The second quarter was an eventful one for Hewlett-Packard Co.s Enterprise Systems Group.
Earlier this month, the Palo Alto, Calif., company realigned its three hardware divisions—covering servers and storage products—into a single business unit and strengthened the groups ties with the services organization to present a more integrated business approach.
That was a prelude to the announcement the following week, when Chairman and CEO Carly Fiorina announced HPs Adaptive Enterprise strategy, an initiative that brings together new and enhanced hardware, software and services in a more holistic way to offer customers an integrated infrastructure that is agile and flexible enough to meet a businesss changing needs.
Key to the new initiative—which builds off of HPs early adaptive infrastructure strategy—are the hardware and software found within the Enterprise Systems Group, or ESG. At the center of that is Peter Blackmore, the groups executive vice president and the man in charge of bringing the unit into profitability by the end of the year.
For Blackmore, the reorganization and the introduction of the Adaptive Enterprise strategy marked a shift for the company, an end to the issues of integrating Compaq Computer Corp. and a start forward to build the ESG and the company.
“It is absolutely [a shift],” Blackmore said in an interview with eWEEK. “Now, going forward, its how we compete toe-to-toe in the market and how do we grow faster than the market. The integration is behind us.”
The enterprise group just completed a second quarter that saw its loss drop from $83 million in the first quarter to $7 million in the three months that ended April 30. Blackmore said the numbers are an indication of HPs growing strength in the marketplace as it completes the absorption of Compaq, which for about $19 billion.
“Were obviously in very good position to have a good portfolio, so the strength of that came through with a better margin,” he said.
Now the trick is to parlay that into becoming a profitable business unit sometime in the second half of the year, something Fiorina promised on Tuesday during a conference call with analysts and reporters when she announced the companys second-quarter earnings.
Blackmore said that both the reorganization—which was announced a year ahead of schedule—and the Adaptive Enterprise initiative will go a long way in helping with that.
“When you merged the companies, obviously the priority is to stay close to the customers, to make sure the road map transition is followed through, and we quickly get to the end state model of combining the road map, retiring products, confirming what products would survive,” he said. “That is a lot of work, and hence the most effective model is to have the three [hardware] groups working separately and independently. Then once you do that, you can say that obviously what the customers are expecting is one technology hardware message from HP and one software message, so lets make it easier to get the technology hardware message aligned. Lets combine the groups.”
The Adaptive Enterprise initiative gives customers an idea of what the new combined company is capable of, Blackmore said.
“It shows the capabilities of the new HP and also responding very clearly to customers saying that they wanted [the company] to play at the highest ends of the enterprise decision-making and the business-process level as well as the infrastructure level,” he said. “Were more than capable of doing that now.”
The ESG is now gearing up for the July launch of the next generation of the 64-bit Itanium 2 chip, code-named Madison. HP is preparing a number of product launches to coincide with the new chip, including the rollout of an Itanium version of its high-end 64-way Superdome server. In January, HP will roll out a 128-way version of the system.
Currently HP offers a Superdome system that runs on its PA RISC 8700+ chip and supports the HP-UX operating system. The new system will run Windows and Linux.
HP, which co-developed Itanium, is banking its 64-bit future on the chip, which up until now has gotten a tepid reception in the industry. But Blackmore said he is confident adoption of the architecture will ramp quickly in 2004 as ISV support grows and impressive benchmarks continue to roll out.
“Its really redefining the whole RISC-based marketplace because we have 64-way Madison-powered platforms, we already have benchmarks out there,” he said. “As we bring this family of products out to market and redefine the RISC marketplace, we also continue to drive three operating systems very effectively—Unix, Windows and Linux—and theres really only two players out there which can do that right across the portfolio [HP and IBM].”
Also in July, HP will roll out an enhanced version of its Utility Data Center, software that easily moves workloads and applications across resources in the data center and can respond to changes in that workload. Blackmore said the key to the enhanced version will be making it less of a major step for businesses to add the technology.
The company wants to make it “more building block; right now its a big decision for customers to implement it all because there are a lot of changes required,” he said. “Clearly the payback is there because customers are doing it, but we could even see greater and faster acceptance by having a building block approach. Our teams are working on that so you can build up to it as opposed to going for a big bang.”
Analysts also have said that HP needs to improve the UDCs workload balancing capabilities for Windows and Linux so that it works as well as it does for Unix.
Blackmore also answered some industry observers who say that HP is at a disadvantage against IBM because—beyond the management software offer in OpenView—the bulk of the companys software offering comes from partners like BEA Software Inc. and Oracle Corp., whereas Big Blue can offer an entirely IBM branded line, from hardware to software to services.
“[The largest corporate accounts] look to one person, or one organization, to bring this together, and we are doing that with our software architecture,” he said. “One, we have a lot of intellectual property in that. We did point out at the Adaptive Enterprise launch that all the top 100 companies happen to be huge OpenView users.
“Customers ask us that we step up and … be the integrator. One throat to choke, because what they dont want to do is be left with all the piece parts. So our architecture and our Adaptive Enterprise message is very clear: We will step up and be the integrator, and one throat to choke, and then the customer gets the advantage of choice and also gets the advantage of accountability.”
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