Mixed reactions as HP buys Autonomy

The blogotweetosphere has been positively buzzing since last night’s announcement that Hewlett Packard will be buying Autonomy for £7.1bn, while divesting itself of its PC business. Many commentators have put a positive spin on this, pointing to Autonomy’s meteoric rise from a small office in Cambridge to the behemoth it is today. It’s undoubtedly good news for Autonomy’s shareholders. Dave Kellogg correctly identifies Autonomy as a “finance company dressed in (meaning-based) technology company clothing” with a “happy ending”.

However the reaction isn’t all positive – the FT implies this deal is at the “lunatic end of the valuation spectrum”. Law Technology News says “Autonomy’s e-discovery revenue stream is high-end but unsustainable” and quotes users of the system with problems: “We had a lot of issues with the applications crashing, the documents tending not to get checked in”….””[Autonomy sales staff] were pricey, arrogant, and they couldn’t care less about us. … It cannot get any worse.”.

HP will have to work hard to integrate Autonomy into both its corporate culture and software frameworks – a problem currently faced by Microsoft since its acquisition of FAST a short while ago. Stephen Arnold thinks this process will be “risky”. What it means for the rest of the search sector is harder to guess, although Martin White of Intranet Focus says this deal indicates HP can see a “future in search applications” and, interestingly, “A number of privately-held search vendors are probably working out what their valuation would be”.

My view is that this is just the latest of huge shifts in the enterprise search market, partly spurred on by the rise of open source options and the gradual realisation that the huge license fees charged by some vendors may be unsustainable. I don’t think Autonomy will be the last company looking for a safe haven in the years to come.

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