Are we going to lose our Autonomy?

 
Hewlett-Packard sign outside its UK headquarters HP plans to axe some 27,000 workers

The decline of HP is beginning to look like a slow-motion car crash, much like what's been happening at Nokia and RIM.

Today's radical surgery, with the loss of 27,000 jobs worldwide, is meant to put this American computing icon back on track. But as well as the anxiety for many of the firm's UK workers, there is also a serious question mark over the future of a major British technology success story, Autonomy.

When HP paid what now looks an extraordinary and perhaps foolish price to acquire the Cambridge-based firm last year, I wrote that it was good news and bad news. Great for the shareholders - and for Autonomy's chief executive who made £500m from the deal - but worrying for the prosperity of Cambridge and the UK hi-tech sector.

But Mike Lynch was staying on - indeed he was put in charge of one of HP's most important divisions - and he was keen to reassure everyone that there would be continued investment in the UK.

Now Mr Lynch has been shown the door, along with most of his senior team at Autonomy. HP is briefing that this is the inevitable result of failing to meet targets, and suggesting that the Autonomy founder wasn't up to the job of running such a large-scale business.

Friends of Mr Lynch say he was increasingly exasperated by the way HP was being run, and what he saw as the failure of its leaders to understand both the technological and strategic challenges it faced.

So where does this leave Autonomy, and the Cambridge cluster that has been the UK's hi-tech superstar for some years? In the short-term it's difficult to see HP putting more investment into the business, and projects like the Aurasma augmented reality service must fear for their future.

Woman uses Aurasma app on an iPad which displays a virtual 3D animation of a Thundercat character Aurasma in action

But Mr Lynch is already talking of his determination to start again.

"The fact that there are talented experienced people with access to capital now available to start new businesses is very positive for UK PLC," he says.

And it's true that even if work at Autonomy dries up, there is plenty of demand for skilled staff in Cambridge. I'm told that one fast growing software firm sends an ice cream van to the science park offering free cornets to lure engineers to interviews.

But there are still lessons to be learned from the Autonomy story. Fast growing software firms still run by mercurial and impatient founders don't make a good fit with lumbering bureaucracies.

And next time a UK technology business sells up to an American giant and tells us not to worry, that ownership doesn't matter, we have the right to be just a little bit cynical.

 
Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this
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    Comment number 15.

    Look at it from the other side: a big company with 350k employees buys a much smaller company with a supposedly neat idea having 100s employees for US$10B. Why wouldn't the big company with 'processes' want their existing staff take a good long look at the new acquisition? US 'MBA101' training states that you must fire the senior management during the merger. The Compaq merger was identical. QED

  • rate this
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    Comment number 14.

    We even flogged off Cadbury

    100 years of guaranteed jobs and profits and future food industry technology for Britain...

    ...gone for good

    ...for a few measly dollars of stock market profit

  • rate this
    +1

    Comment number 13.

    a) British company has idea
    b) 'Vulture' capatalist 'invests' (doesn't care about a business just returns)
    c) Idea is success
    d) Sold to an American giant who wants the IP
    e) Vulture capatalist pockets a buckert of cash ready to repeat
    f) Yet more good ideas and chances lost to the UK economy.

    Could be stopped but the government doesn't care

  • rate this
    +1

    Comment number 12.

    IT and software are highly dynamic industries
    Companies in it for the long term who can remain focused are rare
    Poor management in large organisations is pretty common


    If you REALLY want job security nowadays then you really have no choice, you have to go self employed

    The alternative is to throw yourself into the corporate void and pray for job security
    Only praying will help, nothing else

  • rate this
    +1

    Comment number 11.

    Of course we will, but this is very common.
    STNC were bought by Microsoft many years ago when I worked for them - much fanfare and press releases. 2 years later having moved the few of us they really wanted and taken all the IP the 35 UK redundancies went un reported and were hushed up with clauses in the redundnacy packages.

  • rate this
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    Comment number 10.

    #4: "takeovers and mergers in the computing industry (almost) never work out. I can't think of one that did; "

    I can: Bungie and Microsoft. Pixar and Disney did alright too.

  • rate this
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    Comment number 9.

    I have seen 'serial entrepeneurs' before - get a few people with a good idea, build up a company around it then sell the company for someone to strip.
    But don't forget the firms that are in it for the long run e.g. ARM.

  • rate this
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    Comment number 8.

    Having been an employee of a small UK firm which was bought out by a big US firm, only to have exactly the same promises made, and exactly the same layoffs a year later, I have some sympathy. There's a fundamental difference in the way the US and the UK do business: we here tailor our business to our clients needs, the US tries a McDonald's approach: one size fits all. Unfortunately, it doesn't.

  • rate this
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    Comment number 7.

    in reply to IanKemmishs post, ICL had no future at all.
    Their hardware products, DRS6000 and Teamserver were among some of the worst I've used in nearly 30 years, their software offerings were clunky and old fashioned and their support and engineering were so bad that I didnt hesitate to take work away from them at the first possibel chance.

    a dead duck

  • rate this
    +1

    Comment number 6.

    @MuchAdo - To correct your correction, Rory's comment was about the software company who sent an ice-cream van to the science park to lure software engineers to interviews. That wasn't Autonomy. It was Red Gate: http://www.cambridge-news.co.uk/Business/Business-News/Firms-up-the-stakes-in-quest-for-talent.htm

  • rate this
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    Comment number 5.

    You summed it up nicely there. Autonomy's leadership should have been rather less bedazzled by corporate America's money and concentrated on establishing their IP on its own terms. £500m is a lot of cash though, and I'm sure that at the time HP were outwardly sincere in their designs for the future of Autonomy's tech.

    The cynical me just sees the whole thing as big fish buying up tech.

  • rate this
    +1

    Comment number 4.

    You can go right back to Fujitsu/ICL - takeovers and mergers in the computing industry (almost) never work out. I can't think of one that did; even those that seem to do so for the first few years (Adobe/Macromedia) crash and burn.

    Unfortunately, an innovative and successful company gets so many offers that eventually you think you must be the one who's wrong and say "yes" when you shouldn't.

  • rate this
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    Comment number 3.

    I don't normally correct articles on here, but I think you will find that the fast growing software company who provides daily free ice creams for its staff, is in fact... Autonomy!! Please check the facts of your contributors before including them in your article!

  • rate this
    0

    Comment number 2.

    The printer/PC division are major reason for any cut. Personal system division, which is responsible for PCs, is the company's LOWEST margin business & margins have been falling pretty dramatically.
    It's lousy timing: economy doesn't have 25,000 jobs to absorb lay-offs.
    In critique of operations earlier this year, it was found company was too complex & too slow; streamlining required.

  • rate this
    -1

    Comment number 1.

    There is a lesson to be learned from this, which I think may be this: technology, especially in computer sector, comes/goes almost overnight. Last time Hewlett-Packard Co. announced layoff of 25,000 people, it was on the same day that Lehman Brothers collapsed and the stock market nose-dived. Now, HP is considering another layoff of equal number - maybe 30,000.

 

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