Ex-SAP head Leo Apotheker takes the HP helm

Posted by Emma Woollacott

HP has picked ex-SAP CEO Leo Apotheker as its new CEO, in a move which has taken some analysts by surprise.

Apotheker spent more than 20 years at SAP in total, where he is credited with transforming its R&D and leading the company to 18 consecutive quarters of double-digit growth between 2004 and 2009.

"Leo has been a leader in anticipating the transformation taking place in our industry, and we believe he is uniquely positioned to help accelerate HP’s strategy," said Robert Ryan, lead independent director of the HP Board.

"He has demonstrated success in the US market and also has vast international experience – which will be a major asset as HP continues to expand globally, particularly in high-growth emerging markets."

This is only part of the story, though, with Apotheker leaving SAP somewhat abruptly after only seven months as CEO, following customer complaints over increases in maintenance fees. He's also a software rather than a hardware man.

Many observers had expected the role to go to Todd Bradley, head of HP's PC division, or Ann Livermore, who heads its enterprise arm.

Martin Reynolds, managing VP at the Gartner Group, says he expects Apotheker to increase HP's focus on sales and marketing. While his predecessor cut costs and tightened up the company's focus to improve profitability, the company's focus on engineering rather than marketing made it hard to grow revenues.

Indeed, he says, the company has no executive vice president of sales at present, something which he expects Apotheker to remedy. He also anticipates a new focus on what he calls 'cloud for business leaders', selling at the CIO level and above.

"Such an approach, executed successfully, will meaningfully increase HP’s revenues and profits. It won’t be easy: HP’s engineering-centric culture will struggle with direction from a central sales and marketing organization," says Reynolds.

"And HP’s strategic software is a tiny part of its overall business – organic growth won’t be sufficient. On the other hand, HP is not constrained by a legacy applications business, and has an opportunity to reinvent itself as a provider of really new ideas."

"Given HP’s diversified products and services, its financial strength, and its leadership position across markets, no other company is as well positioned to drive – and profit from – the revolutionary changes under way in the marketplace," said Apotheker.

"As we move forward, HP will continue to be a valued partner with our customers as well as a fierce competitor. I look forward to working with the outstanding people at HP to write the next chapter in the company’s long and proud history."

Apotheker replaces interim CEO Cathie Lesjak, who took over in August after Mark Hurd quit in somewhat scandalous circumstances and joined Oracle. Lesjak will remain as CFO. Hurd's other role, as non-executive chairman, will be taken by Ray Lane, currently managing partner at Kleiner Perkins Caufield & Byers.