26 April 2005 A set of internal senior management briefings leaked from Hewlett-Packard in the UK show the company shooting for strong growth in servers during the company’s third quarter, despite “confusion” and “negative” perceptions in the marketplace of its flagship server platforms.
The documents, seen by Infoconomy, reveal that the company’s Enterprise Storage and Servers (ESS) division is planning for 20% growth in unit shipments of servers in the third months ending 31 July. The source of the documents suggests the references are to the UK targets.
If it hits its unit shipment targets, ESS should grow revenues 6% quarter-on-quarter, the documents state. In the year-ago quarter, at a worldwide level, revenues for the division fell by 5%.
That upbeat projection gives the company confidence that it can add 2% market share per quarter “to exit 2005 at 49%” share.
Spurring that growth will be several initiatives. Key will be efforts to encourage customers to upgrade their operating systems and applications, and accompany that with a platform switch. There will be a particular emphasis on the adoption of blade servers, where HP thinks it can show “technical and thought leadership” in both the systems and their management.
The company has also singled out four vertical markets for special focus: police/criminal justice, healthcare, retail and finance.
However, the documents also expose the areas where HP’s feels vulnerable.
The documents accuse IBM of spreading FUD (fear, uncertainty and doubt) around the future of the HP Integrity server range: HP needs to “counter FUD that Integrity is no longer supported since [the] departure of Fiorina.” Carly Fiorina was forced to resign as CEO in February and was replaced last month by former NCR head Mark Hurd. HP intends to do all it can to “increase the brand recognition of Integrity”.
In the Linux arena, the battle with IBM is particularly intensely felt. “IBM is seen as synonymous with Linux, where the market share supports the view that HP leads,” say the documents. HP’s response: “Develop IBM attack programme.”
Additionally, the company intends to project itself as having a wider view of open source. It plans an “Open Source Beyond Linux” campaign.