THE GLOBAL economy may be shaky, but it isn't in recession and offers plenty of opportunity for technology companies, say Mark Hurd, chief executive of Hewlett-Packard (HP), and Microsoft boss Steve Ballmer.
Addressing 560 European, Middle East and Africa channel partners at HP's Preferred Partner Conference in San Francisco, the two executives also said their partnership - one of the longest Microsoft has had with any company - continued to be productive.
Mr Hurd described the economic climate as "complicated" but not a recession. "It's the first time someone in my place has looked at low inflation, low interest rates and low unemployment, and seen that combined with economic turmoil," he said.
"Credit vehicles have created liquidity problems," especially for small- to medium-sized companies, he said. "I think it's going to take time to understand the complexity of the intertwining of all these things."
Mr Ballmer said economic pressures were pushing companies to look for different kinds of information technology (IT) solutions.
"We're going through a change in the economic situation . . . with executives asking themselves different questions right now. People feel more pressures on cost, pressure to keep the top line strong. So the types of solutions people look for will continue to evolve," he said. "I think people will want to cut traditional budgets. We have a real opportunity to help people think about taking out IT costs."
Both Mr Ballmer and Mr Hurd spoke of opportunities they see in marketing solutions in areas such as virtualisation, search technologies, green computing, and servers and server management.
Mr Hurd said HP was continuing to focus on cutting its operating costs and expanding its sales and potential markets. He said it had revenue of $104 billion, which included $25 billion in growth over the past three fiscal years.
He said the total possible market HP chases is worth $1.2 trillion - "it's all over the world, and very mobile" - but that the company only currently covers 50 per cent of that market.
The company's profits in the last fiscal year were about $9 billion, with operating costs of $95 billion, of which about $4.3 billion goes on research and development. Mr Hurd's goal is to put more of that $95 billion to work, he said - perhaps more to R&D and less on general operating costs. "We're trying to align spending to profit," he said.
He noted that 60 per cent of R&D spend now goes on software development. Although it is not generally thought of as a software company, HP is the sixth largest global software maker. Mr Hurd said HP was working to improve its own IT infrastructure. "We spent three years focusing on overhauling our IT.
"We used to run on 6,000 applications, in 87 data centres. We run the company today on less than 3,000 'apps', and are on our way to 1,500."
Mr Ballmer noted the importance and longevity of Microsoft's relationship with HP. "With the addition of Intel, this is the partnership that has been most active for the longest period of time for our company," he said.
"There will be occasionally a bit of rub and overlap with companies as large as HP and Microsoft, but there's still so much opportunity."
