With today's announcement that Meg Whitman will become the next CEO of HP, it is time to a look at where she has come from and what challenges are ahead for the computer company. Certainly, in its 72-year history, the fortunes of HP have never been more at risk than they are now.

eBay history

Meg Whitman served as President and Chief Executive Officer of eBay from 1998 to 2008. Those were the go-go years for the online auction house. When she started they had just 30 employees. She grew it to 15,000 employees and $8B in revenue. eBay also bought Skype, selling it for about half of what they paid. Other notable eBay purchases during the Whitman era included Half.com, Paypal, Shopping.com and StubHub.

HP's troubles

Whitman would be HP's third CEO in less than two years: Mark Hurd resigned under an accounting/sex scandal and Apotheker hasn't done much for the company. Meanwhile, their stock has taken a beating. (See chart comparing their stock price to Apple and Oracle.) You would expect more of a $100B company.

HP has huge businesses that for the most part operate independently, which is both good and bad. There is its software group, which could be transformed with a pending $10 billion Autonomy purchase; its printing group, which makes the most money selling toner and still has a leading position; its services group (almost a third of its revenues) was expanded when they purchased EDS, but hasn't dominated the market and lots of consultants have fled. They have a solid second-place networking group, which continues to challenge Cisco, but it has been tough integrating 3Com into the existing ProCurve lines. And then let's not forget its PC group, which was once a proud business and still accounts for a third of its revenues (but nowhere near that portion of its profits).
In the past decade HP has bought Palm, 3Com, 3Par, Compaq (the original PC pictured here), and Snapfish and Voodoo PC, among many others. These purchases haven't gone smoothly.

HP has been late to the gate on cloud computing; they have not done well articulating a mobile strategy (witness the debacle around their tablets, which instantly became popular the moment the company ditched them); and they have failed to challenge Oracle/Sun on the high end, once a no-brainer for them.

Issues and challenges for Whitman

Enterprise experience. While Whitman certainly knows how to run large companies with complex product lines, she has been running large consumer-oriented companies with little B2C footprint. HP is mostly about serving enterprises. Shaw Wu of Sterne Agee said in a note to investors, "We think an ideal candidate for [HP] should have extensive experience in the enterprise market." Frank Gillett of Forrester says, "HP has strong enterprise data center technologies and infrastructure software, but undifferentiated enterprise services. They could buy Amdocs for enhanced billing and monitoring; but buying SAP still doesn't make sense."

Yeah, but does she grok HP? Whitman lost the gubernatorial race to Jerry Brown last year, after spending $140 million of her own cash on the race. Before eBay she excelled at branding and marketing consumer products. But whether she can understand the HP culture is an open issue.


FOR MORE: "Clues to HP's Possible Future from Meg Whitman's Past" by Scott M. Fulton, III


Board governance blues. With all the brouhaha over Techcrunch in the past several weeks, Whitman has had her share of conflicts of interest. Shortly after she was elected to the HP board, she joined Kleiner Perkins as a consultant, the same firm that her board chairman Ray Lane runs. There were similar board conflicts with Goldman Sachs back in 2002, when she made almost $2m in profits from quick pre-IPO activities. She joined the HP board at the beginning of the year, and rejoined the Proctor and Gamble board, where she once worked. Eleanor Bloxham, a board governance advisor, wrote in Fortune "Is this the right time for HP to play yet again with its governance reputation? These are issues shareholders should start evaluating now."

These are a lot of challenges, and it isn't clear if anyone is up for the top HP job. But whatever happens, it is clear that the HP of 2012 will be a very different company from what it once was, and that garage on Addison Avenue in Palo Alto where it all started back in 1939 may be where it all ends up.