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GFI Software Working Toward Split into LogicNow, GFI

GFI Software, the surprisingly fast-growing player in the managed services provider (MSP) market with a large community of channel partners for its more traditional software products, is in the process of splitting into two organizations.

When the split, first announced in September, is complete, GFI Software will become two different entities with different boards and different employees -- LogicNow and GFI. LogicNow will focus on cloud technologies under a subscription model and will include the MSP platform, which was previously known as GFI MAX but is being renamed MAXfocus. The GFI side will become an entity focused on private cloud solutions marketed to end user IT administrators. The two companies will have 350 to 400 employees each.

RCP caught up with Dr. Alistair Forbes, general manager of LogicNow, for an update on the corporate restructuring.

RCP: Why split?

Alistair Forbes
Forbes: The reason for making that change is really reflected in the nature of the way those types of products are built and supported. With on-premise, [you have] one, maybe two major releases a year. Customers have to download and install these updates. With a cloud-based product, because we're applying those updates and all the customers are getting the benefits right away, it allows us to iterate on the product much more quickly. The two products have quite different support requirements.

Speaking from a LogicNow perspective, a large part of doing this is to reduce our cycle times and bring new versions of our cloud-based technology for MSPs to the market faster. [The LogicNow MSP products include MAXRemoteManagement, MAXMail, MAXServiceDesk and MAXBackup.]

Will the entities share a board of directors?
Up to now, there was one board for GFI Software, the whole entity. Going forward, there will be two completely separate corporate structures. Ownership will remain the same. Our majority investor is Insight Venture Partners. There will be some commonality in terms of the board. But the management team and all the people working on the products, they will be completely separate. Walter Scott is the CEO of both companies for now. We haven't completed the full legal separation as of yet. We've announced new brands. The legal separation process is moving forward. Walter will be CEO of LogicNow. Likely, there will be a new CEO for GFI.

What will change for current GFI Software partners?
In the short term, as far as partners are concerned, the changes will be largely cosmetic. There will be a substantial number of [LogicNow] partners who currently resell GFI products and will continue to do so. We've seen a migration into the managed services approach for running their organizations using our MAX products. Internally, we had separate field and support organizations for both sides, so that will not be different.

How many MSP partners are using LogicNow MAXfocus (formerly GFI MAX)?
We've currently got just over 11,000 MSPs who are using the MAX management platform. We're adding typically 200 net new customers every month. We're continuing to recruit partners through our hosted e-mail product and backup products, as well. In the aggregate, the number is getting close to 15,000. That, to our knowledge, is the biggest community of MSPs using a platform in the world.

We're seeing a continued move of resellers or consultant-type companies into the managed services space. Overall, I think the market growth is robust and still strong. There certainly was concern and consternation about the impact that the move toward cloud might have. Notwithstanding the fact that more companies are starting to use cloud-based services, they still do want to have an advisor or someone who manages those services on their behalf. They're used to dealing with a single contact. As for the concern that there was maybe 18 months, two years ago, about the threat to the managed services market, the market remains very strong and robust. We're seeing new partners and growth for existing ones.

Is there overlap of GFI and LogicNow partners?
The reseller base for GFI is somewhere in the region of 20,000 partners. It's still a very strong partner community that works with GFI. There's certainly an overlap. It's by no means the majority of either partner base that would also be using the other.

Within the MAX platform, we have some elements of technology that come from the GFI organization. We will have OEM agreements to use things like the patch management [GFI LanGuard]. In a commercial sense, the organizations will be pretty much completely separate. There will be technology that we license backwards and forwards.

What are LogicNow's plans geographically?
North America still remains a very strong growth market for us. The market is growing, and we're also seeing our market share continuing to grow. In certain European markets, they've been later to the party in terms of this move to managed services, particularly southern Europe -- France, Spain and Italy. There, percentage growth is quite high but from smaller numbers. In percentage terms, growth in South America is also high. Asia [is another opportunity] we might look at over the next year.

