Analysis: Whitman's Tenure At HP Must Include Open-Source Investment

Of all the priorities Meg Whitman now must face as Hewlett-Packard's CEO -- and HP has many priorities -- deep and long commitment to open-source technology must be near the top of the list.

HP’s software business is simply not a strength for the Palo Alto, Calif.-based company -- whether it’s on the desktop, the server, the data center or in the cloud. Perhaps the best piece of software that comes from HP is its Universal Print Driver, which is actually a powerful piece of software but not exactly positioned in the IT industry’s growth areas.

As a company, HP currently spends about $3 billion per year on research and development, while last year Apple spent $1.8 billion. So that raises the rhetorical question: Which company is getting more for its money?

HP has long been a contributor to open source projects, including contributions of significant technology that had been proprietary. But it simply can contribute more and contribute it better. Whitman can oversee HP investments in open-source areas where the company can see substantial returns.

There are no quick fixes for HP to make strides in developing winning product sets in the cloud, in smart devices or other critical areas where it is lacking. But, fortunately for Whitman, there is a vibrant open-source community in just about every area critical to HP’s success. IBM realized this for itself in the late 1990s, when it let go of its proprietary mindset and gave itself up to the open-source movement. That was the beginning of a major transformation at IBM; it let go of its addiction to proprietary turf wars and began focusing more and more on solving customer problems.

Whitman’s turnaround efforts could benefit by doing now what IBM did then. She could take a full 50 percent of HP’s R&D budget, and over three years invest in developing technology in these three open-source efforts that could have immediate benefits for HP, its employees, its channel partners and its shareholders:

OpenStack: Developers of the open-source cloud platform, launched through an effort of both Rackspace and the U.S. National Aeronautics and Space Administration (NASA), are working toward building scalable, yet simple, building blocks for all manner of cloud solutions. HP’s portfolio includes a long legacy of high-availability technologies (going back to the old Digital Equipment Corp. and Tandem properties, which HP eventually came to own when it bought Compaq.)

HP did announce several weeks ago that it would support OpenStack, so now is the time for it to get aggressive here. By contributing more of its technology to the OpenStack movement, HP could see an attractive ROI multiplier for its effort -- as well as speeding up its own ability to drive cloud solutions. The market will soon migrate in bigger numbers to cloud-based solutions and, when it does, HP will want to be there in a big way. Investing in OpenStack could come a lot cheaper, and be far less disruptive to HP, than dicey acquisitions like its recent deal to by Autonomy.

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Android: So WebOS failed. You know what? IBM failed with OS/2 but it survived -- eventually using a lot of the skill sets it developed and some of the code in different parts of its business.

While HP will likely not produce any more noteworthy products based on WebOS, that experience should not stop it from diving deep into the Android open source community. While developing and contributing more of its own intellectual capital to the open-source community (a step that could help rivals like Xerox, Samsung and Dell), HP could also see returns here quickly. Android, while a snappy platform that is enjoying amazing adoption rates, is simply lacking in too many areas critical to mid-to-large organizations. HP’s own know-how for print management, enterprise management and security could speed up Android’s adoption in the enterprise -- where HP could make a lot of money selling printers, servers and services through channel partners.

Enterprises will be investing in Android-based technology eventually and, when they do, HP will either be there in a serious way -- with Android running on printers, storage devices, networking units and the like -- or it could well miss a critical opportunity;

Virtualization: HP is currently a member of the Xen.org Community’s advisory board, so it knows that open-source virtualization is an important area both for itself as a company as well as its partners and their customers. But more work needs to be done and the faster the better.

The overwhelming majority of servers now running throughout the world are not virtualized -- and many don’t even have enough hardware to support even rudimentary virtualization. Increased investment by HP in research and development in open-source virtualization -- to tackle issues ranging from hardware requirements to security, areas where it has a lot of know-how and skill -- could open the door to a server refresh in the market the likes of which we haven’t yet seen.

For all its size and reach as a company, HP needs to move swiftly and successfully in so many areas that even the most skilled of CEOs would be challenged to get it done. By contributing half of HP’s R&D investment into open-source projects like OpenStack, Android and Xen.org -- a figure of about $4.5 billion over three years -- Whitman as CEO would be able to shift its focus onto solving growing customer problems without the weight of having to prop up proprietary projects that aren’t really giving employees, partners or investors enough of a return (and HP’s market value has dropped some 47 percent in the past year).

Whitman could solve an awful lot of problems by investing many more HP dollars and resources into open-source projects, and she could solve them sooner rather than later. And, given how much time Leo Apotheker had to work, time would appear to be of the essence.