Q. What's motivating HP to do things like give companies mainframes and services in exchange for a cut of revenues?
A. One of the things that I believe characterizes the Internet revolution is new business models that destroy or kill old ones. Part of the Internet revolution is all about new business models, and how companies can create a new way to add value with a new model. One of the things we've decided is that as we're working with some of our folks who are leaders in e-services, we need to work with them in a new way. So, we get our compensation as a percentage of the fees they collect. We believe it's the kind of thing we need to do with our customers.
Q. This isn't exactly the kind of thing one would expect from HP.
A. We're trying to be more innovative and aggressive than our competitors. There tends to be the best innovation and imagination happening when there's a lot of competition in the market and there's some sort of business revolution going on. (We have) a desire to create a bit of turmoil in the competitive landscape by doing some things differently. Very often you have a big advantage if you can be the guy who can change the rules of the game.
Q. Who are your target markets for these new types of deals? Do you think your core customers will be interested?
A. This doesn't apply to the big corporate accounts as much. We're taking this approach with ISPs and ASPs (applications service providers), who generate revenue and profit streams from the services they sell. This approach is really targeted at service providers.
Q. At what level do these deals get worked out, and how do you decide what cut to take?
A. It gets negotiated at a pretty high level on both sides. The percentage is really a function of how much of the value we are adding.
Q. How are you going to make money off something like your deal with ariba.com?
A. If you look at the ariba.com network, Ariba has big customers [HP among them]. If you add up the annual procurement revenue for its customers, it comes up to $65 billion a year.
Q. This is gutsy. But what happens if you guess wrong?
A. We are betting on a few companies who we think are going to be some of the next gorillas in the marketplace. We may pick one or two that are wrong, but we think we're going to get a lot of them right. Plus, in this model our skin is in the game, and we're very motivated to keep them in the game.
Q. How much of your revenue do you think you'll generate from these non-traditional forms of business?
A. My crystal ball is not real clear on this yet. I think that pretty quickly it could be 10 percent of my revenue. Depending on how it takes off, it could be 50 percent over time. If it goes faster and I'm in the lead, I love it.
Q. Those are pretty substantial numbers for something this different.
A. I am sure that there's going to be a percentage of spending on computers and services that will go this way. We are absolutely 100 percent confident that some percentage is going to go this way.
Q. How did HP's Executive Committee react when you told them about this idea?
A. [pause] We just decided to do it. It was our choice, and we did it without asking anybody's permission. We have reviewed it with our board and also with Lew and the rest of our executive committee, and they do think it's a good idea.
Q. You're from North Carolina, and I'll bet you might like basketball a bit. Is this a slam dunk, or are you shooting three-pointers from half court?
A. This is a slam dunk in terms of where the marketplace is going and the approach that we've taken. We just gotta see whether it turns into the whole game.
Q. Some of the premise behind e-services goes against the grain of the Internet, namely that you're trying to create a model where people pay a subscription fee for things they do for free now.
A. That is one of the big hurdles -- but I think about it like a utility. I pay for water based on how much I use. I pay for electricity based on how much I use. I don't think five minutes a year about how the water got out of my spigot and into the glass. We believe there's going to be a certain amount of computing that'll be managed and handled like that in the future.
Q. Some might say that this is an example of how desperate times call for desperate measures.
A. I don't call this desperate. We are very good at looking at the financial angle of things, and we like what we see.
