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September 12, 2014

Can HP's cloud deals ground enterprises?

Editors at The New York Times seem to believe the above is true -- or more to the point, that cloud business will come at the expense of HP's hardware revenues. Nobody knows whether this is the way that HP's clouds will rise. Not yet. But a deal to buy an open source software company caught notice of a writer at the NYT, and then came a saucy headline.

Storm-cloudsHP Is Committed to the Cloud, Even If It Kills. The bulk of the story was about Marten Mickos, who sold his company Eucalyptus to Hewlett-Packard and got himself named as General Manager of HP Cloud Business, or somesuch. Open source followers will know Mickos as the man who sold mySQL to Sun, sparking some fury in a customer base that didn't want any connection to major vendor. (As it turned out, Sun wasn't really a major vendor at all, just an object for Oracle acquisition.)

This only matters to migrating customers who use HP 3000s, so if you're still reading and you're homesteading -- or migrating away from HP altogether -- what follows is more for sport than strategic planning. But once more, I'll remind readers that HP is looking for anything that can lift its fortunes. Selling enterprise hardware, like the Integrity servers which are the only island where HP-UX can live, has got a dim outlook. Selling cloud services instead of hardware has plenty more promise, even if it's largely unrealized at HP today.

The rain-clouds in HP's skies come from Amazon, mostly, whose Amazon Web Services is the leader in a growing segment. Eucalyptus works with AWS, and that seems to be the major reason that Mickos gets to direct-report to HP's CEO Meg Whitman. Eucalyptus manages cloud computing systems. HP still sells hardware and software to host private clouds, but an AWS arrangement is a public cloud concept. HP wants to be sure an AWS user can still be an HP customer.

Clouds have a penchant for carrying a customer away from a vendor. Or at least a vendor's hardware. In the NYT story, "HP will have to rely less on revenue from selling hardware, and more on software and service contracts. 'Success will be a tight alignment of many parts of the company,' said Mr. Mickos. 'We have to figure out how to work together.' "

If you go back 24 years, you can find some roots of this HP desire on a stranded pleasure boat in the San Francisco harbor. But until the business critical HP iron stopped selling, the company never believed it would have to set a rapid course for services.

In the fall of 1990, HP hosted a CIMinar conference, mostly for the press and some big customers. The letters stood for Computer Integrated Manufacturing. There was a dinner party on a nice cruise boat as part of the event. When the engines died after dinner, the boat sat in the bay for awhile. We all went out to the deck to lean on the rail and catch some cool air and wait for the tug. That's when Charlie, HP media relations guy, explained that hardware would be on its way out.

"We don't want to sell servers in the long run," Charlie said, while we were talking long enough that he got to the soul of what he believed. He was a former trade press reporter and a good media guy, too. "HP wants to be in the services business, and maybe selling some software."

So here we are, close to a quarter-century later, and now HP's finally found a reason to buy open source software and the fellow who guided it into several hundred companies. Then name him head of HP Cloud making. They hope the whole deal will turn him and his software into a rainmaker for HP enterprise revenues. 

While the Times article has got its problems, it got one stretch of the story pretty accurate. HP, like it has said for several decades, is just following its customers. Apparently, away from relying on HP's hardware.

Putting services and hardware together in new ways is part of "the hard hill we are in the process of climbing," said Martin Fink, HP’s chief technology officer and the head of HP Labs, where much of the development is taking place. "Is there uncertainty? There is always uncertainty." He added that Ms. Whitman has determined that this is where customers are going, so HP needs to adjust its business accordingly.

For years, the HP 3000 community wanted Hewlett-Packard to make recommendations to customers about which HP solution to employ. No dice. "We just want to be trusted advisors," HP said over and over. "The customer will tell us what they need, and then we will provide it."

And if the customer needs more legroom to use Integrity and HP-UX? Well, there's always that uncertainty that Mr. Fink mentioned.

09:48 PM in Migration, News Outta HP | Permalink

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