Posted by Scott Bekker on November 20, 2014 at 2:11 PM0 comments

SkyKick Offers Partner Tool for Office 365 Data-Only Migrations

SkyKick, the partner-focused Office 365 migration tools vendor, launched an individual component of its suite this week for times when customers only need their data migrated, as opposed to the usual start-to-finish migration project SkyKick's original tool was designed around.

The Seattle-area company's core product is SkyKick Application Suite, which started as a way for partners to automate and shorten what SkyKick positions as a 40-hour-process for partners to complete an SMB customer migration to an Office 365 environment from legacy platforms like Exchange, Windows Small Business Server, Google, IMAP or POP3. SkyKick also offers an Enterprise Migration Suite for more complex migrations.

The new release is called the SkyKick Data-Only application, and Co-Founder and Co-CEO Todd Schwartz described it as something existing partners asked for to help with a subset of their customers.

"Maybe 10 percent of customer migration scenarios are data-only," Schwartz estimated. Asked for examples, he provided three: "One is the deskless worker or kiosk worker, somebody who doesn't actually have Outlook and all that desktop setup. Another scenario is where sometimes customers have an IT staff and they want to do the project work themselves, but it's hard to move the data and they call the partner and ask them for help. Then there are always fringe scenarios -- maybe a customer has a lot of Macintoshes and project automation doesn't make sense."

Those data migration processes take up about 20 percent -- or eight hours -- of SkyKick's idealized 40-hour project. To rip out that component and package it as a separate offering, SkyKick had to make a few changes. For example, the standard migration suite uses a list of the old mailboxes to create new Office 365 user accounts. But the new data-only tool has to go back and match the customer-created Office 365 accounts with the old mailboxes, so SkyKick created a new engine for that purpose.

[Click on image for larger view.] The SkyKick Data-Only application automatically matches old mailboxes to new Office 365 accounts, helping partners avoid the time-consuming process of mapping relationships between systems.

Other features of the Web-based e-mail migration product include Server Synch for full-fidelity replication, automated management of the migration and a Migration Manager for real-time reporting and management of the process.

One practical application of the automation is the ability to see that both sides of the migration are up and responsive before you start, explained Co-Founder and Co-CEO Evan Richman. "You don't want to start moving the data on a Friday night and realize on Monday morning that mailboxes were not synching. This makes it very, very easy for the partner to make sure it's connected on both sides," Richman said.

The tool also prompts the partner in advance for necessary passwords, such as those needed to migrate public folders, and allows for provisioning new users on the fly if the data migration process turns up users that the customer accidentally missed in the pre-data stage of the migration.

The pricing for the data-only tool is $12 per mailbox retail with discounts available from distributors. It's not clear how that compares to the main suite's cost because SkyKick keeps that price under wraps. Schwartz did say that billing for the data-only package, like the main suite, only occurs upon completion of the project.

Also this month, SkyKick and Ingram Micro U.K. Ltd. announced the addition of SkyKick to the U.K. Ingram Micro Cloud Portfolio. The move into the United Kingdom follows SkyKick's recent hiring of Eric Jewett from Microsoft to head up an international expansion.

Ed's Note: This article has been updated to clarify that SkyKick doesn't publicly disclose the price of the SkyKick Application Suite. 

Posted by Scott Bekker on November 19, 2014 at 12:44 PM0 comments

Laplink Overhauls Its Partner Program

As Windows 8/8.1 starts building some momentum and Microsoft prepares Windows 10 for release, small-business PC migration specialist Laplink Software is overhauling its partner program.

Bellevue, Wash.-based Laplink relaunched the program this month with more benefits and automation.

Laplink's core offering is PCmover Professional, which is PC migration software for automatic transfer of files, applications and settings from an old PC or operating system, including Windows XP, to a new one. Other products in the 30-year-old company's portfolio include PCmover Windows Upgrade Assistant; PCmover Image & Drive Assistant; Laplink Sync, which synchronizes folders and files between a Windows PC and an Android or iOS device; DiskImage; SafeErase, for wiping old PCs before selling or recycling them; Defrag; and the remote access programs Laplink Gold and Laplink Everywhere.

