For the past year there has been much discussion over the Hewlett Packard Enterprise Co. (HP) spin-off and sale to Micro Focus International Plc (Micro Focus), drawing the attention of many in this industry such as competitors, analysts like Gartner, and current HP customers. On Friday, the papers were signed and now that the ink has dried you’re probably wondering how this will affect you. This spin-off will certainly cause significant changes to current HP customers as the current state of sales for the HP software division have been decreasing as well as the uncertainty that will arise from product consolidation and development.
So… What’s Happening?
- HP has spun off much of its software business to Micro Focus for $8.8 billion following a troubling multi-year period including acquisitions, lawsuits, and declining revenues and services for their enterprise customers.
- The list of tools being spun off and merged includes:
- Unified Functional Testing (UFT)
- Quality Center
- Application Lifecycle Management
- There has been a large migration of HP customers leaving the enterprise company as much uncertainty has been observed throughout this deal.
Top Considerations To Evaluate Post-Merger
- The uncertainty of cost consolidation and active product development continues to be highlighted as a concerning point for Micro Focus’ future. HP and Micro Focus share similar product portfolios of highly-profitable mature software assets and fast-growing less-mature software products. There are going to be sacrifices for customer needs at the sake of smart investment decisions to increase operating income margin which Micro Focus has said is a principal goal of theirs.
- The case of overlapping assets. This horizontal merger may cause two challenges to the HP Enterprise customer. The first concern is the potential increase in prices, and the second is product consolidation which would require a lot of time and energy meaning feature development for customers would not be a priority.
- Execution Risks. While Micro Focus has gone through multiple acquisitions since 2006, none have been at the scale of acquiring HP. Micro Focus will almost quadruple in size making it difficult to integrate the two different business units.
- The acquisition of HP’s software group is associated with growing debt levels. For Micro Focus they have given up roughly half of their equity along with $5.5 billion of debt financing.
What Should You Do Next—How Can SmartBear Help You?
- Read this white paper for more details into the HP/Micro Focus deal.
- Consider moving off of HP’s legacy testing products to more affordable solutions like SmartBear’s software products, like many previous HP customers have done including:
- Allow SmartBear to ease your migration efforts with free training and fast, expert support.
- Find all the tools to fit your needs at an affordable price from a robust growing portfolio.
- Come hear from customers who have recently migrated from HP tools to Smartbear tools at SmartBear Connect.
Try TestComplete for free to let us show you why SmartBear was rated #1 by Gartner