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The board of directors of HP on Thursday announced the election of Léo Apotheker as chief executive officer and president. The new head of the company previously served as CEO of SAP and his appointment will mark a new focus for the company. The board also elected Ray Lane, managing partner at Kleiner Perkins Caufield & Byers, as non-executive Chairman.

"Léo has been a leader in anticipating the transformation taking place in our industry, and we believe he is uniquely positioned to help accelerate HP’s strategy," said Robert Ryan, lead independent director of HP's board.

During Mr. Apotheker’s more than 20 years at SAP, he was a driving force in making it the largest business software applications company in the world. Apotheker helped develop and implement the most significant changes in SAP history. During his tenure, he transformed R&D and technology platforms and expanded business models and customer segments. Apotheker also helped lead SAP to 18 consecutive quarters of double-digit software revenue growth between 2004 and 2009.

According to Ezra Gottheil, senior analyst of computer practice at Technology Business Research, HP is confident that hardware and services are on positive trajectories, and is once again filling out its portfolio by strengthening the third leg of the IT stool: hardware, software, and services. The experience Mr. Apotheker brings in running and selling an enterprise software company is directly beneficial to HP. Given the strong margin contribution of enterprise software, TBR believes Mr. Apotheker will reinvigorate the software portfolio under the HP software and the enterprise server, storage and networking (ESS&N) divisions as a highly profitable lever that can help to quickly lift overall HP profitability. The appointment reinforces the perceived importance of outside experience in running the software business following the hiring of ex-Microsoft executive Bill Veghte as the head of the HP software and services division. Mr. Veghte is a 19-year Microsoft veteran who recently headed the Windows franchise.

“Léo is a strategic thinker with a passion for technology, wide-reaching global experience and proven operational discipline – exactly what we were looking for in a CEO. After more than two decades in the industry, he has a strong track record of driving technological innovation, building customer relationships and developing world-class teams. He has demonstrated success in the U.S. market and also has vast international experience – which will be a major asset as HP continues to expand globally, particularly in high-growth emerging markets," said Mr. Ryan.

TBR believes this appointment is indicative of HP’s satisfaction with its current strategic position in IT hardware and services. Having integrated EDS to form HP Services, increased already substantial market share in PCs and servers and with acquisitions in place to buttress its mobile devices, networking, and storage business, the company is looking to light a fire under its stagnant software business by appointing an experienced software CEO to run its entire business. This positions the company in direct competition across the board with the other horizontally integrated IT behemoths, IBM and Oracle.

“HP has a powerful mix of businesses, products and services, one of the most innovative cultures in the industry, and an accomplished management team who have played a critical role in its success. I am deeply honored to be joining the more than 300 000 dedicated HP employees. Given HP’s diversified products and services, its financial strength, and its leadership position across markets, no other company is as well positioned to drive – and profit from – the revolutionary changes under way in the marketplace. As we move forward, HP will continue to be a valued partner with our customers as well as a fierce competitor. I look forward to working with the outstanding people at HP to write the next chapter in the company’s long and proud history," said Mr. Apotheker.

Tags: HP, SAP, Business, Oracle, IBM

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