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HP: Half Full or Half Empty?

Amid news that Hewlett-Packard Co. will cut another 25,000 to 30,000 jobs, CEO Meg Whitman insists that HP Enterprise is “uniquely positioned” for hybrid IT.

HP is set to split into two companies on Nov. 1 — Hewlett-Packard Enterprise (servers, storage, networks and more) and HP Inc. (PCs and printers). During a financial analyst meeting yesterday, Whitman told Wall Street watchers that HP Enterprise (forthcoming stock symbol: HPE) was “transforming” to a hybrid infrastructure strategy; striving to protect digital enterprises from external risk; empowering customers with data insights; and promoting workplace productivity tools that offer the right economics.

Read between the lines and HP Enterprise is singing the familiar song that all major IT hardware players now shout from the rooftops. It goes something like this: “We understand hybrid cloud, big data analytics, security, and consumption-based IT spending.” HP Enterprise’s tune includes a commitment to delivering more than $50 billion in annual revenue — and cutting about 25,000 to 30,000 jobs.

HP Enterprise continues to insist that the company is “uniquely positioned to help customers migrate more of their applications and services to a hybrid cloud environment.” The challenge: CIOs, investors and channel partners hear the same statement from IBM, EMC, VMware and so many other vendors these days.

HP expects its fiscal 2015 cloud revenue to be “approximately $3 billion, growing over 20% annually for the next several years.” That’s not enough. IBM’s cloud revenues hit $7 billion last year. And both IBM and HP are sort of twisting the cloud revenue conversation — including hardware and software that’s installed on-premises at the customer site. Are private clouds — with traditional hardware and software sales — really cloud revenues?

When it comes to cloud, I prefer to focus on the as-a-service revenue conversation. And there, HP has been struggling, Instead of growing, HP’s SaaS revenues have actually slid in recent quarters. Whitman and the broader HP Enterprise team have to reverse that trend.

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