A tale of two companies

First, apologies for just throwing up Mark Hurd’s email without adding any commentary. I just finished a couple of days vacation with the kids and…..phew, now I’m home and can start to recover!!

Anyhow, did anyone notice the stark difference between BMC’s results and HP’s? BMC over-achieved on their earnings, and increased guidance…..HP disappointed and reduced guidance. Why you may wonder? They are both dealing with the same customers aren’t they?

Well, some personal comments.

First of all, BMC has been constantly cutting costs and right-sizing itself for multiple years. From what I can see they have done a tremendous job of getting the expenses under control and, I know that it is has been tough for their employees for a number of years, but now they are reaping the rewards. Also, they made a couple of big and brave bets. The Remedy purchase a number of years ago has been an absolute gold-mine for BMC and then their more recent acquisition of Bladelogic is a game changer for them. Many people have commented that they overpaid for Blade but, what did they buy? Well, not only did they buy a second engine of growth for the company in a hot space to put alongside Remedy, but they also bought a whole new culture and sales team. Everyone knows that the Blade team has taken over the business unit at BMC and this is probably the biggest single change and dare I say, a major reason for their positive results.

The stories that I hear coming out of HP on the other hand, is that they still think and act like a hardware company. The software sales team does not appear to be “top of the pile” and instead has to follow archaic and complex hardware sales procedures. Try asking HP Software for a quote….see if you can get something back in less than 24 hours. In my opinion, and please remember that these are all personal comments and after all, what do I know….but HP gave up their single best opportunity to change the culture when they tried to integrate Mercury. Why oh why didn’t they leave it as a stand-alone business and let the Mercury leadership take over HP Software rather than the other way round. Remember….when BMC acquired Remedy, they left it alone. When BMC acquired Blade, they have given the Blade team the power to get it done.

Anyhow, when you look closer at the BMC results, their growth is all powered by Remedy and Bladelogic. Their Service Assurance business (Patrol etc) is still declining pretty rapidly in a market that has been growing for many years. Let’s face it, Patrol and related products (Best1, Performance Manager, Proactivenet and multiple others), are also-rans right now.

And what about Nimsoft’s experience? Well, keep in mind that our sample size is relatively small but, we don’t see BMC in our deals because they are focused on other disciplines where they have market-leading products.

But, for HP, they are our most-replaced competitor….

I wonder…if other companies are having similar success at replacing HP as much as we are then maybe, just maybe that contributed to their poor results. An eroding maintenance base is never good for business.

Finally, I want to say that these are worrying times for many people. Job losses, salaries and benefits reduced and bad news at every turn. I wish everyone the best – just remember that sometimes the medicine doesn’t taste good at the time, but helps cure us in the longer term.

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