HPE CEO Meg Whitman reveals strategy update

HP CEO Meg Whitman
Hewlett Packard Enterprise (HPE) CEO Meg Whitman today provided a strategy update and the financial outlook for fiscal year 2017.

Meg Whitman said HPE is not changing the company strategy in the wake of the recent spin-offs and mergers.

HPE continues to aim for becoming the leading provider of hybrid IT, built on the secure, next-generation, software-defined infrastructure that will run customers’ data centers, bridge them to multi-cloud environments, and power the Intelligent Edge that will run campus, branch and Industrial IoT applications.

She said the new HPE will have the right assets to achieve this vision, including core software and services capabilities that differentiate HPE from its competitors and deliver infrastructure solutions to enterprises.

HPE will be well-positioned to address a market of more than $250 billion that is growing at 2-3 percent annually. This market opportunity includes:

Data Center and Cloud, representing a $100 billion opportunity growing at 1-2 percent CAGR, with areas of high growth like High Performance Compute, Private Cloud, all-flash arrays and hyperconverged.

The Intelligent Edge, including the $23 billion campus and branch market, growing at 2-4 percent each year, and a new category called Converged Infrastructure for the Edge, which will power the emerging $14 billion market of Industrial IoT applications, growing at around 15 percent per year.

Services, which represents a $116 billion opportunity growing at 3-4 percent each year, driven by growing customer needs for consulting and support across hybrid infrastructure and demand for flexible IT consumption models.

HPE’s revenue for fiscal 2016 is expected to grow 1-2 percent when adjusted for recent divestitures and currency.

The revenue of present HPE, including a full year of ES and Software contribution, will be flat to down 1 percent when adjusted for divestitures and currency.

The company claims that HPE’s financial profile will be improved following the completion of the ES and Software transactions. The future HPE is expected to see modest revenue growth in FY17.

Business Updates

Antonio Neri, EVP and GM of the Enterprise Group, recapped EG’s solid performance to date in FY16, outlined a strategy aligned to market opportunities and customer needs, and described the steps the business is taking to optimize its operating model and deliver strong profitability.

Mike Nefkens, EVP and GM of Enterprise Services, provided highlights of the three-year turnaround of the business, specifically its stabilized revenue, higher win rates and doubled margins since FY13.

Chris Hsu, EVP and GM of Software, said HPE is on track to complete the spin-merge of its Software business with Micro Focus in the second half of fiscal year 2017. The combined entity will be one of the world’s largest pure-play software companies with products and services to address the challenges IT and business leaders are facing.

Meg Whitman did not share enough reasons why HPE is not achieving impressive growth despite investment in innovation and the execution of its recent strategies.

Baburajan K