New benefits of the free partner program include internal use rights, standardized partner discounts of 20 percent off single license purchases and 30 percent off multi-license packs. Monthly discounts available exclusively to partners can cut up to 60 percent off regular prices, according to Laplink.

The overhaul includes a new partner portal, which can be used for the 24/7 direct purchase of physical or downloadable software. "We know our partners are busy -- they have a lot to get done," said Laplink CEO Thomas Koll in a statement. "We're trying to make this as easy as possible for them with all licenses, purchase history and other resources in one easily accessible location."

Other elements of the program include updated marketing materials and a white-label version of PCmover Enterprise for service provider partners.

Posted by Scott Bekker on November 17, 2014 at 9:33 AM0 comments

The Stock Market Likes Microsoft Lately

Microsoft reclaimed the silver medal Thursday in terms of market capitalization. Thanks largely to the massive slide in oil prices over the last few months, Microsoft's market cap surpassed that of Exxon Mobil Corp. when markets closed Thursday afternoon.

By the numbers, Microsoft is now at about $408.9 billion, while Exxon sits at $400.8 billion, according to Reuters. Microsoft still trails technology sector rival and overall most-valuable company Apple Inc. by a lot. Apple sits at $663 billion, and its share prices have increased faster than Microsoft's through 2014.

Google also briefly wrested the No. 2 spot from Exxon twice this year, for four days in February and two days in March. Google stock prices have declined slightly this year and its current value is $373 billion.

Nonetheless, Microsoft's stock performance under new CEO Satya Nadella has been none too shabby. Since Nadella took over on Feb. 4 of this year, Microsoft shares are up 36 percent to 49.61.

Lest you give all the credit to the new guy, Microsoft's stock has been on a pretty steady upward trajectory for a while now. Stretching back to a low in December 2012 before former CEO Steve Ballmer was even hinting at leaving, the stock is up nearly 90 percent.

With a price of 50 in range, is it crazy to wonder if MSFT could reclaim its 1999 (split-adjusted) peak of 58.72?

Posted by Scott Bekker on November 13, 2014 at 5:27 PM0 comments

Longtime Microsoft Channel Exec Joins Nintex

Longtime Microsoft channel executive Josh Waldo has joined Nintex as vice president of channel strategy and channel programs.

Nintex is a Bellevue, Wash.-based workflow automation platform provider. "With his passion for partners and extensive management and technology industry expertise, Josh is well-qualified to drive our channel marketing strategy and programs and help our channel partners experience success within the new cloud environment," Nintex CEO John Burton said in a statement.

Waldo was most recently senior director of cloud partner strategy in the Microsoft Worldwide Partner Group, where he was responsible for developing programs to help partners sell Microsoft's public cloud services.

According to Nintex's statement, Waldo's charter includes drawing new partners into its current stable of more than 1,000 partners and service providers worldwide.


Posted by Scott Bekker on November 12, 2014 at 4:36 PM0 comments

Does Your 'Patch Tuesday' Policy Have a Zero-Day Gear?

Many organizations need to find another gear when it comes to zero-day vulnerabilities, according to a patching expert.

This week saw a huge Microsoft Patch Tuesday, with Microsoft releasing 14 patches, including four that fixed critical vulnerabilities. Sometimes those critical vulnerabilities can involve zero-days, which are vulnerabilities that are already being used in attacks before the vendor releases patches. The more usual order is that attackers develop exploits after a vendor issues a patch.

"With Microsoft Patch Tuesday, we see most people strive for 90 percent of their security patches applied within a week and a half. For zero days, it's a totally different story," says Rob Juncker, vice president of engineering at LANDesk Software. Juncker came to LANDesk via that company's acquisition of VMware's Shavlik unit.

According to Juncker, organizations need a separate, accelerated process to update systems threatened by zero-day vulnerabilities than they use for regular vulnerability patches.

"As soon as we release [a zero-day] patch, someone will pick up that patch, test it the next day and do some basic surface testing. After that's done they start pushing it out to critical systems, with awareness of how you would handle breakage.  They take a little more risk on the upgrade with that testing," says Juncker. But he says that risk is balanced by the fact that attackers are already exploiting the vulnerability.

