Quick HP-Autonomy thoughts

Just after the HP call about its Q3 numbers and the deal, here’s my initial (very) quick take as it’s late here in London:

  • This deal is about getting serious about software under Leo Apotheker. It gives HP a real information management story, greatly boosting its presence in the archiving, e-Discovery and enterprise search businesses.
  • However, company cultures are not complementary, the HP way is a long way from the hyper-aggressive sales and marketing culture at Autonomy. Maintaining Autonomy as a separate entity run by Mike Lynch proves this and calls into question how much real synergy can be had from such a structure. I cannot see that being sustained.
  • This instantly makes HP a bigger e-Discovery player than IBM or any of the major IT firms.
  • Product overlap exists in document and records management but gets HP into the web content management and website optimization markets.
  • Autonomy has resisted deals over the years as its market capitalization ballooned as it went on its own acquisition binge. Autonomy couldn’t have waited much longer as it would have grown too big to be swallowed by even the largest predator.
  • At least Autonomy customers will now have a services organization to call on after they’ve bought the software. Customer support and after sales service has not been a strength of Autonomy.
  • This leaves the FTSE 100 with just one software firm of note.
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#1 MAK on 08.18.11 at 7:20 pm

Your comments on culture are spot on. Lack of cultural compatibility and implications of the expensive price paid will turn out to be the primary reasons for the failure of this acquisition.

One has to wonder as to why would HP pay so much? especially in the current economic climate? I guess this is just another instance of management squandering cash to paint an illusion of future growth. At the end of the day, shareholders continue to “hold the bag”.

#2 Nick Trendov on 08.19.11 at 4:17 am

It may be too soon to tell though it appears to me that HP has been seduced by the theory of scale where bigger is better and their MBA’s seem to look for the intersection of revenues and capabilities to determine M&A opportunities.

While combining Automony and HP may be awkward it is the least of the pain that HP will feel soon, imho.

Automony customer defections will accelerate as customers will be reluctant to find HP partying like it’s 1999 in celebration.

User behaviours on the internet has shifted from corporate portals blogs, then to Social Media and the next trend is the shift to insular groups or spaces where search is useless.

And corporate search?

Big Data is a tired myth as too much data is worse than not enough and while the search engines talk a good story about sifting through information overload it is simply a losing proposition as there are two many captains steering every search process.

The value of data is navigation, not search as search filters data away to reduce data that must be assessed. The act of filtering is typically guided by single perspectives and results in the baby being thrown out with the bath water–it is precise in execution but achieves an undesired outcome.

#3 Mark on 08.22.11 at 1:23 am

At ISYS, we’re finding a key concern from a customer perspective is just how focused the new organization will be on customer needs while trying to rationalise products, merge corporate cultures and define technology roadmaps. We have found that the most important issue in our industry is being customer responsive and developing technology roadmaps hand in hand with our customers. Last month we released our Document Filters 10.0 – the only software of its type that supports MAC OSX, a specific requirement of one of our key customers, MarkLogic. You’d also wonder whether product development could stagnate further with the acquisition – it has already been five years since IDOL’s last release.

#4 Nick Patience on 08.24.11 at 5:17 am

Thanks for all your thoughts, MAK, Nick & Mark. I’m especially interested in where this goes re ‘big data’, or total data, as we prefer, and the change in the way search is bought, implemented, even thought of in the first place.