Hewlett-Packard is planning to extend its cloud computing services to smaller businesses and consumers to compete with the likes of Amazon and Microsoft, the tech group’s new chief executive said as he revealed its strategy to investors.
In his first meeting with investors since taking charge more than four months ago, Leo Apotheker also revealed that the biggest technology company by revenue was increasing its dividend by 50 per cent – the first rise in 13 years. He said the new strategy could boost earnings per share from a previously projected $5.28 this year to $7.00 in 2014. Stock in HP rose as much as 1 per cent in after-hours trading after the long-anticipated meeting with shareholders and Wall Street analysts began.
Mr Apotheker described the strategy as one focused on connectivity and cloud computing, where technology tasks are performed remotely. HP already does billions of dollars worth of business in cloud computing for big customers, but Mr Apotheker said it would also compete against other large tech groups that provide cloud computing to the general public.
More surprisingly, he said HP would join the ranks of companies with “app stores” to sell applications, or programs tailored for specific purposes.
He said HP’s store would open this year or next and serve everyone from consumers, who have flocked to Apple’s online distribution hub, to big businesses. Initially focused on apps for Windows and HP’s own webOS operating system, Mr Apotheker said the store will carry programs from HP competitors, with the company only screening apps for security and compatibility.
Mr Apotheker said that HP will eventually offer all of its products as a rented service, including some valuable software that has been locked away inside HP computers and printers, which provide the bulk of the company’s $126bn in annual revenue.
“We can leapfrog directly to where the market is going,” Mr Apotheker said.
While software now generates less than 3 per cent of HP’s revenue, Mr Apotheker said he would continue to look to acquire software companies that focus on the cloud, which he depicted as the future of technology.
Mr Apotheker said the company would increase spending on research and development this year by more than revenue grows.
Additional reporting by Richard Waters