At the start of this week’s HP Discover Europe 2013 in Barcelona I wrote
that HP is facing a major inflection point in its history, one that
will determine whether it will remain a Fortune 15 company and one of
the dominant forces in the IT industry or start to fade into legacy or
commodity provider status. So what did observers find out about HP
direction from the two days of keynotes and the Cube interviews, both
webcast live on SiliconAngle.tv?
The most significant revelation is that HP is making a huge
effort to become the leader in cloud of all kinds – public, private,
hybrid, and managed. Speaking during Tuesday’s Keynotes and then on
TheCube Wednesday, ,
SVP and general manager of converged cloud for HP, talked about the
progress HP has made in building a single cloud group combining what
where the separate public and private, and managed cloud groups who
often competed against each other for sales. Over the last year under
Gillai HP first combined the engineering groups and then, at the start
of its FY2014 on November 1, it combined the sales groups. Although he
did not mention this specifically, he also hinted that a cloud
consulting function has been added. Today HP’s response to an engagement
begins with an HP cloud engineer analyzing the client’s needs to
determine what kind of cloud – public, private, hybrid, or managed —
best fits those needs.
In June, he said, HP’s Board of Directors approved a major
increase in investment in the cloud program. He declined to give figures
but said that “over the next year our investment will become more plain
to the public and the level of investment will amaze people.”
HP’s cloud software, including the new Cloud OS that it
announced at the conference, are based on OpenStack. Gillai emphasized
HP’s total commitment to OpenStack during his interview in TheCube,
saying that HP’s investment in it “will benefit us and other people”, an
apparent reference to IBM and Rackspace among others.
What HP needs in cloud
This commitment to cloud is exactly the right strategy for
HP. Cloud clearly is a big part of the future of IT both in terms of
technology and user strategy, and by positioning itself as a leader HP
is making the right moves to gain a major share of that business and
bring its customers forward into the next generation architecture.
Unifying its sales and software development is a major step and not an
easy thing for it to do since it disrupts established internal political
structures.
Hardware was noticeably absent from Gillai’s statements, a
strange omission for what is still mainly a hardware company. HP clearly
needs a “converged system for cloud” offering designed from ground up
to support private/hybrid cloud installations with OpenStack and the HP
Cloud OS and other associated software pre-installed, ready to go out of
the box. This approach has been very successful for IBM PureSystems. If
HP is not already working on this, it should put an engineering team
together starting Monday.
Of course HP faces strong competition in the cloud space,
mainly from Amazon AWS, which is the clear leader in what Gillai called
“the first wave of cloud”. A great deal of cloud software is being
developed on AWS, and because Amazon’s system is proprietary, when it
comes time to put that software into production it will be difficult to
port it to an HP (or any other vendor’s) cloud. And with Amazon
apparently moving to provide private cloud hardware and software to
augment its public service, this threat becomes larger. To counter this,
HP needs to develop specific software tools backed by consulting
support to make it as easy as possible for its customers to move their
AWS-developed cloud software to HP Cloud OS.
Moonshot
HP
Moonshot, its hyperscale architecture which it hopes to sell to both
the large Web-based services and to its Fortune 100-sized clients, is
another important part of its strategy. HP CEO Meg Whitman devoted half
of her keynote to discussing Moonshot and interviewed HP EVP of
Technology & Operations John Hinshaw about how Moonshot is
revolutionizing the environments inside HP’s four worldwide data
centers. They made a strong case about how Moonshot has provided large
amounts of extra capacity in a smaller space with lower power and
cooling use. Hinshaw predicted that with Moonshot HP would “never need
to add another data center”, which given that HP is a F15 company
running its entire operations in four data centers, is quite an
endorsement.
However, HP is the only user Whitman could cite. In every
other case, the keynote presenters talked about the number of customers
or sales and similar statistics that gave an indication of how
successful the products and services they were talking about were in the
real market. Whitman never gave any of that information. Even if other
customers could not be mentioned by name, viewers are left to presume
that if HP had other users she would have said “we have X number of
sales”, leaving viewers to wonder if this major new product, announced
in April, has any customers.
HP converges systems and storage
HP spokespeople in both the keynotes and interviews in
TheCube made a strong case, backed with figures, that they are being
very successful with their converged systems and storage initiatives.
Both, they made clear, are aimed at EMC and its VCE converged system
alliance with Cisco. Hardware convergence is another big piece of the
future architecture. As operational focus moves up from hardware to the
virtualization layer, and as prices per unit of compute and storage
continue to drop, purchasers will be less concerned about customizing
new hardware to specific anticipated demand and instead want boxes that
arrive ready to run out-of-the-box. All of the major vendors have
converged offerings – EMC and Cisco have VCE, IBM has PureSystems, and
HP has its converged systems. HP was a pioneer here, and its vision is
obviously paying off.
Printers and Personal Services
My one real disappointment was with the keynote by Dion
Weisler, head of the Printing & Personal Services Group. Earlier
this week I published a piece
about what HP needs to do to rescue its end-user device business.
Weisler talked a great game at the start of his Keynote, which was
notably scheduled as the last in line on Wednesday, which may be a hint
as to where this group is in terms of HP’s overall strategy. He talked
about how the new generation of workers want to use multiple devices as
“be proud of the device they carry.”
But when he got to specifics, he suddenly was showing off
new laptops instead of new market strategy. HP has refreshed most of its
laptop lineup recently, and yes they are thinner, sleeker, more
powerful, and with longer lasting batteries. But every manufacturer’s
new laptops are thinner, lighter, and more powerful. At one point he
actually felt he had to say that HP “remains committed to its business
tablets.” That may be a hint at just how bad things in this area are for
HP. The heads of mobile devices for Apple, Samsung, Google, Android, or
even Microsoft would never have to say that; their commitment is
obvious. He gave no hint of a change in strategy to create a major
presence for HP in the consumer market, where the vast majority of
tablets are sold.
Conclusions
Things are happening at HP. Its cloud and converged systems
businesses in particular, and its strong showing in storage, provide
hope. But today an IT business cannot be sustained long-term on hardware
alone. HP still has much too little revenue from software and services,
and as hardware becomes commoditized, and that is happening rapidly in
many areas, its market share may remain huge but its income from that
will shrink. So Discover 2013 Europe closed with HP’s future still in
doubt, although it did provide reason to hope that it is creating a path
to a better future.
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