Leo Apotheker, HP's new CEOWall Street has been quick to punish Hewlett-Packard (HPQ) after the computing and software giant named Leo Apotheker as its new CEO on Sept. 30. The former CEO of German enterprise software powerhouse SAP (SAP) comes to HP on the heels of the abrupt and unpleasant departure of Mark Hurd, a dynamic executive who pared the iconic Silicon Valley company's weaker businesses and earned a reputation as a tough cost-cutter.

Unfortunately, Hurd didn't earn much love from HP employees, and in his wake many critics have said Hurd's relentless cost-cutting had greatly diminished HP's capability to innovate new technologies.

Culture, however, says a whole lot about an executive. And if the culture of SAP says anything about what an HP will be like under Apotheker, the tech giant may be turning a full circle back to an era of big bets on innovation.

Shifting Focuses

HP's current CEO cycle really traces back to Carly Fiorina, the high-flying former Lucent executive who oversaw the merger of HP and Compaq, a move that created a giant hardware company with a handful of software assets. The timing of that consolidation wasn't auspicious, however, because it almost perfectly nailed the onset of ever-declining PC prices. In retrospect however, Fiorina's merger probably saved HP's PC business by finally giving it the scale to go toe-to-toe with Dell (DELL), which had dominated the sector.

After Fiorina came Hurd. Rather than focus on growth, he zeroed in on profitability and did a bang-up job. Under Hurd, HP's highly profitable imaging division thrived, and the company crystallized its focus on critical enterprise hardware segments, such as servers, data-center infrastructure and networking.

But even though HP has long had a broad stable of software products, it lagged behind Oracle (ORCL), IBM (IBM) and SAP in the high-value, high-profit segment that targets business applications for financial companies, human resources, and enterprise resource planning, among other areas. And software, increasingly, has become where the real money is in the technology world. Witness IBM's ongoing charge into the software realm and Oracle's steady acquisition of enterprise software plays.

Clearly, HP recognized the imperative to move into the higher-value enterprise software area. That's at least partly why it bought ArcSight (ARST), a data-security and network-logging technology provider, for $1.4 billion. Similarly, HP has made acquisitions in the storage hardware and storage software categories with its recent victory in a stunning bidding war for 3Par fought with rival Dell.

Now, a New Focus?

Enter Apotheker, an exec who comes from the ultimate high-value, high-profit enterprise software player.

SAP has long been considered the market leader in a number of enterprise software segments, and it's regarded as a true tech innovator with a big budget for R&D. In essence, importing some SAP culture could inject HP with both the enterprise software focus and the R&D imperative.

And that might be a wise move for HP as it seeks to find its way in a post-Hurd world. Cost-cutting is no longer as important as growth in the current cash-rich environment for tech companies seeking to beef up where the future of info-tech spending lies -- in enterprise software.

Thus, the worm has turned from hardware growth to cost-cutting to enterprise worth. And despite what Wall Street says, this might be just the medicine that HP needs.

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