In the October Patch Tuesday, Microsoft patched three zero-day vulnerabilities. This month's patch collection was less severe, with just one zero-day, and even that one was somewhat loaded with caveats.

"The most important bulletin MS14-064 addresses a current zero-day vulnerability -- CVE-2014-6352 in the Windows OLE packager for Vista and newer OS versions," wrote Qualys CTO Wolfgang Kandek in a commentary about the November Patch Tuesday. "Attackers have been abusing the vulnerability to gain code execution by sending Powerpoint files to their targets. Microsoft had previously acknowledged the vulnerability in security advisory KB3010060 and offered a work-around using EMET and a temporary patch in the form of a FixIt. This is the final fix for OLE Packager (Microsoft had patched the same software in October already with MS14-060) that should address all known exploit vectors."

Juncker cautions that organizations need to be aware of how many more zero-day vulnerabilities are being discovered these days than in the recent past. He also warns against the outdated idea that Microsoft's systems are the most vulnerable, and therefor that keeping up with Microsoft patches equates with being generally up to date.

"I think a lot of us focus on Microsoft products," Juncker says. "That's where a lot of the exploits used to be. Now they lead out with Java, they lead out with Adobe. The operating system isn't enough anymore. Make sure that you have a patch process that emphasizes not just servers, but make sure you get the endpoints."

Posted by Scott Bekker on November 12, 2014 at 4:36 PM0 comments

US-CERT Issues Windows Server 2003 End-of-Life Alert

The drumbeat over the end of support for Windows Server 2003 is getting louder and more insistent.

On Monday, US-CERT issued an alert titled "Microsoft Ending Support for Windows Server 2003 Operating System" to warn subscribers about the risk that the deadline next summer represents for organizations' security postures.

US-CERT is part of the U.S. Department of Homeland Security, and CERT stands for Computer Emergency Readiness Team.

Much as it ended support for Windows XP on April 8, 2014, Microsoft will stop supporting Windows Server 2003 on July 14, 2015. At that time, Microsoft will no longer provide free security patches for newly discovered vulnerabilities, assisted technical support for the product or software updates.

"Using unsupported software may increase the risks of viruses and other security threats," CERT warns in the alert. "Negative consequences could include loss of confidentiality, integrity and or availability of data, system resources and business assets."

US-CERT's recommendations include looking for software vendors and service providers who offer assistance in migrating from Windows Server 2003 to a supported operating system or a cloud-based service.

The advisory follows recent announcements by several major partners, including Insight Enterprises, that they are rolling out major Windows Server 2003 migration initiatives.


Posted by Scott Bekker on November 10, 2014 at 11:47 AM0 comments

October Saw Dramatic Slide in Windows XP Usage

Six months after the end of support for Windows XP, the user base is finally responding.

Operating system market share figures released over the weekend by Net Applications show the kind of dramatic month-over-month drop in Windows XP's share that seemed like it should have come right around the end of support on April 8, 2014.

Windows XP fell from 23.87 percent of worldwide operating system usage in September to 17.18 percent in October. That 6.7 percentage point drop is a bigger decline in one month than the operating system's usage had fallen previously in the entire year. Windows XP was at 29.3 percent in January and had only fallen 5.43 percentage points through September. That period covered the April support deadline, and Microsoft had loudly and regularly been warning organizations, partners and users that the OS would be completely unpatched against newly discovered vulnerabilities and was therefore a serious security risk.

[Click on image for larger view.] Desktop OS market shares. (Source: Net Applications)

Windows 8 appears to be the prime beneficiary of users abandoning Windows XP. While Windows 7 gained about a third of a percentage point of share from September to October to top 53 percent share, and Mac OS platforms picked up about three-quarters of point to edge over 7 percent, the real gainer was the combination of Windows 8 and Windows 8.1.

Windows 8/8.1 jumped 4.54 percentage points to reach 16.8 percentage usage, good for second-most-used operating system version after Windows 7.

Net Applications puts together its rankings based on data collected from the browsers of site visitors to a network of clients that includes more than 40,000 websites worldwide.

