The analysts said today at a conference in Sydney the rating resulted from confusion over how HP would become a serious player in the burgeoning Web Services market and an imminent attack on their highly profitable printer business.
"HP is trying to build up software in anticipation of a drop in revenue from other areas," said Gartner analyst Kristian Steenstrup. Gartner points to the entry of Dell into the commodity printer market by teaming up with Lexmark as a cause of concern for HP, considering the profits generated by the high-margin cartridge business.
Dell doesn't even have to succeed in the market to cause problems for HP: according to Gartner if Dell nabs four percent of the printer business it will be enough to unsettle HP.
Another Gartner analyst, Betsy Burton, claimed HP was trying to figure out what its server strategy is going to be, and was planning to take its "jewel in the crown," the Openview systems management offering, into the Web Services area.
"HP has committed itself to .NET and Web Services," said Burton, "but they haven't articulated how they're going to get from where they are today to a manager of Web Services."
Gartner also continued its prediction that a massive consolidation of software companies will take place, with half of them, mostly smaller and medium sized companies, disappearing within the next two years. Most of this would result from companies going under, and most mergers will be the result of semi-hostile takeovers as share prices plummet.
"However surprising these figures may seem, in 1997 there were 26 vendors selling servers, today there are 13 server vendors in Australia," said Matthew Boon, principal analyst for hardware platforms.
