HP adds optimisation

Two separate divisions of Hewlett-Packard made two separate acquisitions last month, but no one should be in any doubt over whether they are relevant to each other.

The $1.6 billion capture of Opsware by HP’s software division and the near-simultaneous $214 million acquisition of Neoware by the company’s personal systems group are entirely consistent with HP’s key goal – to be the industry’s dominant provider of business technology optimisation (BTO) products.

HP has been beating the drum for BTO since it first took the shackles off its software business, and gave it the go-ahead to buy a set of software infrastructure tools for the modern era of agile computing.

That process started in 2005 with the $415 million acquisition of Peregrine, an embattled supplier of asset management tools. It continued in August 2006 with its $4.5 billion takeover of Mercury Interactive.

The Mercury coup not only gave HP an instant presence in the strategically significant enterprise software lifecycle management market, it also netted Systinet, a developer of Web services registry software that is now a central plank in HP’s fundamental service-oriented architecture (SOA) strategy.

Thanks to these acquisitions, and their comfortable fit with HP’s existing OpenView systems management product set, by the time that Tom Hogan, HP’s senior software VP, stood up to address the company’s Software Universe event in Vienna in January 2007, he was able to confidently talk about the company’s ability and willingness to go head-to-head with the big five enterprise software infrastructure players: Microsoft, IBM, Oracle, SAP and CA. “We’re not done” Hogan said then, “HP is dead serious about establishing the leadership position in the markets we serve.”

Hogan’s remarks might have sounded hollow to some, but only if they overlooked the fact that HP had built an infrastructure software business with annual revenues of $2 billion and, more importantly, it had done so by focusing on aspects of the software infrastructure that are either entirely absent from its rivals’ portfolios (as in the case of SAP and Oracle), still lacking market and technical maturity (Microsoft) or beginning to look close to their sell-by dates (IBM and CA).

Neither Opsware or Neoware will add significantly to HP’s software revenues, or even do much to extend its customer base. They do, however, fill some important functionality gaps in HP’s BTO capabilities – particularly the critically important area of virtual machine and resource management.

Neoware, for instance, brings with it a set of Linux-based thin-client products that should slot in comfortably alongside HP’s existing desktop virtualisation products, and also gives the company access to one of the market’s first wireless remote client management technologies.

However, it is Opsware that holds the greatest strategic promise for HP’s long-term goals. Since its creation (as part of the break-up of LoudCloud) in 2001, Opsware has concentrated on building a comprehensive suite of data centre management tools and was recently ranked by market watcher IDC as the fastest growing vendor of server provisioning software. This growth stemmed in no small part from Opsware’s early development of tools that could automate the provisioning, configuration and decommissioning of virtual machines based on hypervisor technology from multiple vendors.

HP’s global laboratories have been working on developing equivalent tools of their own for some years, and have frequently offered glimpses of prototype products. However, as an HP executive recently confided to Information Age: “We’ve talked a good story about systems orchestration and management automation in the data centre, but we haven’t ever quite delivered”.

Opsware can fill this gap in HP’s systems management armoury, slotting in as the data centre automation suite that will communicate with hypervisor specific management tools from the likes of VMware, XenSource and, eventually, Microsoft. Opsware will make these virtual machine environments visible to the higher level policy-based management via Mercury’s configuration management database (CMDB) technology.

As virtual machines proliferate in enterprise data centres, HP’s acquisition of Opsware is almost certain to be seen as a wise and timely move. Although, at more than 16 times current revenues, Opsware’s $1.6 billion price tag looks high, it might have been much higher if HP had waited.

Indeed, with VMware preparing to raise funds from an initial public offering (IPO), rumours had been circulating that Opsware was already an acquisition target for the fast growing virtualisation software vendor.

Now though, VMware, and HP’s other BTO competitors, will have to look elsewhere for the foundation of their virtual machine agnostic infrastructure management platform.

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