Why Did HP Pick Apotheker?

HP wants more software expertise, says Peter Judge, and choosing the former CEO of SAP could also send a strong message back to Oracle

Europe is waking up to find one of its leading software CEOs, Leo Apotheker, has taken over the hardware giant Hewlett-Packard. What does this mean?

Firstly, it means the end of two months of speculation, and it means a set of disappointed senior execs at HP. The company doesn’t appoint internally to the top spot it seems, having appointed Mark Hurd from NCR, and before that Carly Fiorina from AT&T.

When Hurd resigned in August, some senior HP people may have thought their time was coming, but once again, it looks as if the best way to get to the top in HP is to start somewhere else.

Why choose Apotheker?

But why Apotheker? The first obvious answer is that he was CEO of a giant software company, SAP, where he worked for twenty years. It looks like HP’s goal in choosing a new leader is to look for someone who is already where they want to get to. HP has been very hardware-centric, and wants to move more towards software and services, ergo, let’s have a software-savvy leader.

He’s also European, which might be a stretch for a company headquartered in the US, and is a departure for HP. The compartmentalised European markets are very different from the open spaces that US execs tend to see.

Maybe this counts in Apotheker’s favour. In any case, he’s already a global CEO. Although headquartered in Germany, SAP is a giant player (and tops the regional software league, the Truffle 100).

It’s not renowned for innovation though. In 2009, SAP was slated for lacking new products or directions. This year, with returning business confidence, it is possible that may be changing, but SAP has always seemed to be one of the giants that rely more on market size and muscle than innovation.

Patchy history

Apotheker also brings another drawback. The very reason he is available is because he was, more or less, ousted from the board of SAP, leaving “by mutual consent” in February, after a particularly bad set of results.

HP’s last two CEOs left under a cloud – HP’s share value halved and the company suffered the brutal Compaq merger under Carly Fiorina, and Hurd left because of expenses, and a vague whiff of sexual scandal, leading Oracle boss Larry Ellison to criticise the HP board and bring Hurd aboard his own ship.

Apotheker has clearly convinced the HP board that SAP’s problems were just part of the economic climate, and he won’t be repeating any of the mistakes of previous CEOs.

But why him in particular?

Hurd’s appointment at Oracle was designed to send a message to HP, according to eWEEK readers, and others.

Now, SAP is one of Oracle’s biggest and fiercest rivals, taking it on in the markets and the courts (a long running battle reaches the court of Delaware next month).

It could be that picking Apothekar is sending a message right back to Oracle.