Hewlett-Packard is suing its former CEO, Mark Hurd, who was named co-president of rival Oracle on Monday, saying his hiring violates the terms of a severance agreement he signed with HP. Hurd left HP last month after a scandal involving an undisclosed relationship with a contractor and alleged improprieties with expense reports.
"Mark Hurd agreed to and signed agreements designed to protect HP's trade secrets and confidential information. HP intends to enforce those agreements," the company said in a statement.
"Despite being paid millions of dollars in cash, stock and stock options in exchange for Hurd's agreements to protect HP's trade secrets .... HP is informed and believes and thereon alleges that Hurd has put HP's most valuable trade secrets and confidential information in peril," states the suit, which was filed yesterday in a Santa Clara, California, court.
Hurd's new role as head of sales, marketing and support for Oracle will place him "in a situation in which he cannot perform his duties for Oracle without necessarily using and disclosing HP's trade secrets and confidential information to others," it adds.
The information in question includes HP's annual business plans, as well as a "highly confidential competitive internal analysis of Oracle," which Hurd received in March, according to the suit.
Hurd signed confidentiality agreements in February 2008, February 2009 and last February.
Hurd was required to notify HP within a year of his departure whether he plans to take a job with a competitor, according to the suit.
He is also supposed to provide HP with enough information to determine whether the job would "likely lead to a violation" of the confidentiality agreement. But Hurd made "no effort" to do so before Oracle's announcement Monday, according to the suit.
HP is asking for an injunction that would block Hurd from taking a job "with a competitor in which he will utilize or disclose HP's trade secrets and information." The vendor also wants a special master to regularly monitor Hurd's compliance with the agreements, and undisclosed damages.
An Oracle spokeswoman declined comment.
Sidebar: Hurd's job: Sell Oracle's Exadata vision
The ascendancy of former Hewlett-Packard CEO Mark Hurd to a co-president slot at Oracle could give the vendor's strategy of selling integrated systems a boost, according to some industry observers.
He replaces Charles Phillips, whose departure had been rumoured following a number of public missteps.
Now Hurd will assume responsibility for Oracle's sales, marketing and support operations as the company ramps up its integrated systems strategy. Hurd has the experience to deliver at scale, according to Altimeter Group analyst Ray Wang. "He understands big systems, sales cycles and related deals."
At the heart of Oracle's strategy lies its Exadata database machines, which were first launched in 2008 using HP hardware, but now use technology the company gained through the acquisition of Sun Microsystems.
Exadata machines employ "smart storage" software built into their storage servers, which moves query processing closer to data and cuts the amount of information that must pass through the system's interconnects, improving performance.
The systems are capable of both data warehousing and online transaction processing. Oracle has indicated it plans to roll out Exadata boxes integrated with a variety of software, including middleware and business applications. Some of those announcements are expected to be made at the OpenWorld conference later this month, perhaps by Hurd himself.
Hurd has experience in the data warehousing arena, having overseen Teradata before it was spun off from parent company NCR. But HP's own data warehousing platform, Neoview, has been "an epic failure," said analyst Curt Monash of Monash Research, via e-mail.
While Neoview is known for its scalability, HP hasn't "gelled a complete data warehousing strategy," whereas Oracle has a full stack of required technologies, said Forrester Research analyst James Kobielus. "Hurd is in a very good position to build on that foundation."
Oracle executives have said the Exadata sales pipeline is in the neighborhood of US$1 billion. But the actual number of systems sold is unclear, and should be weighed against the fact that a full-rack Exadata has a list price of $1 million before support fees and database software licenses.
Part of Hurd's job will be to raise awareness of Exadata, said Frank Scavo, managing partner of the IT consulting firm Strativa. "Many Oracle apps customers don't have Exadata on their horizon. That's a huge untapped market for Oracle."
The integrated system concept is crucial to Oracle because it's the only way it can increase profit margins for Sun's hardware, Scavo added.
Overall, Hurd's hire "is a signal that Oracle is very serious about hardware/software integration," Monash said. "Hurd can surely talk the hardware/software integration game. One can reasonably spin the HP Neoview failure as a high-desire, low-odds attempt to get into the database software/hardware stack business."
As with any system, there is some labor involved in transferring workloads over to Exadata.
Therefore, Hurd's arrival also raises the question of whether Oracle will buy a systems integrator to help flesh out its strategy. Under Hurd's watch, HP made big investments in services through the purchases of EDS and Knightsbridge.
Meanwhile, Oracle already has close relationships with systems integrators such as Infosys, and could conceivably take such partnerships to the next level.
But Altimeter Group's Wang, for one, is unconvinced Oracle will make such a move. It would be less expensive to poach key talent from integrators than to buy an entire company, he said.
In addition, the industry's general move away from on-premises systems toward cloud computing will change services models over time, he added. "They won't need full-scale, Infosys-like staffing."
There will be a shift toward companies that specialize in areas such as SaaS (software as a service) integration or application development on top of vendors' cloud platforms, he said.
Scavo agreed that a services acquisition by Oracle is unlikely.
"Services are not as profitable as software," he said. "[And] whenever they look at cost cutting they look at people. I don't think they want to get into a people business."