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HP's the odd man out as IBM and Oracle tango

Oracle, which some wiseguy termed the world’s scariest software company, may now–with the Sun acquisition — be the world’s scariest IT company, Period.

The software giant’s acquisition of Sun Microsystems famously turned it into a hardware company–raising eyebrows in some very big boardrooms. Last September, IBM chairman Sam Palmisano publicly noted Oracle as the competitor that  worries him most.

Oracle CEO Larry Ellison seemed positively giddy when he mentioned Palmisano’s quotes a few days later. Since buying Sun, he’s taken to saying very complimentary things about IBM, which he used to beat up on regularly. He even cited IBM circa 1960s as the model of an IT company. Gulp.

At the IBM Partnerworld Leadership Conference last week, Palmisano took some swipes at unnamed competitors including (most think) Oracle. What’s interesting here is that Hewlett-Packard, the “biggest IT company in the world” is conspicuous by its absence in these discussions.

This Oracle-IBM tango has not gone unnoticed and there’s a reason Oracle, not HP,  has surfaced as IBM’s chief concern, said one veteran technology analyst. “Oracle executes [on its acquisitions], HP does not,”  she noted.  “Whatever you say about Oracle, it handles acquisitions very well and IBM is very, very worried about that.”

Oracle claims huge pipelines ($1 billion worth) for its Exadata and Exalogic super-servers–although its definition of pipeline is open to interpretation.  (“Yeah, I have a billion-dollar pipeline too,” groused one long-time Oracle partner.)

But back to HP. The company has a new CEO in Leo Apotheker and a new chairman in Ray Lane. Several current board members are being replaced with newbies. And none of that is easing concerns about the company’s direction. Quite the opposite.

Several long-time partners worry that the new regime may be a problem in that the new leadership, Apotheker (a deposed CEO of SAP, a top Oracle rival) and Ray Lane (a deposed former president of Oracle) may have a little too much Oracle on the brain.

To these HP watchers, the board and CEO choices look reactionary and obsessive.  Not good traits for an IT company. It’s good to be obsessed on product quality and customer satisfaction. It’s definitely not good to obsessed on a single competitor. Look what happened to Novell as top guy Ray Noorda became obsessed with all things Microsoft and reacted to whatever Redmond did to the ultimate undoing of Novell.

Corporate governance gurus are not thrilled with the way HP managed this board-and-CEO transition either. Writing in Fortune Magazine, Eleanor Bloxham, an expert on corporate governance, valuation and independent boards, aired her concern that the new board may be a little bit too chummy with the new CEO.

Given reports of a very dysfunctional rapport between the old HP board and ousted CEO Mark Hurd, it’s understandable that HP want a better working relationship. Hurd reportedly treated the board as an annoyance. But concern about self-serving boards and CEOs may be a bigger shareholder issue.

Many HP partners remain miffed that the board did not go with any of the qualified internal HP candidates for CEO.  And they hope that progress the company has made–in networking hardware since the purchase of 3Com for example– does not go by the boards.

And that miscues–HP unbelievebly ran out of Laserjet toner ink earlier this year–get fixed. (That may be an improvement–last year HP ran out of printers.)

Now the company has stocked up on software execs, up to and including Leo Apotheker, presaging a more aggressive move into that territory. That new focus has partners on edge.

“Let’s not forget that HP is arguably the biggest hardware company in the world. They have to protect and hopefully grow that while also breaking into new software and a lot depends on how well they manage that,” said one long-time HP Premier-level VAR who described himself as worried but optimistic.

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