Autonomy Foes Circling to Poach Customers

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Three data management competitors -- RDS, Recommind and OpenText -- are adding to Hewlett-Packard’s woes by offering rich incentives to customers of the wounded Autonomy to switch to their products. Competitive displacement programs are routine and only moderately effective, yet they do put pressure on targeted vendors and their resellers.

Hewlett-Packard Co. and the former executives of Autonomy’s management team continue their war of words over who’s to blame for the massive failure of the $11.7 billion acquisition. Competitors aren’t wasting the opportunity: Three Autonomy rivals announced competitive displacement programs to lure customers away from the wounded software unit.

RSD, Recommind and OpenText are offering Autonomy customers the opportunity to switch to their products with the promise of greater stability and fewer distractions.

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"We want to help Autonomy customers concerned with uncertainty about the future," said Mark J. Barrenechea, president and CEO of OpenText Corp., an Ottawa, Canada-based company. "With the OpenText trade-in offer, we're providing an opportunity for a simple switch to OpenText software from Autonomy software, with no increase to a customer's current software costs, but with a clear and confident path to future value and more innovation."

RSD, a Swiss data governance company, began its Autonomy swap program in September, long before the market learned of the HP software unit’s troubles. It expanded the displacement program through March 31, giving Autonomy users more time to evaluate its competitive offerings and make a switch with less risk.

“Recently, a customer who was considering Autonomy selected us instead. The customer chose us not only for our superior solution, but also because they wanted to feel good about their vendor. That’s when we realized how crucial this offer extension would be,” said Tamir Sigal, vice president of Marketing and Strategy at RSD.

Recommind, a San Francisco-based company, is targeting specific products in the Autonomy portfolio, offering would-be defectors credits and price protection for dropping Augnate, Introspect (on-premises and cloud versions), IDOL Search, IDOL Classification and Worksite Email Management. The offer runs through February 28, 2013.

“With great uncertainty impacting Autonomy customers, IT departments can no longer count on getting significant future value out of their Autonomy investments.  IT departments need to focus on their business needs, not whether or not their vendor will provide future support and product innovation,” Recommind wrote on its Web site.

The potential of any of these three or other competitors to inflict serious damage on HP is minimal. Customers are loathe to ripe and replace hardware or software, particularly systems running mission critical data; the risk of disruption is too great. For customers considering Autonomy, the displacement program and the ongoing troubles at HP may cause them to rethink their purchasing options.

The real threat to HP and its Autonomy partners isn’t so much losing customers, but being forced to make concessions to retain accounts. The displacement programs often spur existing accounts to force price breaks, no-to-low cost service upgrades and free product from companies under siege. HP and other large vendors are often able to absorb those demands, but solution providers are caught in the middle with either servicing non-revenue producing deals or low-margin upgrades.

HP is now a recurring displacement target. PC and server competitors have actively targeted HP accounts and resellers since the company infamously bungled the potential spinoff of its personal computer unit. Since then, Lenovo has expanded its PC market share, overtaking HP for the top spot globally, thanks in part to aggressive displacements of HP accounts and resellers.

And that’s the other danger: Defecting partners. Solution providers, like end users, are not quick to switch suppliers. However, they may diversify and bring competitors into their portfolio to meet customer demands or insulate their revenues from disruptions. In such cases, the insurgent vendor will shower partners with incentives and compensation to grow sales and push out the incumbent. Over time, partner diversification weakens the incumbent’s channel.

It should come as no surprise that competitors are hammering at HP’s customer base. While these three vendors are openly targeting HP, you can be sure rivals such as IBM, Oracle, EMC and Microsoft are quietly pressing their case behind the scenes. Competitors will step up and keep up the pressure until the HP-Autonomy scandal is resolved.

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