Fiorina ouster raises questions about HP plans

When Carly Fiorina was chairman and CEO of Hewlett-Packard, HP users faced some major product changes, including the company's eventual exodus from its Alpha and PA-RISC chips in favor of the Itanium chip. HP also pulled the plug on two popular operating systems, MPE and Tru64 Unix.

With Fiorina's departure, users face the potential of more changes in HP's product road map, analysts warn.

But much is uncertain, and analysts and users are clearly grappling to understand the ramifications of Fiorina's ouster, which the company announced announced early Wednesday morning.

Theories about how the move will affect HP abounded Wednesday, ranging from a break-up of the company to changes in its product road maps. Analysts also said it's possible HP could separate its commodity PC and low-end server business from its enterprise systems and services.

"What's going to happen now is really up in the air," said Denys Beauchemin, a member of the board of HP user group Interex.

But Beauchemin, a past chairman of Interex, said he doesn't see how HP can make major changes to the road maps it has in place for many of it products, such as its plans to discontinue its Alpha and PA-RISC systems. "They are really not in the chip building and designing business anymore," said Beauchemin, who is migration consultant at Austin-based Sector7. "They put all their eggs in the Itanium basket."

Rich Partridge, an analyst at DH Brown Associates, said users need to consider the possibility of product road map changes, possibly to speed up transitions away from Alpha and PA-RISC and reduce the number of products the company has to support.

"I think HP has no choice but to move forward with Itanium," said Partridge. However, he warned Alpha and PA-RISC users to be wary of road map changes. If HP tries to further tighten spending, it "may try to accelerate that transition and may not try to have too many products supported all at once," he said.

In a conference call Wednesday morning, interim HP CEO Robert P. Wayman, who is also the company's chief financial officer, worked to reassure enterprise customers about the company's enterprise customer direction. "The board believes this is the right strategy," Wayman said when asked about the company's technology strategy. He also said the company had an "action plan" in place to reassure customers.

But just what HP is reassuring its customers of may hinge on whom is selected as HP's new CEO, said analysts.

Aside from a possible break-up, Frank Gillet, an analyst at Forrester Research in Cambridge, said the leadership change "increases the uncertainty around Itanium-based businesses and about where that goes."

HP has placed big bets on the success of Itanium, and while its market share is growing, Gillet said the Itanium business has struggled. Itanium hasn't been helped by Advanced Micro Devices' 64-bit Opteron, which HP sells in addition to Intel's 64-bit x86 offering, which provides a "compelling alternative in some cases" to Itanium.

Gillet's advice: "I think the short term advice is don't make any big bets ... until this sorts itself out."

Analysts said that many of the changes affecting specific product lines, such as Tru64, were made a level below the CEO. Moreover, they said, HP is so far along on those plans that it's unlikely that there's any turning back.

Fiorina, who became CEO in 1999, also worked to improve HP's services business and set the company on a strategy to offer integrated hardware and software offerings -- creating an "adaptive enterprise" that is more responsive to business needs.

Nick Gall, an analyst at Meta Group, said he doesn't see any immediate repercussions for enterprise customers. He said there are still users buying Alpha systems, for instance. Any changes that HP makes to its road map will cover a product's life cycle, he said.

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