From knobs to knowledge - HP and Autonomy
Jinfo Blog

By Tim Buckley Owen

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What would induce a youngish British software company, the darling of the high tech community with no obvious competitors, to be gobbled up by a struggling American hardware giant? And, more importantly, what should its customers think?

Let’s not underestimate the problems Hewlett Packard faces. It’s abandoning devices based on its WebOS mobile operating system and seems to be contemplating shedding its PC operations too, at a time when (as Gartner reports) the decline in Western European PC shipments is scarcely offset by increases in the Indian market.

Yet HP has also announced that it is acquiring Autonomy – the world’s leading provider of order-out-of-chaos solutions for corporate documentation – for around $11 billion, or about 10 times Autonomy’s sales (the FT reports). HP cites a string of benefits from the deal, but commentators’ views are mixed.

HP actually already runs “the world’s largest and most mature Open Source/cloud operations after those of IBM” and has “thinkers who understand the nature of cloud computing”, says Philip Virgo on the Computer Weekly blog. Michael Barnett of Marketing Week agrees that buying into Big Data through its Autonomy purchase will represent good value for HP, attributing the share price fall that accompanied the announcement to investor scepticism about HP’s overall strategy rather than any doubts about Autonomy.

But Therese Poletti of Dow Jones MarketWatch asserts that HP has “never been strong in software, and its efforts at growing that business … have come mostly through acquisitions and resulted in a patchwork of little-known offerings for corporations”.  And Reuters’ Paul Sandle quotes Paul Morland of broker Peel Hunt, who doubts that Autonomy is the answer to HP’s strategic problems and doesn’t expect IBM and Microsoft to be “quaking in their boots”. 

Whatever the outcome for HP, Autonomy does seem to be a clear winner. Co-founder Mike Lynch believes that it’s a “momentous day” in his company’s history, providing a platform to bring its technology to a world-leading stage.

“Autonomy is in a business that is counter cyclical,” adds Dennis Howlett of the ZDNet blog. “The fact there is economic uncertainty plays to its strengths and increases the likelihood of it outperforming the business software market”.

Writing in the Guardian Technology blog, Dan Crow additionally pooh-poohs worries about another American takeover of a successful British firm, saying that it’s “good news for British start-ups”. Mike Lynch has no time for the doomsayers either.

You can’t just move Autonomy’s research and development abroad, he says. “The people who sit there doing it are the world experts. They have family here.”

So a global platform, a huge cash injection and Autonomy’s inspirational boss stays at the helm. Good news for Autonomy is presumably good news for its customers as well.

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