SAN DIEGO — Carly Fiorina Monday said a shift in power in the technology industry was a motivating factor in the decision to pursue a merger with Compaq and called it a sobering wake-up call.
“”In all of the countless column inches
written about this merger — a few more inches that I would have cared to have read — the one story that never made it into the headlines,”” said Hewlett-Packard‘s CEO, “”is the transfer of power to the customer. In a corporate drama that’s rife with power struggles, this is the one that started it all.””
Fiorina delivered the remarks — her first public address in months — during the opening keynote at Oracle Apps World in San Diego.
Fiorina said when HP’s board of directors began examining the company’s future direction they looked at current technology advances and how customer requirements were changing. This in turn raised a series of questions.
“”What does the future hold for technology companies that specialize in point products when customers want end-to-end integrated solutions? What happens to technology companies whose growth depends on proprietary architectures in an era when open industry standards-based architectures will give customers the choice, the flexibility and the cost leverage they want? What does the future hold for technology companies whose business models are tuned to the heady 40 to 60 per cent growth rates of the 90s at a time when growth isn’t expected to climb back to the levels of the good old days ever?””
According to Fiorina, network and storage capability is increasing while the price is falling. Cheap and powerful hardware combined with software standards, she said, will be the foundation for new network applications. While this very good news for users, she said, this has tremendous implications for the technology industry.
Referring to a white paper on commoditization by the Segeza Group, Fiorina said historically enterprise applications were built in-house or heavily customized. The shift to distributed computing, however, has changed this. Web sites and Web-based applications, she said, can now offer functionality that was once reserved for monolithic applications.
“”The fact is the business cycle no longer supports specialized or custom built hardware or software to meet business computing needs,”” Fiorina said. “”Companies have to be able to adopt their infrastructures much more rapidly and deploy systems and applications as soon as their needed.””
While Fiorina’s speech focused on the future of the industry in general, she briefly mentioned the merger with Compaq. She said an important benefit for both parties is the deal addresses “”many of the shortcoming and gaps”” in their computing portfolios.
“”This is a merger of like businesses coming together — a merger of consolidation not diversification — and make no mistake this industry will consolidate.””