HEWLETT-PACKARD'S next-generation strategy includes expanding its enterprise IT management software business as well as controlling the increasing complexity and cost of managing the data centre.
As part of its focus on offering a comprehensive software line, HP says it has agreed to purchase data centre automation software provider Opsware for about $US1.6 billion ($2.7 billion).
HP also says it plans to acquire NeoWare for $US214 million to help with its thin-client technology. HP says Neoware's client management capabilities will complement Opsware's network and server management tools.
HP plans to have Opsware chief executive Ben Horowitz lead its business technology optimisation group and Opsware will become part of the HP software business.
Marc Andreessen founded Opsware as Loudcloud in 1999, went public in 2001, and changed its name to Opsware in 2002.
HP officials say combining the technologies of the two companies will enable better IT automation in large, enterprise-class data centres.
HP software senior vice-president Thomas Hogan says the deals are a "coincidence from a timing perspective, but there could be some synergy and value between the product lines sold by Opsware and Neoware".
Hogan says there is very little overlap between Opsware's products and HP's existing line of system management tools.
The move should be seen as part of HP's strategy of becoming a leader in the software sector, particularly in data centre management, he says.
Including the Opsware deal, HP will have spent about $US6.5 billion on business technology optimisation software, Hogan says.
HP says it expects both the Opsware and Neoware deals to close in this year's fiscal fourth quarter, pending regulatory and other approvals.
The company also acquired Mercury Interactive (for $US4.5 billion a year ago) and Peregrine Systems (for $US425 million in 2005) as part of its BTO expansion plans. Clay Ryder, an analyst at Sageza Group, says that as part of chief executive Mark Hurd's transformation of HP, software has been given an increasingly important role in the company.
"In particular, the new acquisitions, following on the earlier Mercury Interactive and Peregrine Systems purchases, also serve to reinforce the software and management mantra of the new HP," he says.
According to Ryder, the focus of the company on BTO illustrates the desire of the firm to not only provide infrastructure but to actively manage it end-to-end across the data centre while also deriving considerable business value from the IT investments.
Opsware's focus on automating the data centre -- be it providing servers, networks, storage or other elements, or managing the ever-changing topology and business and regulatory requirements -- provides a capability that grows in importance as data centres continue to get bigger, Ryder says.
"While HP continues to excel in raw technology, it is also quite clear that the company understands the value of management and alignment with its customers' business operations," Ryder says.
Pund-IT analyst Charles King says HP's decision to acquire Opsware is more strategic for achieving its enterprise software and IT automation ambitions, providing another element following the Peregrine and Mercury acquisitions.
"The deal also reflects a decidedly more aggressive and acquisitive HP under chief executive Mark Hurd, particularly regarding enterprise solution development," he said.
The real question is whether HP's considerable cash outlays ($US6.5-plus billion for the three companies mentioned) will be worth the risk, King says. "We believe so."
"The Opsware acquisition should allow HP to get to market far more quickly than the company would otherwise and take advantage of the wave of data centre expansion that many believe is inevitable."
At the recent HP Technology Forum and Expo, company officials, including executive vice-president Anne Livermore, talked about moving the company beyond its traditional roots as a hardware provider to offer more software suites, management tools and services.
She reiterated her comments at this month's LinuxWorld, where she told participants that almost all chief executives see the importance of IT to their companies' success but almost none are satisfied that IT is driving the business outcomes they want.
"Every company in the world wants to automate and take out the complexity," she said.
According to Livermore, IT management software is a market HP has set its sights on.
"You're going to see us invest like crazy in this area," she said.
That is a clear indication that there will be more acquisitions to come as the company works towards transforming the way customers manage and automate IT.
Livermore talked about how HP needed to put all of its products, hardware, storage, software and services, into a package that enabled more efficient management of the data centre.
Analysts agree the new focus is a signal that HP intends to compete against similar management tools and services provided by rival vendors, such as IBM and Computer Associates.
Read the original, here.