The stock market hates HP's new strategy

What color is the sky on your planet?

Enterprise software -- the largest software market by a long-shot -- is not scared of ... Dropbox. That's like saying that cars will be wiped out by lawnmowers. The statement doesn't make any sense. Nor does using Facebook and MySpace as examples of enterprise infrastructures. They're medium sized companies with disproportionately large infrastructure needs. What happens at Facebook says virtually nothing about what happens at Mercedes. And nobody in the enterprise trusts Google since enterprise software is all about managing worst case scenarios, and Google's "here, talk to a robot" isn't even in the same galaxy as an acceptable partner program for the enterprise.

Salesforce is the only one of those companies that even should be mentioned in the same breath and they're mostly a pain in the ass for Oracle and SAP because they've been chipping away at the low end of the market (very successfully). It is plausible that they'll continue to push upward and conquer increasingly larger markets, but that's something that will take a decade or two to unfold.

If HP or IBM or SAP or Oracle wanted to do what, say, Dropbox does, they would throw effectively unlimited funding at the problem until it was solved. They might not even bother to market the result publicly, to avoid diluting their brand, but if they chose to do so, then the unfortunate small company concerned would probably be gone in a few months (assuming the large company didn't just litigate it out of existence because it was easier, if you're in a jurisdiction like the US).

Put another way, companies like Dropbox don't do well because they have a magic recipe that the big boys don't, they do well because they've chosen a niche where they're too small for the big boys to care about and where there are plenty of smaller businesses who will value and pay for that kind of offering because they don't have the same kind of resources in-house to do it themselves.

Edit... I should also mention Google, who aren't likely to be competing in the "enterprise" arena any time soon for a very different reason: they aren't set up to support that scale of customer. If you want to sell software to an engineering giant or a global services firm with an employee count in six figures, you don't show up with a few web pages and an e-mail address, you send a CxO or two on a plane to their head office to schmooze them, and then you appoint an SVP whose only role is to lead a large team of sales and support staff dedicated to jumping when that customer says jump.

HP makes lots of money through EDS selling consulting services and outsourcing services to do all that stuff. Stuff that is being fed by the move to more and more cloud services whether internal or external.

And when I say enterprise services, I mean software as a service stuff like Salesforce. There are more services that business need than Salesforce such as data warehousing that HP is in a strong position to enter or dominate. That said, even though something like Salesforce is a turn key solution hosted off site, it doesn't mean there isn't an enterprise sales process. A middle manager doesn't buy up 1,000 seats of Salesforce subscriptions at $65 per month without going through the normal enterprise approval process. I've seen it and it can take several months even though your average small business owner can sign up in 10 minutes with a corporate credit card. The real deal involves contract scrutiny and due diligence work. And just because Salesforce is easier, it doesn't mean you don't need a ton of development and integration work to bring it in line with your existing practices and software tools which usually requires outside experts at least for training if not complete outsourcing.