Feeds

HP takes one in the servers

Hurd hails 3Com 'convergence'

Choosing a cloud hosting partner with confidence

Comment Well, it looks the enterprise slammed on the server spending brakes a lot quicker and a lot harder than smaller outfits this fall.

HP released its fourth quarter earnings yesterday, and its Enterprise Storage and Servers group took a serious hit, with sales down 16.6 per cent to $4.22bn in the quarter ended October 31.

The unit posted operating earnings of $481m, down 31.8 per cent - so if you think there's no price war going on in the server and storage rackets, well, forget that. However, biz is better for ESS than it was in the prior quarter, which ended in July, when the unit posted $3.74bn in sales and only $381m in operating earnings.

Within ESS, sales of ProLiant rack, tower, and blade servers and related BladeSystem blade chassis, all cobbled together into the Industry Standard Server division, came to $2.67bn in fiscal Q4, down 10.3 per cent. The Business Critical Systems division (including Integrity and NonStop systems based on Itanium processors as well as prior HP-9000, AlphaServer, and NonStop upgrades, where available) took it on the chin with only $631m in sales, down 32.5 per cent.

HP's cross-platform blade sales (including x64 and Itanium blades running Windows, Linux, HP-UX, NonStop, or OpenVMS) fell by only 8 per cent, a relative bright spot in a pretty dismal quarter.

Speaking on a conference call with Wall Street analysts, HP chief financial officer Cathie Lesjak said that the ProLiant G6 machines, based on the latest Xeon processors from Intel and the most current Opterons from Advanced Micro Devices, accounted for 60 per cent of Industry Standard Server sales.

Mark Hurd, HP's president, chief executive officer, and chairman, said that the power, cooling, and performance benefits of the G6 allow HP's sales reps and reseller partners to make an economic case for the ProLiant G6 lineup, offering a twelve-month payback when upgrading from ProLiant G5 machines and a three-month payback when upgrading from even earlier ProLiant G4 iron.

"In my experience, any deal with a payback of a year or less is easy to close given the value to the customer," Hurd said.

Yeah, but you cannot push a string, as the server and storage rackets so clearly demonstrate in this economic downturn. And with commodity prices on the rise - particularly server memory - and prices under pressure, profits suffer.

Like IBM, HP's server sales were a little bit better than the market at large over the period - not nearly as good as Dell, but nowhere near as bad as Sun Microsystems. In the quarter ended in October, Dell's server and networking business posted sales of $1.54bn, down only 6 per cent. You can see who sells more servers to enterprises and who sells more to SMBs who buy when they have no choice, no matter what the state of the economy.

HP's combined enterprise disk and tape storage business accounted for $918m in revenues in the quarter, down 20 per cent year-on-year but up 11.4 per cent sequentially. (El Reg already took a scalpel to HP's enterprise storage biz here.)

For the full fiscal year, the ESS group at HP had sales of $15.4bn, down 20.8 per cent, with ProLiant boxes generating $9.3bn in sales, down 20.3 per cent, and BCS boxes making up $2.6bn in sales, down 26.8 per cent.

Speaking of the pending $2.7bn 3Com acquisition, Hurd said that the deal was consistent with HP's vision of converged infrastructure - something that Cisco Systems and partner EMC want to peddle and something that both IBM and Oracle/Sun are also starting to espouse, under various names, of course.

"We have had a strategy around converged infrastructure for some period of time, that for us is the ability to give customers the opportunity to see server, storage, and networking all sort of working together in a common capability that we can deliver to customers either as a service or directly to them. Our strategy has been consistent," Hurd said.

"We think with ProCurve and with what we get through the 3Com acquisition added to our VirtualConnect software, we now bring an extremely robust networking solution to market both from trying to reduce the number of ports that customers have to buy but added to it the fact that we can bring great technology for the ports that the customers do have to deploy. We are very optimistic and obviously very excited about it, and we are just going to go through the process to get the acquisition closed and get the work done and get it to market." ®

Beginner's guide to SSL certificates

More from The Register

next story
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
The DRUGSTORES DON'T WORK, CVS makes IT WORSE ... for Apple Pay
Goog Wallet apparently also spurned in NFC lockdown
Desktop Linux users beware: the boss thinks you need to be managed
VMware reveals VDI for Linux desktops plan, plus China lab to do the development
IBM, backing away from hardware? NEVER!
Don't be so sure, so-surers
Hey - who wants 4.8 TERABYTES almost AS FAST AS MEMORY?
China's Memblaze says they've got it in PCIe. Yow
Microsoft brings the CLOUD that GOES ON FOREVER
Sky's the limit with unrestricted space in the cloud
This time it's SO REAL: Overcoming the open-source orgasm myth with TODO
If the web giants need it to work, hey, maybe it'll work
'ANYTHING BUT STABLE' Netflix suffers BIG Europe-wide outage
Friday night LIVE? Nope. The only thing streaming are tears down my face
Google roolz! Nest buys Revolv, KILLS new sales of home hub
Take my temperature, I'm feeling a little bit dizzy
Storage array giants can use Azure to evacuate their back ends
Site Recovery can help to move snapshots around
prev story

Whitepapers

Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Top 5 reasons to deploy VMware with Tegile
Data demand and the rise of virtualization is challenging IT teams to deliver storage performance, scalability and capacity that can keep up, while maximizing efficiency.
Mitigating web security risk with SSL certificates
Web-based systems are essential tools for running business processes and delivering services to customers.