick Brown made. Really, those are the real names of two of the greatest information-technology marketing-communications/PR professionals of all time and they worked back to back to back to back at Data General. That is, Smith was replaced by Brown who was replaced by Smith who was replaced by Brown between 1973 and 1983 as the company went from $20 million in annual sales to over a $1.2 billion (remember that's in 1970s/1980s dollars).  And PR guys certainly didn't get blamed, as some others have speculated, because some breaking news hit the wire 20 minutes before it should have on August 18. 

The fact that Wohl is being replaced by another ex-SAP guy actually tells the story.  I'm pretty sure this is another Brown replaces Smith replaces Brown sort of thing.

But at least someone remembered enough PR 101 that the news was released on a Friday afternoon(eastern U.S.)/nite (in Europe) in August in the northern hemisphere during a hurricane. Smith and Brown would be proud.

-- Dennis Byron

Obama and New York Times Are Both Like Match-Play Golf and "Tin Cup"

(Note: There is nothing to do with investment research or information technology in the following.)

There is a kind of meandering, non sensical column in the New York Times August 24 that compares former Illinois Senator Barack Obama to either or both Tiger Woods or to Kevin Costner's character in the golf movie, "Tin Cup." (I'm not sure because of the meandering.) The article popped on my little search doo-hickey because of the word "golf" but through the mention of golf strategy and "Tin Cup," the column is really a great metaphor for the Times itself and Obama.

Relative to the Times, the article begins with an odd description of the strategy of competitive golf, something along the lines of "play the course, not the opponent." "Play the course" is always good advice but the strategy that the Times associated with match-play golf in the article is more often associated with stroke play, the type of golf where you have to count every stroke, the lowest absolute stroke total wins, there are no "gimmes," and no running up a big stroke total into a  loss on one hole and yet make things "all even" on the next. Judging by its corrections page, the Times is always in need of match-play rules, not "playing the course" rules.

Then there is passing reference to Woods. It has nothing to do with his private life thankfully (if the timing had been right they could have done that column about Bill Clinton). 

Finally the article concludes with a paragraph that reads:

"There is a great scene where Dr. Molly Griswold is trying to help Roy “Tin Cup” McAvoy, the golf pro, rediscover his swing — and himself. She finally tells him: “Roy ... don’t try to be cool or smooth or whatever; just be honest and take a risk. And you know what, whatever happens, if you act from the heart, you can’t make a mistake.”"

That's where the metaphor for Obama comes in.  In the article the Times fails to tell the rest of the story.  Following this advice and against all sensible golf strategy (including the advice to "play the course"), Tin Cup proceeded to dump five shots in  row into a pond -- costing him 10 strokes and the chance to win a golf tournament. Isn't that the way his term as President has gone?

-- Dennis Byron

HP Acquires Hodgepodge of Enterprise Applications at Top Dollar

Boy, you take a few months off and the world goes crazy.

Congratulations to the guys at Autonomy (LSE: AUTN) for unloading that hodgepodge of old enterprise applications businesses for top dollar to HP. 

Maybe it's something to do with Euro to dollar exchange rate... or a way to save on U.S. corporate taxes by not repatriating profits... or something else not immediately obvious... Whatever, HP (HPQ) is

• back in a business it shouldn't be in
• will be trying to sell a half dozen products that didn't sell that well when they had their own brandnames on them 
• tyring to sell them into a market dominated by Microsoft (MSFT), Adobe (ADBE) and IBM
  • [I think even Oracle (ORCL) and Open Text (OTEX) are slightly bigger than HP will be in the content software market if the deal goes through but Oracle and Open Text have just as much a hodgepodge of products as Autonomy.]  
  • [Google (GOOG) could have entered this market with gusto anytime in the last 10 years and hasn't; does that tell you something?)

Supposedly this deal has driven up the share prices of MicroFocus and Sage a few pence (Is a pence what I think it is?) and put SAP and Software Ag (SOW) in play.

It would be interesting to know if Oracle had bid and if this price was just the result of some kind of male-urination contest.

-- Dennis Byron