HP’s $11.7bn acquisition of Autonomy represents a "sad day" for the UK software giant, an analyst has told CBR.
Hewlett-Packard confirmed the deal last night after news began to leak about a possible deal for Mike Lynch’s Cambridge-based company. For HP the move signalled a shift away from PC hardware to software and services.
Speaking to CBR, Quocirca founder Clive Longbottom said the move was unlikely to prove a success. "It’s a sad day for Autonomy. It’s good news for its shareholders but that’s about it," he told CBR.
"HP has a chronic record in software acquisitions – just look at Mercury Interactive – and it doesn’t understand software. Leo Apotheker [HP CEO, formally at German company SAP] has a background in software but he’s one person in a very large organisation. The hardware guys will want to see how they can wrap hardware around it, the same for the services group," Longbottom added.
Longbottom speculated that Autonomy may look to spin off some of its government work so part of it remains a UK company, something that GCHQ would no doubt be in favour of, he told CBR.
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TechMarketView’s Angela Eager suggested the lack of synergies between the companies could prove costly. "In the software space, HP is known for its infrastructure and application management software, which is a far cry from Autonomy’s area of pattern recognition, unstructured data management and discovery, and barely touches the massive business software space. HP’s activity around BI, analytics and information management products (the closet offerings to Autonomy’s software) is in a state of change and no clear direction is apparent," she wrote.
"Given the limited synergy between the two companies, at this point in time it is difficult to see precisely how Autonomy will benefit from the move. If HP intends using Autonomy and its own related assets as the basis for a concerted push into the analytics and information management space, Autonomy could benefit. But the question that can’t be ignored is how capable a vendor with a very limited software heritage is of making it work," Eager added.
Since the news was announced there has been much speculation about what the deal means for the UK tech scene. Richard Holway, also of TechMarketView, summed up his feelings in a blog called "RIP the best of British Software."
"It isn’t ownership that really matters. It is where a company is HQed. Autonomy’s HQ is in Cambridge. It was a magnet for the area. It created jobs not just for entry level graduates in the UK, but in all the support activities like brokers, advisers, legal beavers, accountants etc. It created a beacon that others aimed for," he wrote.
After HP suggested Autonomy would be remaining in the UK, Holway added: "Mike Lynch has said overnight that HP’s Software operations, which Lynch will lead, will be based in Cambridge, UK. Indeed it is being lauded as ‘a significant boost to the UK tech sector’. I, of course, hope that this will be the case. I hope this will be one of the first such acquisitions that has a ‘happy ending’. ‘Hope’ and ‘the reality’ are often different."
Autonomy is unsurprisingly claiming the deal will have a positive impact on the UK tech scene. "Autonomy will effectively become a key component of the information software division of HP," the company told CBR in a statement.
"Autonomy’s management will remain at the helm of Autonomy, and CEO Mike Lynch will report directly to Leo Apotheker at HP. The deal gives Autonomy access to HP’s 28,000 strong sales force, and HP access to the next generation of data management software. Autonomy will remain headquartered in Cambridge, and all key R&D will remain in Cambridge too. Autonomy UK employees will share a £30m share options bonanza," the statement added.
Longbottom added that it is almost inevitable that UK companies will be acquired by bigger US firms once they reach a certain size. "The UK has always been a great base for new technology. But the nature of the beast is that you can’t break into the US as an independent UK company; you just can’t compete with businesses there. It’s 60 million people compared to 300 million."
