Where now for HP's Cloud strategy?

Computing giant Hewlett Packard (HP) has reported a staggering dive in Q4 profits of 91% following a tough year that saw the manufacturer sack its CEO, then ditch its WebOS business in favour of a focus on software and cloud computing infrastructure.

But with a number of key decisions reversed, dropped and discontinued, one could be forgiven for doubting the firm’s stated direction. So where does the world’s largest technology company see itself heading now after a most confusing twelve months?

In what was a pretty dismal, though in truth better than many predicted, financial quarter, HP’s profits nudged $200m, down from $2.5bn over the same period in 2010, and despite a modest increase in revenue.

The current CEO of HP, former eBay boss Meg Whitman, has made a number of far reaching strategy changes since the sacking of her predecessor Leo Apotheker in September, which followed a series of profit warnings and vocal criticism from shareholders on a number of his key proposals.

Strategic realignments have taken up much of Whitman’s first months in the job; reversing plans for a spin out or sale of the firm’s PC business and discontinuing the company’s WebOS-based smartphone and tablet business; including the withdrawal of the new TouchPad Tablet, which had only just become available to consumers.

“We’re relatively pessimistic about the economic outlook in two of our three major regions. 2012 just looks tough to me,” she told analysts. "We need to get back to the business fundamentals in 2012, including making prudent investments in the business and driving more consistent execution."

Apotheker angered many shareholders in August with the acquisition of UK-based software firm Autonomy for $10.3bn in August. The acquisition was widely tipped to be part of a plan to wind up the HP’s hardware business and concentrate on software and cloud computing infrastructure, but many believed the deal had been overvalued by a substantial amount.

With the reversal in strategy leaving HP still very much in the PC business, combined with shareholder criticism of the Autonomy deal, some industry commentators had suggested a potential shift in HP’s cloud aspirations.

But despite all this, Whitman insisted that the deal stands, and that continued growth of Autonomy would be a high priority for the coming year, although HP would not be making any acquisitions on the same scale any time soon, she said.

The Cambridge firm was already well integrated into HP, and vice versa, with sales leads flowing between the two organisations. The set up would allow Autonomy to grow far faster than would have been possible on its own, she added.

 “That's the name of the game for 2012. There's going to be lots of other things we do together but accelerating the growth of Autonomy, using the distribution capability of Hewlett Packard is priority number one, two and three for 2012.”

So what does the company’s cloud computing strategy look like now? “HP is getting back to business fundamentals in 2012,” Whitman told analysts. “No more surprises.”

It’s likely that we’ll learn more in December, when she is expected to present her overall strategy to investors. And with analysts generally positive about the deliberate lack of ‘drama’ under Whitman, the movements of HP over next 12 months will be keenly observed in all quarters.

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