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August 01, 2014

HP doubles down on x86 Intel, not HP-UX

IBM's giving up on another market that HP continues to prize, but the latest one is more relevant to the small-sized enterprise where HP 3000 migrators hail from. (Years back, IBM sold its consumer PC business to Lenovo.) Now the modest-horsepower x86 server field's going to Lenovo, since IBM's decided to exit another Intel-based hardware market.

A longtime HP 3000 software vendor took note of this transition. He wondered aloud if the message HP now sends to its x86 prospects has a shadowy echo of another advisory, one delivered a decade ago. From our correspondent Martin Gorfinkel:

Hewlett-Packard has been running full page ads in the New York Times with the lead, “Building a cloud? Your future is uncertain.” (The “un” in “uncertain” is crossed out.) The ad goes on to say that the "IBM decision to exit the x86 server market impacts your cloud strategy." Thus, they say, move to HP and be assured that HP will not leave you stranded.

Would I be the only former user/vendor in the HP 3000 market to find that advertising hypocritical -- and further evidence that the company we once relied on no longer exists?

FutureIsUncertainThe hypocrisy is probably on display for any 3000 customer who was told Hewlett-Packard was making an exit from the 3000 hardware market (and by extension, the MPE software world). Every vendor exits some part of their business, once the vendor gets large enough to sell a wide array of products. IBM is dropping away from x86. HP invites enterprises to "join us to plan your forward strategy." This forwarding strategy of moving to Windows and Linux differs from HP advice of 10 years ago. Going to HP-UX was the strategy du jour, beyond a 3000 exit in 2004.

The full-page ads in four colors in a national daily announce a redoubling of effort to win Intel x86 business. That's going to suck up some energy and mindshare, effort that 3000 customers who followed HP forward on HP-UX are probably going to miss.

It won't come as much news to the migrated customer who's been listening to HP management comment about the future of its Business Critical Systems Unix products. "A formerly growing business" is the best that HP's chairman and CEO Meg Whitman can manage in quarterly briefings.

IBM's moving in different directions than HP these days. A recent announcement pulls Big Blue into step with Apple to win enterprise business for both companies at once. Microsoft was once the savior of Apple in hard times. Now it looks like Apple, which has a valuation well above IBM's, is going to perform some salvation. HP had a shot at working with Apple in consumer business, but it was back in the days when selling re-badged iPods seemed like a good idea.

HP's attraction of IBM customers has been a give-and-take that goes back decades. In 1995, IBM wanted HP 3000 customers to switch to AS/400s. Database issues stood in the way of that effort, but certainly a very few companies made the transfer once HP announced an exit of the 3000.

In the same way, HP executives are claiming wins for business in the hundreds, according to an article in eWeek

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 in those deals might be the only parties who still have to figure out how they feel about this change. IBM is happy to let loose of server business that was killing its profits, according to a NY Times article. The changes say a lot about how important these big vendors consider enterprise server business. On one hand, IBM says there's no enterprise-caliber profit in selling x86. On the other, HP is happy to take on whatever customers IBM was passing over to Lenovo.

[Vendors'] businesses like PCs are losing ground to mobile devices like smartphones, and the once-formidable computer server is increasingly viewed as one more commodity piece of globe-spanning cloud computing projects from a few elite players.

“We need to get an inventor’s profit, not a distributor’s profit,” said Steve Mills, senior vice president of software and systems at IBM. “Our investment in research and development is what makes IBM go. It’s hard to do that in markets that don’t give you credit for the innovations you bring.”

It’s stark how quickly that margin fell away. A year ago, IBM was talking about a sale of its server business to Lenovo for what was reported at the time to be $6 billion. Today’s deal for $2.3 billion kept for IBM some higher-value servers, like those that perform complex data analytics. But according to Mr. Mills, it also included agreements for IBM to buy from Lenovo some of the commodity, or x86, servers for IBM’s growing cloud business.

And so there's the interesting wrinkle for anybody considering their migration off HP 3000s. IBM isn't giving up on cloud computing, not any more than HP has; both vendors want to host your applications on cloud servers they'll set up and maintain for you. (So does Amazon, of course, and probably at a better price.) Clouds might be the only way to get a 3000 migration that carries a budget similar to sticking with HP 3000s. Everyone wants to know more about security on clouds, but they want to know about security everywhere these days.

One combination you won't see is clouds and HP-UX computing. HP's own Cloud cannot host HP-UX apps, just those running Windows or Linux. It's an Intel party up there in the HP Cloud. (In a big piece of irony, Apple's OS X Unix is one of the supported HP Cloud installs.) Going forward from the 3000 with HP has more options than going forward than with IBM, right? It's true if you don't count Unix. Hewlett-Packard shows its strategy, with full-page splashes, that Unix counts for much less at enterprises.

We invite any correspondents who see the full-page ads about HP-UX enterprise to alert us. Twenty years ago, the HP 3000 customers were measuring the HP love by way of ads and alliances. To reply to the other part of Gorfinkel's question, we believe that old HP still exists. The company that 3000 customers relied upon in the '90s is repeating its behavior. It's just leaving a different OS out of its forward strategy this time. 

Gorfinkel added that he managed to put his opinions into the inbox of the HP CEO. "I got a promotional email from HP that included – if you follow enough links – an opportunity to email Meg Whitman herself," he said. "Could not resist sending the following:

I cannot believe that HP is running full page ads pointing out that IBM decided to exit the x86 server market and that HP can be trusted to keep your future certain. Is there no corporate memory of the HP exit from the HP3000 market? None of us who felt our future was certain with the most reliable, most secure hardware/software combination in the industry have forgotten. HP left us stranded with a few independent vendors working to pick up the slack. Those who know of HP's history will just laugh (or cry) over the ad; others may be fooled.

It is certainly ironic!

06:34 PM in Migration, News Outta HP | Permalink

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