HP sheds light on competitive cloud pressure

News Caroline Donnelly Jan 2, 2013

Hardware giant's latest 10-K filing reveals challenge cloud poses to HP's business

Hardware giant HP has revealed that it could sell off some of its underperforming business units, as it fights to meet the growing demand for cloud services and mobile devices.

In a 10-K filing to the US Securities and Exchange Commission, the company said: "We continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives."

The company then goes on to admit the strategy is not without its pitfalls, but would undoubtedly help the firm deliver on its “multi-year” turnaround strategy, which has been referenced on many occasions by CEO Meg Whitman since she took over the company reins in 2011.

“When we decide to sell assets or a business, we may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, which could delay the achievement of our strategic objectives,” it added.

The company also shed some light on the challenges it is facing at the moment, both internally and from other tech market forces, including the growing demand for mobile devices and cloud services.
 
“We need to align our costs with our revenue trajectory; we need to address our underinvestment in R&D and in our internal IT systems in recent years, which has made us less competitive,” the document continued.

“We are also facing dynamic market trends, such as the growth of mobility...the shift to software-as-a-service and the transition towards cloud computing, and we need to develop products and services that position us to win in a very competitive marketplace."

Failure to do so could "significantly harm our market share", the company admitted.

"As we transition to an environment characterised by cloud-based computing and software being delivered as a service, we must continue to successfully develop and deploy cloud-based solutions for our customers," the document stated.

"Any delay in the development, production or marketing of a new product, service or solution could result in us not being among the first to market, which could further harm our competitive position."