Posted by Scott Bekker on November 03, 2014 at 10:54 AM0 comments

Elite Partner Hosting Program, Microsoft Cloud OS Network, Growing Quickly

Microsoft's elite hosting program quadrupled to 100 partners in the year since its launch, with new partners fueling a 40 percent expansion in the number of service provider datacenters and contributing to a 20 percent boost in customers.

Microsoft unveiled the new enrollment number for the Cloud OS Program as part of its TechEd Europe 2014 event in Barcelona.

The Cloud OS Network consists of service providers that offer hybrid cloud solutions encompassing private clouds, service provider clouds and Microsoft Azure. The network, rolled out in October 2013, is an effort to build an elite community of partners around the Cloud OS that Microsoft rolled out in September 2012.

Cloud OS Network partners are an elite group among Microsoft's tens of thousands of hosting partners, rarer even than the 2,500 partners in the Gold Hosting Competency.

"When you look at the Cloud OS Network, you're looking really at the premier service provider player. The datacenter is their business," said Marco Limena, vice president of Hosting Service Providers at Microsoft.

While the 75 new service provider partners are a big addition in terms of raw enrollment numbers, their contribution to the overall datacenter and customer footprint is incremental compared with the two dozen large service providers Microsoft launched with a year ago.

With the first 25 Cloud OS Network partners, Microsoft claimed 425 datacenters and more than 3 million customers. Now, with 100 partners, those numbers slide up to 600 datacenters and 3.7 million customers.

Meanwhile, Microsoft's overall hosting business has been growing strongly since Microsoft redefined its previously core Windows Server operating system as only one component of a Cloud OS that also includes Azure and service provider clouds.

"We've had 11 consecutive quarters of double-digit growth," Limena said. "The overall ecosystem has 26,000 hosting partners. We added 5,000 in the past 12 months."

That broader ecosystem is getting interesting, as well. "The definition of a channel partner and a customer is really blurry," Limena explained. "When I look at the 26,000 partners, we are looking at a very diverse and agile ecosystem of players. Many of them are the traditional Web hosters that have been with us for a long time or the Exchange hosters who have been with us for a long time. But more and more in recent times, we are adding players like solutions integrators, ISVs or enterprise companies that see hosting not as their business but as more of a means to an end. For example, some enterprises are using hosting to extend capabilities to the supply chain."

Limena promises more activity in the coming months in this strategic area for Microsoft. We'll keep you posted on the news.

Update: In the original version of this blog entry, I implied via an indirect quote that Marco Limena said Cloud OS Network partners are a step above Gold Hosting Competency partners. That assertion was mine not Marco's and incorrectly compared two related, but not directly comparable, partner groups.

Posted by Scott Bekker on October 29, 2014 at 3:31 PM0 comments

Microsoft Veterans Among New Execs at SkyKick

Fresh off a recent round of investment, channel-focused Office 365 migration project automation specialist SkyKick is expanding its management team to accelerate North American growth and drive into new markets internationally.

The Seattle-based startup and a 2013 Microsoft Partner of the Year winner is adding three senior executives -- Steve Bonilla as COO, Peter Labes as vice president of business development and Eric Jewett as vice president of international operations. The executive additions, being announced Monday, follow a $3 million round of private equity and angel investor funding announced in late July.

"We have a strong bench around product development," said Todd Schwartz, co-CEO of SkyKick, in an interview. "By adding some industry veterans, this will help us in some areas that up until this point we haven't invested in."

Bonilla most recently was COO at Spiraledge and also held senior positions at Accenture and Digital Impact. "What we thought was very important as we build this company for the long term is we wanted to hire a COO with hardcore operational experience and experience in building companies from small to big," Schwartz said.

SkyKick picked up Labes and Jewett from Microsoft, where SkyKick co-founders Schwartz and co-CEO Evan Richman came from.

Labes was most recently senior cloud strategy lead for the Microsoft U.S. SMB Channel Group. Richman said Labes' experience with building the Office 365 business through the U.S. channel and previous channel-based business development experience with Sage Software make him a strong fit for SkyKick's ongoing channel-centric ambitions.

