Hewlett-Packard:
The Internet Company

"If you want to implement a large, Internet-based system, particularly an electronic commerce product, HP would be a very strong technology partner."
--Ezra Gottheil, Senior Analyst, Hurwitz Group, Inc.

• Hewlett-Packard is about to become a dominant provider of Internet services and software, particularly in the area of security and electronic commerce.

• It has been very active in the Internet, in both internal development and in acquisitions and partnerships.

• Hewlett-Packard's strong presence will dispel any lingering doubts about the enduring value of the Internet.

Hewlett-Packard is posed to be the definitive provider of services to companies doing business over the Internet and to companies using the intranet for workgroup computing. In addition, HP will be a major provider of both hardware and software for Internet and intranet applications. HP has identified Internet commerce and intranet workgroup collaboration as the two Internet areas that will grow fastest in the near future. Hurwitz Group, Inc. agrees and believes that HP is the most likely winner in electronic commerce, as well as being a serious contender in workgroup collaboration.

HP is moving into the Internet with the focus and speed of a much smaller, younger company. It is incisive; it has identified the key growth areas and critical obstacles to success; and it is addressing them. HP is rapidly developing Internet technologies, establishing partnerships, and making acquisitions.

The only area in which HP can be faulted is in marketing communications: The company is still not closely identified with the Internet. The challenge facing HP marketers is that HP does so much in so many areas that it is hard for one theme to emerge. However, HP has issued a series of announcements that, taken together, tell its story.

These are only some of HP's Internet-related announcements:

• In February, HP acquired Web security and trusted operating systems technology from SecureWare, Inc. This software allows organizations to transmit sensitive transaction data over the Web, as well as providing mandatory access control, networking security, and audit and log-in capabilities - all to the highest level of government certification commercially available. HP's relationship with SecureWare developed when the two companies collaborated to create the Security First Network Bank in Atlanta, the first Internet-only bank to provide online banking services. HP did the systems integration; SecureWare provided the crucial security software platform.

• Also in February, HP made an equity investment in Business@Web, an Internet business-application development company. Business@Web's OpenScape object-oriented development tools allow rapid development of robust, secure, Web-based applications that connect to an organization's existing computing systems. The object orientation and security make the OpenScape product well suited to the development of commercial, business-to-business applications.

• In April, HP announced Internet Collaboration Services, an extension of OpenMail, HP's messaging backbone infrastructure. For OpenMail users with Web browsers, these services include:

  • Conferencing or threaded asynchronous conversations, like those provided by Lotus Notes or Internet Usenet Newsgroups

  • Calendars and scheduling, using HP's OpenTime calendar system

  • Access to directories and directory synchronization using LDAP

  • End-to-end messaging security

  Note that the conferencing system is based on the Internet NNTP standard. Hurwitz Group believes that NNTP does not provide adequate functionality to compete with products like Notes. This is an example of the occasional downside of HP's commitment to open standards. Nevertheless, Internet Collaboration Services show HP's understanding of this market need and are a first step to meeting it.

• In April, HP introduced an Authorization Server, the first of a projected line of Internet security products, with the brand name Praesidium. The Praesidium Server centralizes business rules pertaining to authorization, rather than locating them in the individual applications.

• In May, HP and Netscape announced a strategic partnership to deliver "Enterprise Intranet Solutions", with a particular focus on workgroup collaboration. The announced initiatives were not ground-breaking, but Hurwitz Group believes that Netscape and HP have very complimentary capabilities and that the alliance will significantly strengthen both companies.

• Also in May, HP announced that its Professional Services Organization (PSO) was significantly expanding its portfolio of Internet-related consulting, systems-integration, and education services. Many of the added services cover security and commerce, including Quickstart Internet Firewall Implementation and Electronic Commerce Design and Implementation. HP is building on its excellent reputation for service and positioning itself as the definitive service provider in these areas.

In addition, HP made other announcements in the areas of security and performance during the same period. For example, HP began offering a Broadband Internet Deliver System; it was already manufacturing cable modems. It partnered with ANS Core Systems, a subsidiary of America Online (AOL), to provide wide-area intranet connections that bypass the Internet to provide increased security and performance. HP is also developing smartcard technology to provide the highest possible degree of security.

Conclusion

HP is making the Internet its primary strategic focus in computer services and software. It has identified security as the key to Internet commerce and the key to HP's taking a leading role in Internet systems.

The Internet and the intranet fit HP's model of how the world should work. Internet technology consists of open standards; it is designed for ultimate reliability; and it is globally scaleable. This type of technology is something HP should be very good at, and it is. In a recent three-day conference for industry analysts, HP showed its vision of the future: the Internet. It is clear that HP has been working for a long time on systems that exploit the Internet's strong points, compensate for its weaknesses, and anticipate where the Internet is likely to go.

Implications for Vendors

Look for opportunities in providing security software and services for Internet applications, particularly opportunities to partner with HP.

The last inhibitor to enterprises embracing the Internet and intranets has been the lack of a major, stable player with a wholehearted commitment. HP's recent activities remove this obstacle. IS utilization of the Internet will grow even faster, as will the corporate market for Internet products and Internet-enabled products.

Internet commerce will also accelerate. Although the competition in this arena is very strong, the whole market will expand. Considerable opportunity also exists for vertical market Internet commerce products, particularly those based on HP technologies.

Implications for Users

In developing your Internet applications, focus on security first and implementation second. If you want to implement a large, Internet-based system, particularly an electronic commerce product, HP would be a very strong technology partner.

Success will fuel success. The more useful and available electronic commerce becomes, the more customers will buy into it, and vice versa. If you have a potential electronic commerce product, the technology will be there, the services will be there, and the customers will be there.

This bulletin is a reprint from the June 20, 1996 Hurwitz BalancedView Research Bulletin, "Hewlett-Packard: The Internet Company," written for the Hurwitz BalancedView Internet Business Strategies Service.

Hurwitz BalancedView Research Bulletins are published by Hurwitz Group, Inc., 29 Crafts Street, Newton, MA 02158. Phone: 617-965-6900. Fax: 617-965-6901. Web address: http://www.hurwitz.com

Text (C) Hurwitz Group, Inc. 1996 All rights reserved. Reproduction in whole or in part is prohibited without prior written permission.

Everything else, (C) Hewlett-Packard Company 1996. All Rights Reserved. Reproduction adaptation, or translation without prior written permission is prohibited, except as allowed under copyright laws.