HPE and Dell Crazy Similarities: From PCs to Services to Software

This week, HP Enterprises (HPE) announced that it was going to merge its IT services unit with CSC in an effort to focus on its software and infrastructure efforts. Wall Street reacted incredibly positive to the news with HPE and CSC stocks soaring 7% and 15% respectively.

While reading the news, I couldn’t avoid thinking about the similarities of HPE’s strategy with its archrival Dell. While Dell and HP have been competing fiercely for the last 30 years, it’s shocking to see how similar their strategies have been at any given time. The competition between the two giants has expended different sectors of the technology markets such as PCs, professional services, cloud, infrastructure software, etc. Let’s take a look.

The PC Days

During the late 1990s and early 200s, both Dell and HP alternated the number 1 spot in PC sales worldwide. The competition had its peak with HP and Compaq merger in 2002, a disaster that became an example of failed M&A in business schools.

Going Into Professional Services

After 2005, Dell and HP expanded their competition into the IT services and business solutions market. This competition translated into massive M&A activity like HP acquiring EDS for $14B in 2008 and Dell acquiring Perot Systems for $3.5B in 2009.

Missing Mobile

Their relentless focus on dominating the laptop retail market caused that both Dell and HP missed the mobile revolution. Since the launch of the IPhone in 2007, Dell and HP started seeing steady declines on retail sales. This decline became critical at the end of 2011 when smartphone sales passed soared passed PC sales for the first time in history.

Failing in the Cloud

Both Dell and HP attempted have been attempting to become relevant players in the infrastructure and platform as a service spaces. Both companies focused their strategies on building on open source initiatives such as OpenStack and Cloud Foundry. While both Dell and HP have made important progress in their cloud efforts, they have failed to become a first tier player in the space. Last year, HP announced that it was abandoning its public cloud platform efforts to focus on the hybrid and private cloud space.

Street Struggles

In recent years both HP and Dell struggled with constant pressure from public shareholders which became a challenge for their aggressive transformation efforts. That level of pressure forced both companies to make bold moves: Dell decided to go private in 2014 with the help of Silver Lake Management and HP split into two public traded companies HPE and HP INC.

Going Back to Software

After 30 years of competition, Dell and HPE are going at it again by reinventing themselves as enterprise software and infrastructure services. Dell is in the middle of a mega merger with EMC that can end up with one of the most impressive enterprise infrastructure portfolios in the market. By spinning out its enterprise services unit, HPE is now a leaner $32B company focused on enterprise software and infrastructure.

CEO of IntoTheBlock, Chief Scientist at Invector Labs, I write The Sequence Newsletter, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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