"There's a lot of change happening in the channel as the cloud is coming. [He's going to help] us work with those different partners and continue to support the channel in the best way possible," Richman said.

Eric Jewett, one of three new senior executives at SkyKick, is tasked with driving a new international expansion initiative for the Office 365 migration project automation specialist.

Jewett had several international roles at Microsoft, including worldwide director for Microsoft Azure Enterprise Sales Strategy, senior director of Microsoft Azure for Western Europe and worldwide director of Windows Server and Virtualization Marketing.

SkyKick's international strategy is to build the business first in other English speaking countries, like the United Kingdom, Australia and New Zealand, and branch out from there, Schwartz and Richman said.

The executive expansion reflects overall employee growth at SkyKick. When announcing the $3 million in new funding over the summer, SkyKick unveiled plans to double the company's headcount from 40 people to 80 employees over the next year.

Schwartz says SkyKick's buildout is only beginning. "Only 7 percent of SMBs have moved to the cloud over the last three years. We're still very much in the early days. This is only year three of probably a 10-to-15-year journey."


Posted by Scott Bekker on October 20, 2014 at 5:29 AM0 comments

How Wireless 802.11ac Could Be a Win for Microsoft Lync

Wireless standard upgrades often meet with a collective yawn by customers. If the wireless network is getting the job done, a speed increase often won't do enough to improve performance to justify the cost.

But Jamie Stark, senior product manager with Microsoft Lync, is evangelizing a recent wireless standard as a big opportunity to dramatically improve unified communications performance on mobile networks.

The opportunity, which for partners extends beyond those who specialize in Lync, is related to the new 802.11ac wireless standard. The standard was approved in January, and it turbocharges wireless bandwidth to single-link throughput of at least 500MBps.

"The promise of mobility with Lync is really strong. Customers think, 'Not only can I save a lot of money, not having this really extensive wired plant would be great,'" Stark told me. He says expense savings could go as far as removing a standard requirement to have air conditioning on every floor's equipment closet to keep existing switches for old telephone handsets cool.

"If I have a cell phone, tablet and a workstation with a headset, I don't need to be tethered down by a wire," Stark said.

An obstacle has been wireless bandwidth. "If a dozen people are in the conference room looking at a Lync meeting, it's easy to saturate an access point," Stark said.

The 802.11ac equipment removes the bandwidth barrier affecting current traffic levels. "It's absolutely an opportunity now. 802.11ac is now to the point in the market where folks are going to be buying that," Stark said. "The single biggest thing that I bring up to every one of the customers that I talk to is around Wi-Fi."

For more on emerging opportunities around Lync, see the recent RCP Partner Guide to Microsoft Lync here (registration required).

Posted by Scott Bekker on October 07, 2014 at 11:31 AM0 comments

Channel Takeaways from the HP Split

The rumors over the weekend were correct, and Hewlett-Packard revealed Monday morning that it will split into two roughly equal-sized entities -- Hewlett-Packard Enterprise and HP Inc.

The move creates two massive new, if familiar, players in the tech industry -- Hewlett-Packard Enterprise's annual revenues for a recently concluded period would have been $58 billion, HP Inc.'s $57 billion. The new arrangement has implications across the IT industry, including for the many Microsoft partners who are also HP partners. Here are a few of the main takeaways that are visible at first blush.

A New Poster Child for Spinoffs
The IT industry commonly veers between two business poles -- mergers and acquisitions or spinoffs and sell-offs. Big events give us a shorthand to understand trends and HP's new decision is one of the biggest. As a symbol of old Silicon Valley, the PC industry, the printer industry or the new cloud+services world, HP's decision will become a major data point in all kinds of discussions about whether spinning off business divisions makes sense.

HP Chairman, CEO and President Meg Whitman was touting a strategy of "One HP" -- in other words, not splitting up -- recently enough that she needed to do some tap dancing about it on Monday morning in a call for investment analysts.

"Let me be clear, One HP was the right approach. During the fix-and-rebuild phase of our turnaround plan, we used the strength found in being together to become stronger throughout. But of course, the marketplace never stands still, and in our industry today more than ever, you have to compete harder and faster every single day. Being nimble is the only path to winning," Whitman said.

