HP Ousts Apotheker, Partners Applaud Dismissal

HP Thursday fired President and CEO Leo Apotheker less than a year after picking him to succeed Mark Hurd.

HP’s board of directors appointed one of its own, Meg Whitman, to replace him. Whitman, the former president and CEO of eBay and an unsuccessful California gubernatorial candidate in 2010, joined the HP board earlier this year.

"We are fortunate to have someone of Meg Whitman’s caliber and experience step up to lead HP,’ said Ray Lane, who Thursday moved from non-executive chairman to executive chairman of HP’s board, in a statement. "We are at a critical moment and we need renewed leadership to successfully implement our strategy and take advantage of the market opportunities ahead. Meg is a technology visionary with a proven track record of execution. She is a strong communicator who is customer focused with deep leadership capabilities. Furthermore, as a member of HP’s board of directors for the past eight months, Meg has a solid understanding of our products and markets."

Apotheker also resigned his seat on the board, the company said.

Many channel partners of the Palo Alto, Calif.-based company are pleased with the turn of events. Consensus opinion among several HP partners contacted by CRN is that Apotheker didn't show enough interest in the channel and made some questionable decisions during his brief tenure at the helm that negatively impacted their businesses.

In particular, HP solution providers are displeased with the uncertainty created in August when HP unceremoniously disclosed that it is considering a sale or spin-off of its $42 billion Personal Systems Group, a revelation that partners say has put channel deals in jeopardy. Some are also disgruntled over HP’s move to pull the much-ballyhooed HP TouchPad tablet from the market after just six weeks.

Some HP partners are downright giddy that Apotheker is no longer with HP.

"I am ecstatic," said Sam Haffar, president and co-CEO of Computex, one of HP's top enterprise partners and a CRN Tech Elite 250 solution provider based in Houston, Tex. "This guy was fired by SAP and was unemployed when HP hired him. [HP's board] should have done their due diligence. Now they get rid of him in less than a year. It should have happened sooner!"

Leigh Carpenter, director of strategic services for Nth Generation Computing, a San Diego-based HP partner, said Apotheker didn't really connect with the HP channel, despite making appearances at the major HP events. "For us, he seemed a lot less in-touch with partners [than his predecessor],’ Carpenter said. While she couldn’t put her finger on exactly what caused the disconnect, Carpenter said that ’it just felt like Mark Hurd was more hands-on with partners."

NEXT: Partners Say Apotheker Damaged Channel Ties

Apotheker's inability to establish strong partner ties took its toll in HP's sales trenches, according to Haffar. "When they lost focus on us, we lost focus on them," he said. "They were a much more focused strategic partner for us before Apotheker, and they lost a lot of talent in our region to competitors as a result. Replacing that talent is going to take a long time."

Mont Phelps, CEO of NWN, a fast-growing HP partner headquartered in Waltham, Mass., said Apotheker’s reign has resulted in damage to the relationship HP has with its channel partners.

"I congratulate the board for being decisive and making the change," Phelps said. "The events of the last year have strained HP's relationship with the channel and it is important that one of the new CEO's top priorities is to rebuild that trust and engagement with partners. HP has got to get beyond this and focus on communication and trust and building the business."

Many HP partners were puzzled -- and in some cases, disappointed -- when HP hired Apotheker last September. Some openly questioned whether Apotheker would maintain Hurd's laser focus on the channel, noting that he hadn't distinguished himself as a channel-savvy leader during his 20 year career at SAP.

In fact, SAP's hybrid direct-indirect sales model was a major source of frustration under Apotheker's leadership at the software company, several SAP partners told CRN last year. "Under his reign, I don't think SAP was super-partner friendly," said one solution provider.

Questions about Apotheker's ability to effectively lead HP have been swirling since the company’s Discover conference in June, according to an executive with one of HP's enterprise partners. "He was on stage at Discover with a TouchPad, touting the ability for HP to integrate how people use technology personally and professionally. And now, that seems to be off the table," said the source, who requested anonymity.

Indeed, HP's decision to kill the TouchPad just six weeks after its launch sent shockwaves through the channel. HP had been aggressively positioning the tablet, and WebOS, as major services drivers for partners, and many VARs had made the decision to invest in building mobility practices.

But HP's decision to explore a spin-off or sale of PSG came as an even bigger surprise, particularly for longtime partners.

"He presided over some of the biggest blunders I have ever seen. If you tried to destroy value in a company you couldn't do it as fast as he did," said another top HP partner, who requested anonymity.

However, the partner said he's heartened that HP's board has finally come to its senses. "I was starting to wonder if the board knew what was happening in the field," the source said. "I'm glad they finally manned up and made the decision to get rid of him instead of digging the company deeper and deeper into a hole."

NEXT: Partners Offer Advice For Whitman As She Takes The CEO Chair

Soon after joining HP, Apotheker declared his intention to build HP's services and software capabilities. But HP's decision to bid $10.3 billion to acquire Autonomy, a developer of information management and infrastructure software, has triggered a near-revolt with investors who believe HP is grossly overpaying for the Cambridge, U.K.-based outfit.

Travis Fisher, executive vice president at Inacom Information Systems, a Salisbury, Md.-based solution provider, is baffled by the moves HP has made under Apotheker's watch.

"Between the PSG uncertainty putting channel partners on edge, failing to give the WebOS vision a chance to flourish, and the seemingly expensive purchase of Autonomy, I can’t say his reputation has improved in my mind," Fisher said. "And I must admit, I don’t have good feelings about HP’s board for their choice, either."

Other partners concurred with Fisher’s assessment of Apotheker’s 11 months at HP’s helm.

"I think his performance for the first year speaks for itself," said Daniel Duffy, CEO of Valley Network Solutions, a Fresno, Calif.-based solution provider.

As for HP’s new CEO, Whitman, solution providers said she would be wise to develop a keen understanding of the channel.

"The new CEO needs to do what Mark Hurd did, which is set a clear direction on what HP wants to be and figure out how to involve partners, customers and the whole HP ecosystem," said another HP partner, who didn’t want to be named.

Computex’s Haffar said HP and its board need to get back to basics.

"HP's roots are in embracing the channel. If they want to be successful, they have to focus on the channel," Haffar said.

With additional reporting from Andrew Hickey and Steven Burke