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Under Micro Focus, formerly HPE Autonomy Assets Face Uncertain Future In Cognitive Computing

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The announcement that HPE (Hewlett Packard Enterprise) has spun out most of its software assets to UK-based Micro Focus International plc indicates that the company is adopting a strategy of retreat from the fast-moving but nascent field of cognitive computing.

Micro Focus has had a successful run up on the London Stock Exchange since the beginning of the year. On the news of the deal, the stock value spiked: it is now up 45% year-to-date. While this should be good news for Micro Focus shareholders, including the new ones at HPE, it should be a warning signal of challenging days to come for owners of Autonomy’s IDOL software and other software assets, like Vertica, formerly driven by innovation.

Micro Focus’s strategic approach appears to be strikingly similar to that of the US-based software rollup megalith, Computer Associates. Computer Associates managed to bring together some 200 software products during its heyday in the 1990s. Micro Focus – with less than $1B in revenue prior to this week’s acquisition — has not so far demonstrated a CA scale of acquisition appetite, but this deal quintuples its annual revenue.

More important than the rapidly growing size of Micro Focus’s software portfolio is its assertion that it will increase the margin on the HPE software portfolio by 20% over a three-year period. Wringing that kind of increase out of these application software products is not something achievable simply through better management. It points to a new campaign carried out the CA way: slash new development, slash marketing and customer commitment, extend release cycles, slash people, slash all administrative overhead, and adopt more creative accounting approaches. HPE had already played many of these cards on Autonomy between its 2011 acquisition and the present. IDOL customers will watch carefully as the new UK management fulfills our expectations.

It remains to be seen what will happen with the most recently released HPE innovations, including Haven On Demand and its promising developer-friendly catalog of plug & play APIs and “Combinations” configurations announced as recently as last week. The change of ownership will certainly give potential new customers pause as they consider which platforms are most promising for current and future cognitive computing application development.

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About the Author:

Hadley Reynolds is Co-founder and Managing Director at the Cognitive Computing Consortium. He is a leading analyst of the search, content management, and knowledge management industries, researching, speaking, and writing on emerging trends in these technologies and their impact on business practice. He currently leads the publications program at the Consortium.
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