The Empire Comes Back

Posted: March 11, 2012 in Economics, Technology
Tags: , ,

One of the more noticeable efforts by Meg Whitman since she became HP’s president and CEO last September has been the company’s effort in cloud computing.  Last week the company announced  that within two months it will begin offering cloud services.  Moreover, HP has taken the important stance of trying to be different from the infrastructure as a service companies crowding the market.

Meg Whitman, CEO HP

Meg Whitman, CEO HP

The HP plan is to offer an expanding suite of applications rather than raw CPU and storage.  Recently, Amazon and Microsoft have become engaged in a price war that looks like both companies are selling at or below cost, presumably to gain market share.  Each company also supplies applications but the emphasis on price makes the apps something of a sideshow and I am not sure that’s the right emphasis.  While this approach might be good for building market share in the short term, building a customer base is all about providing something that customers want and need, which is well beyond low prices for IT.

HP might have another advantage too.  Tien Tzuo, CEO of Zuora, the billing and payments company that specializes in subscription services, tells me that HP selected Zuora for its business.  That makes a lot of sense because when you are selling something more sophisticated than servers-by-the-hour, things get complicated quickly.  Amazon has a lot of free apps and Microsoft is happy to sell one-time licenses, so there are some real differences between the three.

In addition to the number of seats, customers can suddenly buy a constellation of applications in different seat configurations that demand a billing system that goes beyond a single line item.

The HP relationship will not likely challenge Zuora’s infrastructure or its ability to serve many customers — the company already has well over a billion dollars worth of subscriptions under management.  But the relationship does something very important for Zuora and for the subscription industry.  HP, with its commitment to something beyond commoditized pricing of generic services, has taken the spotlight away from the simple price war and focused it on the challenges of managing a real business in the twenty-first century.  Zuora is integral to telling that story.


So, what did you think?

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