October 22, 2009

HP CEO, Mark Hurd, speaks from both sides of his mouth: cloud computing good for the customers, but not for HP

In my very first blog on The Directive, I wrote a not-so-nice article about Mark Hurd, the CEO of HP. The blog was a reaction to Hurd’s major cutbacks in HP’s R&D expenditures, and the idea was that by cutting back on R&D programs, HP would lose its innovative edge and corner itself into commoditized markets. I find myself perplexed by Hurd again. I have nothing against the man, or the company he leads. In less than 12 hours from publishing this article, I’ll be buying an HP laptop, so there.

This isn’t about laptops though. How much innovation is left in laptops? Or margins for that matter?

In a Q&A with Gartner analysts this week, Hurd made some comments about cloud computing that need major PR damage control. In a nutshell, he said that he doesn’t trust cloud computing due to security issues, and that if HP CIO, Randy Mott, had a big idea and wanted to put general ledger and accounting in the cloud, Hurd “would send him back to work.” He added, “We have 1,000 hacks a day and I can’t tell you why, but they keep showing up. We wouldn’t put anything material in nature outside the firewall.”


This, coming from the CEO of a company that is heavily pushing cloud computing into the enterprise markets, and boasts articles and brochures about “Cloud Assure” for “enabling business confidence in the cloud.”

Wouldn’t you know, I have a few thoughts on this.

Thought #1. HP needs to think about why its customers should believe in cloud computing if HP’s own CEO doesn’t. Sales rule #1: believe in what you’re selling.

Thought #2. Millions of internet users trust in their banking and brokerage firms keeping their financial data in the clouds. If Fidelity and Wells Fargo have figured out how to keep client data securely in the clouds, shouldn’t HP be miles ahead of them? This is the company that’s developing the technologies for cloud computing in their R&D labs.

Thought #3. I work out of a small office on a single computer (sometimes two), and I get hacked several times a day (I know this because my computer is set to alert me with that annoying ding whenever a hack has been attempted). I have relatively inexpensive software to protect my computer and my data. 1,000 hacks a day on HP? I’m sure someone at HP’s IT can figure out how to deal with this. You can’t control the problem, but you can control the solution.

Thought #4. Cloud computing is here to stay. Instead of open expressions of doubt about this market and related technologies, shouldn’t Hurd discuss how HP is working to alleviate the problems in this relatively nascent market through innovation and technological excellence?

Thought #5. Google will lead the way and leave the rest in the dust. Enough said.

Thought #6. HP needs to ponder Thought #1, really really hard.

HP is on my radar screen because I followed the company’s product line competitively for many years. I have the highest regards for the company and its culture, but I want the company to show some signs of innovation again.

Bring back “HP invent” any time!


  1. Hey,

    Great article - Just thought adding some observations; I had a chance to listen to the same Gartner Expo event and also keenly followed what Mr Hurd had to say.

    I believe that Mr. Hurd with a conservative approach touched the prime issue that cloud computing is facing - Security. The question is not whether Fidelity/Wells Fargo have moved their financial data onto a cloud. The question is how comfortable a customer feels when the data doesnt physically lie with trusted financial partner they have choosen. I am not saying that moving to the cloud is a bad option, but it requires a strong line of trust for anyone to allow confidential data to float in the cloud. I also believe that cloud would initially function better in no-critical areas.

    Every vendor in the app/infrastructure/services space claim to have cloud products and invariably tie-up with Amazon. But no-one has reported 'cloud revenue' distinctly as yet, to claim that they have started benefitting because of the cloud model - be it public/private/hybrid clouds.

    Cloud is here to stay and even financial ledgers have to move to the cloud, but gradually when the industry sentiment is right.


  2. Hi Kat: Nice writeup. I have a few thoughts to share. BTW, I'm an HP employee and have been following grid, virtualization and cloud for sometime. This said, my response here, comprises truly of my personal thoughts and ideas and is not representative of HP in any manner. I'm also quoting all publicly available information to support my respsnse.

    I would like to fill you in with some critical details, which I think you must take into consideration before writing off a technology, company or person.

    1) Failure fears around cloud are not new. A recent one came in with Microsoft/T-mobile data loss. Hence, Mark's statement is not coming out-of-the-blue but is an informed one. So, though the title of your post sounds trendy and must be serving some purpose that HP doesn't want to use its own products, it is far from reality, especially when Mark has been one leader in HP who has provided the hardest push to all within HP to use HP products as much as possible. In my opinion, if you were to associate a level of criticality to data being handled, based on high availability/criticality or redundancy, there is a "Criticality 1" data that none of the companies (big or small) should consider cloud to host. I'd also like to give HP some credit for being the largest and an involved IT company, sensing what the customer's are wanting from IT and not driving its own agenda.

