Is the new HP just an IBM clone?

a radical restructuring like as not, or plans to spin off the low-margin PC division. What they got was Apotheker's anodyne vision of an evolving IT industry, the disruptive force of cloud computing, and HP's role as a soup-to-nuts provider. "All of us need a trusted partner to navigate this new world," he said. "Who however HP could deliver this leadership?"

HP and IBM have long been rivals. Both were computing giants for decades, now while HP pinned the future on its $25 billion purchase of personal computer maker Compaq in 2002, IBM took the in contrast approach, transitioning into software and IT consulting services, both areas that had more growth potential and better profit margins than the PC business.

In time, HP expanded into these areas as then, helped in good part by its $14 billion acquisition of EDS, an IT services giant. As a result, HP surpassed IBM in revenue, bringing in sales in its last fiscal year, compared with IBM's $100 billion. However by other important metrics, HP for all that lagged: In spite of smaller revenue, IBM's net profit of $14.8 billion dwarfed HP's $8.8 billion figure. And the market values IBM at $188 billion, double HP's market cap of $89 billion.

There are, clearly, strengths that HP offers that IBM lacks, however these are usually areas where IBM has chosen not to do business. IBM sold its PC business, which made the popular Thinkpad laptop, to Lenovo in 2005. Today, near a third of HP's revenue comes from its PC division, which has an operating profit margin of 5%. By contrast, HP's software unit has a profit margin of 21%, yet software makes up less than 2.3% of HP's total revenue.

So software is going to be an important plank in HP's growth strategy going forward -- in other words, HP is going to go hard afterwards a core IBM competency. And like IBM, HP is moving into cloud computing, though as Michael Copeland pointed out, HP will focus furthermore down the food chain, leaving the high-end to companies with more established cloud offerings like Oracle and, ahem, IBM.

In his presentation, Apotheker spoke as if he believed that HP's access to end users would give it an advantage over IBM, as if 100 million webOS-powered devices will somehow draw consumers and companies into HP's cloud offerings. Nevertheless it's not clear that will happen: The cloud is nearly by definition independent of the operating software running devices that connect to it. Amazon has built a successful cloud business, Amazon Web Services, without caring which OS devices are running.

The mid-level cloud

But IBM is already taking big steps into the "mid-level" cloud, too. It recently announced its own plan to build a public cloud, and this week it said it's investing $38 million in a cloud computing data center in Singapore. Previously this month, IBM told investors it plans to see $7 billion in revenue from cloud services by 2015. It may be that IBM is closer to the proverbial puck than HP.