IT giant Hewlett-Packard has agreed to acquire UK information management software and services provider Autonomy, and has confirmed reports that it is seeking "strategic alternatives" for its PC division.
It added a futher revelation: that it is to stop making its TouchPad tablet devices, launched only a month ago, and webOS phones. “HP will continue to explore options to optimize the value of webOS software going forward,” it said in a statement.
The announcements represent the culmination of CEO Leo Apotheker’s strategic overhaul of HP. Apotheker, formerly CEO of business applications giant SAP, has spoken of his desire to move the company away from hardware and towards software and cloud services.
Apotheker said today that the Autonomy acquisition "brings to HP higher value business solutions that will help customers manage the explosion of information."
"Together with Autonomy, we plan to reinvent how both unstructured and structured data is processed, analyzed, optimized, automated and protected," he said. "Autonomy has an attractive business model, including a strong cloud based solution set, which is aligned with HP’s efforts to improve our portfolio mix. We believe this bold action will squarely position HP in software and information to create the next-generation Information Platform, and thereby, create significant value for our shareholders.”
Autonomy will continue to operate as a distinct business unit, and will continue to be lead by founder and CEO Dr Mike Lynch, who will report to Apotheker.
“This is a momentous day in Autonomy’s history,” said Lynch. "From our foundation in 1996, we have been driven by one shared vision: to fundamentally change the IT industry by revolutionizing the way people interact with information. HP shares this vision and provides Autonomy with the platform to bring our world-leading technology and innovation to a truly global stage, making the shift to a future age of the information economy a reality.”
HP’s $10.3 billion (£6.2 billion) offer for Autonomy represents a 75% premium on top of its market capitalisation earlier today.
Autonomy is one of the few remaining UK-headquartered software companies of any size, and the largest by market capitalisation. Earlier this month, banking software vendor Misys narrowly avoided acquisition by US provider Fidelity National Information Services, while software development tools maker Micro Focus last week confirmed that it is in acquisition talks with various private equity firms. Only accounting software provider Sage seems to be still gunning for independence, and is said to be close to acquiring Australian rival MYOB.
Along with chip designer ARM Holdings, Autonomy is seen as a standard-bearer for the Cambridge technology cluster. It has a successful track record of innovation, having spun off a video search start-up named blinx and recently launched an augmented reality marketing application.
The rumoured PC spin-off would not be surprising. Recent Gartner figures showed that the PC market is shrinking, as consumers are not upgrading their machines frequently as they once did. IBM’s decision to sell its PC division to Chinese manufacturer Lenovo in 2005 now looks remarkable prescient (indeed, HP’s announcements today have garnerd the criticism that it is trying to “be IBM”.)
The rapid exit from the mobile device market is more remarkable. It is only 16 months since HP acquired Palm, which effectively became its mobile business, for $1.2 billion. The webOS operating system was always seen as the real asset in that deal, but the fact that HP has dropped its mobile hardware division just one week after Google acquired one shows that significant changes in the structure of the industry are afoot.
HP also reported revenue growth of just 1.6% to $31.7 billion, the latest in a string of meagre growth figures from the company.