OPENWORLD - HP CEO: Further industry consolidation likely

HP's Hurd said more industry consolidation could be on the way.

Count HP CEO Mark Hurd among those who believe the tech industry could be on the cusp of another major wave of consolidation.

"In the end, math wins," he said during a keynote address at Oracle's OpenWorld conference in San Francisco on Monday. "If you look at the math right now in the tech industry ... only a handful of players have more than US$100 billion in cash."

Hurd said those reserves are likely to go toward just a few different things: dividends, stock buybacks or acquisitions. "In many cases, potential [merger and acquisition] cases will rise to the top of that list," he argued.

Naming a second driver for consolidation, Hurd said there is pressure for companies to conduct business in a more standardized manner, dealing with fewer suppliers.

But he stopped short of saying he is sure a wave of consolidation is coming: "I won't say it will happen, but it could happen."

HP has done its share to constrict the tech sector's ranks, having made a string of purchases recently. Two higher-profile ones include its 2006 grab of Mercury Interactive and a US$1.6 billion deal earlier this year to buy datacenter automation vendor Opsware. Also, on Monday, the company announced plans to buy EYP Mission Critical Facilities, a New York-based datacenter consulting firm, for an undisclosed amount.

Hurd's remarks came in a keynote address that deviated from the usual formula. Instead of giving a prepared speech, he responded to videotaped queries from OpenWorld attendees. One questioner had asked Hurd to predict who the top players in tech would be in 2010.

HP's activity around its software business was the subject of another inquiry. Hurd said HP right now is the world's sixth-largest software company and wants to eventually lead the IT management software category. "It's not only the pillars of the management stacks, but integrating those pillars," Hurd said. "For us, that's where you'll see us focusing our software assets."

Another question centered on business intelligence. "I think the problem's going to get harder before it gets easier," Hurd said, citing the fact that as the amount of data proliferates, end-users' demands to access it quickly grow in turn.

A related question involved Yahoo and Google, and whether HP considers those companies friends or rivals. "What we at HP love is the ecosystem of content continuing to explode," Hurd said. "It's fantastic for us. The fact there's a desire to have this content global is also fantastic for us."

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Chris Kanaracus

IDG News Service
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