Innovations in cloud that democratize the technology could pull a profitable business out from underneath Hewlett Packard Enterprises (HPE) , analysts warn.
Enjoying over $6 billion in revenue this past quarter, primarily driven by hybrid IT services that include cloud technologies, HPE's results certainly rest on the success of this segment.
Currently, HPE's system is a "hybrid", which means it allows for multi-cloud management across a workplace while allowing for the security and privacy afforded by private clouds and further allows for a consumption based pricing model.
So far, this has received a warm reception from IT professionals, as CFO Timothy Stonesifer reported that revenue from the company's Greenlake cloud platform has increased by 40% year over year.
However, as technology shifts, this might evaporate.
"IT customers adopting a public cloud-only model could decrease demand for on-premise and/or hybrid solutions, which would likely impact HPE's financial results," RBC analyst Amit Daryanani wrote in a note on August 28.
Multiple analysts voiced their concerns about HPE's prized segment possibly falling victim to fickle consumer preference and being cannibalized by larger competitors in the space.
Morgan Stanley managing director of research noted that "nearly 80% of HPE's revenue is threatened by accelerating cloud adoption," citing the industry shift as the primary risk to the company's turnaround and her own buy rating on the stock.
To be sure, a hybrid cloud does provide a larger degree of security and privacy, which becomes advantageous as both hacking and data privacy laws pressure public cloud providers.
As the turnaround continues, the company's response to the growing threat of cloud market shifts will be pivotal to the protection of 80% of its revenues.