    (Reported at: https://news.fidelity.com/news/news.jhtml?cat=Opinion&articleid=200910131055MTLYFOOLFINANCE__rx26715&IMG=N
    Corroborated at: http://www.microsoft.com/Presspass/press/2009/oct09/10-13sidekick.mspx

    2) Cloud has been THE most interesting development after virtualization and HP has been standing behind both from the very beginning and conitnues to do that. You do concur that HP's been pushing cloud but are surprised by Mark's statement. If you were to go back a few years in time, the fears being cited for cloud are very similar to those being associated with virtualization. In fact, concerns around virtualization were more of perception than factual. Cloud works at a higher level of abstraction, hence, is facing more factual odds than just perception. I agree with Avi's view point. I'd interpret Mark's statement as, the technology needs to mature and the players hosting a cloud, need to ensure that security and data integrity would be key to traction in the enterprise domain. And for all we know, if the hosts do not play it well, a few bad instances like that of T-mobile, and the technology may really slow down. I'm sure you wouldn't want your bank to tell you that you're a pauper since they lost your records or somebody fudged them by hacking in. Sometimes movies are pretty educative. Remember Entrapment (IIRC), 15 cents from a billion accounts does sound sizeable.

    3) Quoting Gartner's hype cycle on cloud. The current state of affair, in my opinion, is that the expectation from cloud have sky-rocketed without the clouds having the maturity to scale up, to meet the expectation.

    (Hype cycle report source: http://www.gartner.com/it/page.jsp?id=1124212)

    4) Few more references that you may want to consider while interpreting Mark's statements:


    Summarily, I think Mark is projecting concern around a niche technology application. It is working well for areas like hosting websites, emails, data logging, etc. I believe it will take sometime for it to mature for use in enterprise and truly derive the value from cloud.


  3. @Rohit
    I think you make a very valid point but would argue that situations where high availability, Critical 1 data is being managed, is only one niche for HP, and all parties to this conversation would probably agree that these situations probably don't lend themselves to the cloud.
    The point is that Mark Hurd should have made the distingtion, because small busineses like mine are embracing cloud computing because it allows us to deploy applications, that we would suffer an interminal nightmare if we were to to engage HP, virtually instantly.
    If thousands of small businesses embracing cloud applications stopped comitting hardware budget to HP, or even a portion of it, what would the affect on HP's bottom line become?

  4. Hi Kat. I'm a former HP'er, recently left to take a position with another well known IT company. A few thoughts on your comments:

    Regarding commoditized markets...Hurd already views hardware as basically nothing more than a commodity today and heading further that way all the time. He's chose to accept that and focus more on software, services and outsourcing, which obviously provide high margins. Take a look at the companies HP has acquired over the past 24 months, OpsWare, Polyserve, Ibrix, ummm, EDS? Just to name a few. See where I'm going here? Hurd *wants* hardware to be a commodity and he wants HP to hold a dominant position with the companies that supply parts for those commodities. Then HP can win the price wars through sheer brute strength....they'll make low margins, but the volume will be huge, which will drive revenue and also drive competitors out of the game. He's playing for keeps.

    How much innovation is left in laptops? Kat.....come on. Netbooks are a pretty new introduction and have been selling very well. Margins? You'd be surprised, and in any case it's more about *volume* in this market.

    Hurd's message should have been a bit clearer, but it's dead-on. Putting mission critical, sensitive data into a public cloud does not make sense for a mid-sized to large enterprise. A private cloud might make sense, but one then has to ponder whether a private cloud is really a cloud or just another form of hosting, outsourcing, or managed services -- all depends on how the contract is structured.

    And cloud computing makes hardware completely a commodity. If the customer never sess or touches the hardware, why would they care what brand it is, how it's configured, etc.? They only care about access, availability and their SLAs.

    Re: Fidelty. Bad example. I have some investments with Fidelty and I received a lovely letter a while back letting me know that some of their systems had been "compromised" and some of my personal data may have been exposed. I was cautioned to watch my account at Fidelity and other accounts closely for any "suspicious" activity. Do I trust Fidelty? Awww, hell no!

    Re: the point you refer to as "#1". Hurd's point was that companies should explore cloud computing carefully, rather than jump in with both feet. Let the model mature a bit before you run and put your critical and sensitive data into a cloud environment. Pretty good advice, although he should have explained public cloud vs. private cloud in more detail.

    And finally, the point you make as "#3". Today, HP can control the solution to the 1,000 hacks per day since their critical information is behind their firewall. Put it out on the cloud and can that solution be as simple? Can that solution work? Is it worth the risk?

    In Hurd's opinion, it is not worth the risk today. And he's right.