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    HP Grows Efforts to Target IBM, Lenovo Server Customers

    By
    Jeff Burt
    -
    July 19, 2014
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      HP Moonshot

      Hewlett-Packard is looking to make the most of the $4 billion market opportunity that opened up when IBM announced in January that it was selling its x86 server business to Lenovo.

      Soon after the announcement was made, HP officials launched a program called Project Smart Choice—complete with a Website—designed to attract IBM server customers that may have concerns and reservations about becoming Lenovo server customers and want to look at alternatives.

      More recently, HP this month expanded its marketing campaign, with a full-page ad in The New York Times asking businesses whether their “server vendor is planning its exit strategy” and then inviting them to “join us to plan your forward strategy.” HP also is offering a free half day of consulting services to qualified customers to help them create a server strategy going forward.

      According to Antonio Neri, senior vice president and general manager of HP’s servers and networking businesses, the efforts over the past six months are paying off. The company has seen its win rate against IBM increase more than 40 percent, accounting for several hundred new deals won against Big Blue.

      “Customers have to make a tough choice going forward,” Neri told eWEEK. “When they look at HP and its portfolio, there’s not a better choice in the industry. … We want customers to understand there is a choice out there.”

      IBM in January announced its intention to sell its x86 server business to Lenovo for $2.3 billion, a move that would instantly make the Chinese systems maker the world’s third-largest server OEM behind HP and Dell. The move follows IBM’s pattern of selling off low-margin, commodity businesses to enable it to better focus on growth areas, including analytics, cloud computing, software and its Watson platform.

      Closing the deal is taking longer than either company expected, due in large part to a regulatory review by the Committee on Foreign Investments in the United States, a U.S. governmental interagency group that reviews for national security purposes the acquisitions of domestic companies by foreign entities. The group’s approval is necessary before such a deal is closed. It’s part of a larger debate between the United States and China over cyber-espionage and national security. Still, Lenovo CEO Yang Yuanging said he believes the deal will close before the end of the year.

      Soon after the deal, HP and other vendors launched new efforts to go after IBM customers that may not want to make the move to Lenovo. In HP’s case, much of the work centers around outlining the vendor’s vision of the future—which CEO Meg Whitman and other executives call the “new style of IT,” driven by such trends as mobility, big data, cloud computing and hardware optimized for particular workloads—the ambitious server road map the company is putting together and the vast array of services HP offers to organizations, Neri said.

      He said the company also is stressing the openness of HP’s servers, which will enable new customers to keep their IBM hardware running as they migrate to HP systems.

      “To keep your business focused on the future, you need a partner who is committed to your success,” Whitman said in a quote at the top of the Smart Choice Website. “To keep your business focused on the future, you need a partner who is committed to your success.”

      HP Grows Efforts to Target IBM, Lenovo Server Customers

      According to market research firm Gartner, the top three server vendors all saw declines in their revenues and shipments in the first quarter. However, HP had the smallest declines in both revenues (2.3 percent) and unit shipments (7.9 percent), while IBM saw revenues fall 25.6 percent and shipments decline 27.8 percent, the analysts said.

      HP is building out several programs aimed at expanding its server technology. The company more than two years ago introduced its Moonshot initiative to develop small, ultra-energy-efficient servers that are powered by a range of chips, from x86 processors from Intel and Advanced Micro Devices to ARM-based systems-on-a-chip (SoCs) from chip makers like Applied Micro. In addition, at its recent HP Discover 2014 show, HP executives also unveiled its Apollo line of supercomputers, including one that sports a water-cooling system.

      It also was at HP Discover when executives for HP and HP Labs introduced an entirely new open-source server architecture dubbed The Machine that will include the company’s memristor memory technology, custom processors, silicon photonics and its own operating system, a throwback to the days when HP, IBM, Sun Microsystems and others made their own components and OSes for their systems.

      “There’s a significant amount of innovation going on,” Neri said.

      IBM, which is retaining its Power server and mainframe businesses, is not standing still as competitors try to take its customers. The vendor has its own Website outlining what customers can expect during the transition of the x86 business to Lenovo, and noting Intel’s $1 billion investment in innovation around the x86 servers.

      At the same time, IBM officials earlier this month said the company will spend $3 billion over the next five years in projects to continue to shrink the current processor architecture to at least 7 nanometers as well as investigate what will replace that architecture when it reaches its physical limits. That will lead to new system architectures—from quantum computers to carbon nanotubes to graphene—which also will be included in the research.

      Jeff Burt
      Jeffrey Burt has been with eWEEK since 2000, covering an array of areas that includes servers, networking, PCs, processors, converged infrastructure, unified communications and the Internet of things.
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