Michel Feaster: prediction

Transcript context

…And you think if it was in an emerging market, then HP would have had a chance at building their own but still typically worse than a startup. It would have been almost impossible for that to happen but yes, I mean in theory, we could have had a chance and you probably would have taken a different strategy in that context, right? So I actually was given a very simple problem. There was nothing really complex about answering that question. There’s more to it but that's essentially the math. Even more if you looked at it in the context of the whole portfolio, why would you invest so much engineering for so little return? Because the other part about software which we all understand in valuation is that the only players that make any money are the #1 or #2 player in the market. So even if there was a path for HP to become from 5 to 4, or take out IBM in 5 to 3, profitability goes to the winner. And so you lose money indefinitely on a software business unless you become the dominant player and then you make insane profit. To me, if there’s no path to #1 or #2 for you based on who you are, that's really what you need to look at to buy a solution. So that was really – I think I presented five slides, it was very concrete. I also, by the way, spent a bunch of time interviewing sales people and trying to understand how important this was, meaning how often was it coming up in deals, what was the channel relevance. Because the other piece of it is if we did a deal, can we monetize? Are we talking to the people who’d buy it? Do we feel like we could have gotten that money that went to Opsware, IBM. And the was maybe the last piece of the calculus was the channel fit was very high. So HP at the time had many brands, Openview being one of the most famous ones that we were selling to the operations teams. So we had a very experienced channel selling to the same buyer that would be buying Opsware or buying BladeLogic. When you really step back and look at that math, it’s pretty obvious that it has to be an M&A scenario or you should shut the business down. So that was phase one. But you probably did enough calculus on what does this market look like in 5 or 10 years where it was like we can’t afford to not play in this market.…

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