HP, Mark Hurd, and Oracle Kiss and Make Up. Uh Huh

Last Updated Sep 21, 2010 2:08 PM EDT

The saga of Hewlett-Packard (HPQ), its former CEO Mark Hurd, and his new employer, Oracle (ORCL) is over in theory. HP and Hurd have settled their differences. He gives up many of his stock shares and HP doesn't pursue an attempt to keep him from working for Oracle CEO and pal Larry Ellison.

It sounds too neatly tied up, like an episode of Law & Order. But, as I said, it's over in theory. In reality, there is bad blood, disputes that likely go back years, and industry pressures that will increasingly set partners at each other as large companies, hard-pressed to grow core businesses quickly enough for investors' tastes, must try to take each others' turf.

Yesterday's 8-K filing from HP was to the point. HP and Hurd would modify the terms of his separation agreement so that he'd give up 346,030 shares of stock, "which collectively represent the only remaining compensation that Mr. Hurd was entitled to receive under the terms of the Separation Agreement." HP would drop its suit for "alleged breach of contract and threatened misappropriate of trade secrets" and not try to keep the former CEO from working for Oracle.

The value of the stock that Hurd forgoes was, as of this morning, were worth approximately $13.8 million. But he's hardly hurting and keeps the other parts, whose value could be as high as $26 million.

Everything is then right with the world, or so analysts and customers are supposed to believe as HP and Oracle kept a lid on drama at the opening of Oracle World, the company's annual user conference. Here's what HP Executive Vice President of Enterprise Business Ann Livermore said:

"First, I want to make some comments on the HP-Oracle partnership," she said, while ticking off some numbers like that the two share 140,000 customers, and that 40 percent of Oracle licenses run on HP equipment. Lest any customers be concerned that drama would disrupt the partnership, she noted, "HP has made a big investment" in supporting Oracle software and customers.
However, for all the high level air kissing, things have not been going along swimmingly between the two companies. Two years ago, Oracle and HP announced database-optimized servers co-branded by the two companies. The systems supposedly had been in development since 2005. It wasn't the first time Ellison wanted to get into the hardware business. Back in 1997, Ellison touted "server appliances" that bypassed operating systems by using a micro-kernel and "essentially running Oracle's database program on hardware."

At the time, I mentioned that Oracle has essentially thrown a gauntlet down at its hardware partners. And then, last September, suddenly everything changed. Oracle announced that Sun Microsystems would supply the hardware for the new systems. This happened after Oracle and Sun announced the acquisition. Oracle pulled out an extra gauntlet and tossed it at HP.

In other words, HP's board reacted to more than Hurd taking a job at a competitor. At the same time, HP has demonstrated its interest in database technology. How long before it tries to acquire or develop its own database to compete with Oracle?

Neither side trusts the other, no matter how much they make nice in public. But then, many large tech companies in the corporate computing space feel the pressure of crossing traditional boundaries. Cisco (CSCO) develops a line of servers. HP buys Palm and plans non-Microsoft (MSFT) Windows based devices. They all want to make more money and they all address mature markets. Something has to give, and for the foreseeable future it will be trust and partnership.

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Image: Flickr user antwerpenR, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.