Apotheker is seeking to revive innovation at HP. In a recent interview with BusinessWeek, he said HP had "lost its soul." That's quite a dramatic statement -- and generally speaking, The VAR Guy agrees with it.
Under former CEO Mark Hurd (now at Oracle), HP underwent multiple rounds of cost cutting. Hurd brought much-needed financial discipline to HP. But HP also took some lumps for cutting its R&D under Hurd's watch.
Potential Software TargetsThese days, Apotheker seems set to accelerate HP's software acquisition strategy. Informatica Corp., BMC Software Inc., SAS Institute Inc., Symantec Corp. and CommVault Systems Inc. are among potential targets, according to Robert W. Baird, a financial analyst firm quoted by BusinessWeek.
Hmmm... Those are all interesting. But if HP really wants to dominate the cloud the company needs to own software that serves as the foundation for the cloud -- operating systems and virtualization software, The VAR Guy believes.
But virtualization companies carry big price premiums. Alas, VMware's market capitalization -- $32 billion on March 16, 2011 -- is likely too lofty for HP's wallet. Plus, EMC owns a stake in VMware. In stark contrast, Citrix Systems -- another virtualization specialist -- has a $12.71 billion market cap and would be easier to swallow.
A Logical TargetBut wait, what's this?: Red Hat's market cap is a reasonable $7.64 billion. Build in a healthy premium -- say, a $10 billion total price tag -- and HP could acquire a highly strategic operating system (Red Hat Enterprise Linux) and an emerging virtualization platform (Red Hat Enterprise Virtualization). Surely, owning WebOS on the front end and Red Hat's software on the back-end would give HP and its channel partners a powerful one-two punch in the cloud.
Of course, the HP-Red Hat chatter is pure speculation on The VAR Guy's part. But in terms of takeover targets, Red Hat aught to be on HP's shortlist of candidates. An HP-Red Hat deal would also upset the apple cart across the hardware industry, forcing Dell, IBM and others to rethink their various Linux relationships.
Disclosure: As of this article's publication date, The VAR Guy owns a couple hundred Red Hat shares, and no HP shares.
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