HP announced its bid for Autonomy on August 18, 2011 at a whapping 78% premium on closing prices. Autonomy is a very successful business growing its revenues consistently from $343M in 2007 to $870M in 2010.
What will HP do with Autonomy?
First of all HP is regrouping itself as seen its intention to spin off its PC business and shutting the TouchPad and smartphone lines. Expanding its focus on software and content is also a bet on more profitable offerings. HP can also re-ignite the growth of Autonomy that slowed down in 2010 by pushing through the much larger HP sales force.
Search and techniques to mine and find value in enterprise data stores is furthermore an area we at Rainmakers believe is will become used much wider by businesses small as well as large. Autonomy has built a set offerings which are aimed at large enterprises. Over time these offerings will be packaged differently and aimed at smaller businesses. The desire to mine data benefits multiple stakeholders in organisations which is under penetrated and has got plenty of room to grow.
HP’s bid shows that it needs to snatch Autonomy before its competitors make a move. This may well lead to bidding war, but the initial premium is already very high.
We covered the acquisition by Autonomy of Iron Mountain Digital. The proposition was that a backup store could be mined just like the primary data store. This is still work-in-progress and we were awaiting to see how Autonomy would deliver and package this solution. There is no reason why HP would not be interested in this extension to the search business. But this means that HP will take on an offsite backup business which one proprietor recently decided it could not make profitable. HP has recently launched its enterprise cloud business model and a DR module should be additive.