The Legal Battle Has Taken Its Toll on HP

By Jeffrey Burt  |  Posted 2012-06-11 Print this article Print

€œAs far as the damage goes, over the past year, we€™ve seen sales in HP Business Critical Systems €¦ kind of fall off the cliff,€ Charles King, principal analyst with Pund-IT Research, told eWEEK, noting that sales of Unix-based systems industry-wide have been slowing over the past six to 12 months. €œIf you look at both HP and Oracle, both are losing sales at considerably quicker rates than the market€™s been dropping.

€œIronically, the only vendor who seems to be gaining out of all this is IBM.€

The trial in the Santa Clara County superior courthouse in San Jose, Calif., is the latest step in the deteriorating relationship between two onetime close partners who share about 140,000 customers. The ill will began in 2010, when Oracle bought Sun Microsystems€”and its SPARC hardware business€”putting it in direct competition with HP. It continued later that year when then-HP CEO Mark Hurd was forced out by the company board of directors and soon afterward was hired by Oracle as president.

HP sued, claiming Hurd violated his contract with HP by taking the job, and the case was eventually settled. Tensions ramped up even more when HP hired former SAP CEO Leo Apotheker, a rival of Oracle CEO Larry Ellison, to replace Hurd, a tenure that lasted about 11 months. In March 2011, Oracle announced it would no longer develop software for the Itanium platform. HP claimed Oracle was violating a contractual agreement that was part of the Hurd settlement to continue supporting technologies used by joint customers, with Oracle executives saying there was no binding contract. HP sued, seeking $4 billion in damages, and Oracle countersued, saying HP was not honest about the imminent demise of Itanium. Both HP and Intel said the road map for Itanium extends through most of the decade.

Caught in the middle are the joint customers, with many voicing their anger at Oracle. However, some€”with the next version of Oracle€™s database, 12c, coming out later this year or early next with no Itanium support€”have opted to move to a new platform. HP CEO Meg Whitman and other executives have noted the hit in lost revenues caused by the Oracle dispute.

€œThe real losers in all this are the customers,€ Pund-IT€™s King said. €œThey must be feeling a bit like the Christians were at the gates of the Colosseum.€

IBM becomes an attractive alternative, he said. Big Blue has had an aggressive migration program in place for several years, looking to entice customers away from HP and Oracle/Sun. In addition, IBM€™s DB2 database can run on HP€™s Integrity systems, and the vendor has a program in place to help businesses migrate from Oracle€™s database to DB2.

However, both King and another analyst, who did not want to be named, noted that many large companies run mission-critical workloads on Integrity systems, and changing to another platform is not an easy, quick or inexpensive proposition. €œThere€™s no such thing as just turning off the light switch,€ the anonymous analyst told eWEEK.

HP can be blamed for some of its troubles, according to Matt Eastwood, group vice president of enterprise platform research at IDC. The company hasn€™t done enough to ease customer concerns or lay out its road map, which includes Project Odyssey, an initiative announced in November 2011 that will enable enterprises to run mission-critical workloads on either its Itanium-based or x86-based systems within a single platform.

€œOracle made this about HP's migration and support plans for the HP-UX base and HP responded with a lawsuit rather than focusing on calming their customers down,€ Eastwood said in an email to eWEEK. €œThe reality is that before most Oracle customers running on HP-UX need to migrate, HP will have a seamless migration plan to x86 systems in place. However, they have not been telling that story adequately, which is creating more alarm in the customer base.€

Large businesses need to see long-term road maps, and HP hasn€™t given these customers enough detail, he said.

€œThen, this week Meg Whitman hinted at [HP] Discover [show] that a port of HP-UX to x86 is in the works,€ Eastwood said. €œThis is yet another wrinkle for customers to consider. But all in all, it€™s a confusing message for enterprises and it makes IBM look that much more attractive because their road map is solid.€

HP has another challenge when looking to protect its high-end server business, he said. With Intel narrowing the core capabilities between its x86 Xeon chips and Itanium by putting more mission-critical reliability, available and serviceability (RAS) features into Xeon, the server hardware is converging quickly.

€œHowever, the [software] ecosystems generally lag, and HP is relying on Microsoft and Red Hat in particular to build additional [high-availability] features into their core OSes,€ Eastwood said. €œThese features are already embedded in HP-UX, and the challenge for HP is that despite making the HW transition from Itanium to Xeon easier thru Odyssey, the [software] shift is more complex. This will cause customers to pause and consider other options, including IBM and Oracle.€

But for companies looking to make the move from Unix to x86, HP should be able to keep most of those customers, though it will come at €œa lower cost with generally smaller support value.€

Pund-IT€™s King also said Itanium€™s future may not be a short as Oracle is making it out to be. At an IBM-sponsored Information on Demand event last year that included officials with HP, Intel and IBM, King said he remembered the three companies publicly pledging support for Itanium into 2020.


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