Already, HP's move is resparking conversations about EMC and VMware, as well as renewing calls for Microsoft to look into breaking up. Whether HP's spinoff is a success or a failure, it is high-profile enough that it will become shorthand for the one or the other.

A Star Is Born
Dion Weisler earned a level of industry renown with his elevation to the position of HP's executive vice president of Printing and Personal Systems Group in the summer of 2013. But the Australian-born tech industry veteran, who joined HP in January 2012, goes from being well-known by tech industry insiders to the type of business superstar who appears on CNBC with his elevation to CEO of the newly formed independent company, HP Inc.

Dion Weisler

According to Weisler's bio from the HP site, prior to his EVP role, he was senior vice president and managing director of Printing and Personal Systems for the Asia Pacific and Japan regions. He came to HP from Lenovo, where his top role was vice president and COO of Lenovo's Product and Mobile Internet Digital Home groups. He also worked at Telstra Corp., an Australian telecommunications company, and spent 11 years at Acer.

In a statement, Whitman gave this assessment of Weisler's performance as EVP, a job that precisely parallels what he'll be working on as CEO of HP Inc.: "Since assuming responsibility for the Printing and Personal Systems Group, Dion and his leadership team have done an excellent job of building our relationships with customers and channel partners, segmenting the market and driving product innovation."

Whitman Bets on Hewlett-Packard Enterprise?
Is Meg Whitman tipping her hand as to which of the two businesses has more potential?

Meg Whitman

"The board and the management are convinced that by separating HP into two new, independent companies, we will be able to accelerate the performance of both more rapidly than we could as currently configured," Whitman explained on the investor call.

Whitman will serve as CEO of Hewlett-Packard Enterprise, while serving as non-executive chairman for HP Inc.

She's chosen to focus her day-to-day attention on the business that moves forward with HP's lines of servers, storage, networking, services, software, cloud and converged systems. That's as opposed to the business built on notebooks, desktops, mobility, printing, managed print services and graphics.

Whitman will be the executive on the side of the business with larger expected profit margins and the side that includes the booming cloud market. That said, both businesses currently carry similar operating margins, according to a slide deck for investment analysts (10.2 percent for Hewlett-Packard Enterprise and 9.4 percent for HP Inc.).

More Layoffs Coming
HP has always done things in a big way because of its scale. While Microsoft makes headlines for layoffs in the 18,000-employee range, HP was already committed to laying off between 45,000 and 50,000 people.

During the call about the spinoff, an HP slide revealed that "incremental opportunities for reductions have been identified...independent of the separation transaction." The latest figure is that the entity once known as HP has need of 55,000 fewer employees. The elimination of 5,000 or 10,000 people from the payroll beyond the company's previous guidance means additional money for R&D and sales, according to an HP slide.

The layoffs and other job eliminations are proceeding, with about 36,000 jobs already eliminated. Expect uncertainty and trepidation from HP contacts until they're certain what the other 19,000 eliminated jobs will be.

Spotlight on Future Products
HP executives provided hints on Monday about what product lines they're most excited about for future growth.

On the Hewlett-Packard Enterprise side, it's Apollo, Gen 9 and Moonshot servers, the 3PAR storage platform, the HP OneView management platform and the HP Helion Cloud. For HP Inc., mobility is an area where the company is looking to gain traction, while the spinoff is also looking to build a business in 3-D printing.

HP Financial Services
There wasn't a lot of detail about partners on Monday, but one area where channel partners did get mentioned involved financing. Going forward, both companies appear to view HP Financial Services as a strategic capability for partners and customers.

"By leveraging its HP Financial Services capability, the company will be well positioned to create unique technology deployment models for customers and partner partners based on their specific business needs," the company said in a statement about the Hewlett-Packard Enterprise side. "Additionally, the company intends for HP Financial Services to continue to provide financing and business model innovation for customers and partners of HP Inc."

Posted by Scott Bekker on October 06, 2014 at 12:56 PM0 comments