HP Puts Its Faith in Thin Clients

The IT giant is rolling out two new thin-client PCs plus improvements to its blade PC architecture that it hopes will capture expanding vertical markets like health care and outsourcing.

Hewlett-Packard believes thinner is better, and is rolling out two new thin-client PCs on Jan. 26, as well as offering new features for its blade PC architecture.

With the additional investments in thin clients and blades, the Palo Alto, Calif., PC maker is aiming for vertical markets, such as health care, where it can make a significant margin by leveraging a package of hardware, software and services.

Within the worldwide PC market, HP has caught up to its main competitor, Dell, within the last year. Two separate surveys by IDC and Gartner released on Jan. 17 show that HP continues to hold the top spot among PC vendors both inside the United States and worldwide.

In the thin-client space, however, HP is second to Wyse Technology, a San Jose, Calif., company that has specialized in producing these type of PCs for years, said Mark Margevicius, an analyst with Gartner, based in Stamford, Conn.

By stepping up its thin-client offerings, HP is looking to catch up. Since it started selling its own thin client in 2005, HP has sold 1.5 million of these PCs and should surpass the two million mark in 2007, company officials said.

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For years, thin clients have been considered a niche market but with pressure by lawmakers to provide more privacy for a variety of records—the Sarbanes-Oxley Act in the financial realm and the HIPAA (Health Insurance Portability and Accountability Act) in the health care field—HP is betting that more companies will look for the security that thin clients promise.

"Thin clients have a history of being a fairly niche market," said Margevicius, adding that these new concerns have started to open up new markets for thin clients.

"There are lots of customers out there for a computer that offers a higher level of security and there are also a lot of customers concerned about compliancy requirements, like Sarbanes-Oxley and HIPAA. Those are legitimate reasons to look at thin clients," Margevicius said.

With improvements to the back-end architecture in the data center and the proliferation of remote configuration and broadband, the thin client might have a shot at the mainstream.

"I like to think of it as the stewing stage," Margevicius said. "It might not be ready to serve but something smells like its cooking."

In general, server-based computing—thin clients and PC blades—place the key components of a PC—the processor, memory, hard drive—on a server that is housed within a data center. IT administrators can then manage the applications from one central location, while the user is left with a keyboard, mouse and display that function like a standard desktop computer.

For Manoj Malhotra, the product marketing manager for HPs thin-client business, the market for this type of PC is verticals—health care and education—as well as companies that outsource work. "Health care is very concerned about security," Malhorta told eWEEK.

Next Page: Thin clients save power.