Hewlett-Packard Enterprise (HPE) recently sold its software assets to Micro Focus in $8.8 billion transaction, which essentially made Micro Focus one of the world’s largest pure-play software companies. The deal in turn enables HPE to narrow its business focus, while spinning-off and merging its non-core assets like UFT, Quality Center, and LoadRunner.
While the deal sounds like a great play for investors, it does raise a lot of questions about the future of HPE’s products and what it could mean for customers.
Questions such as how Micro Focus goes about achieving a balance between cost consolidation and active product development, while trying to increase the operating income of HPE’s business by 20 % points to around 45% are obvious. Or for instance, what happens to overlapping tools such as Silk Test and Unified Functional Testing (UFT) or Quality Center and Silk Central that are targeted at the same market segment and meet similar needs?
Simultaneously, Micro Focus has been parent company for SUSE, which resulted from the merger of Micro Focus and Attachmate Group. The SUSE group, unlike the mature testing business of HPE, has been showing solid double digit fast-growth. Hence, it does make sense for Micro Focus to increase investment in this portfolio. The recent partnership through which SUSE became HPE's preferred Linux partner was probably the first step in increasing the reach of SUSE. With focus on growth from SUSE, consolidation could occur around mature software testing products, thereby hampering active new product developing in the testing areas.
HPE however insists the merger will be beneficial to customers of both companies because it will offer accelerated delivery, increased agility, and lower costs. This does sound logical given the economies of scale Micro Focus achieves thorough this merger.
However, the recent layoffs of software engineers and programmers does raise concerns on whether Micro Focus is purely managing mature software assets of HP and extending their shelf life, rather than actively investing in feature developments.
The merger is set to close by Q3 2017. And as this merger goes through normal closing conditions, including anti-trust clearances and shareholder approval, it will be a while before we know how all these developments play out.
So what happens next? The structure and terms of the merger give some solid insight into how the future will play out for HP customers.
You probably have questions, and we will try to unravel as much as possible in the upcoming webinar. Tune in on Thursday, November 17th to discover and learn more details:
- The structure and terms of the HP-Micro Focus merger
- What it could mean for HPE’s products and customers
- What SUSE is and why you should care
- How to navigate what’s coming
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