Intel and Server Giant Decline: The Knock on Effect for HP

September 13, 2012

I don’t pay any attention to the chip and chip set world. However, after I read “Intel Confirms Decline of Server Giants HP, Dell, and IBM,” I thought about the knock on effect. The idea is that one action strikes another object. Sometimes the nudge is a plus. Other times the bonk breaks something.

The article asserts, “Some of the biggest server buyers are cutting out the big-name middlemen.” Google gave credence to the method, and I as said in The Google Legacy in 2003-2004, Google has pointed the way to what is now a much broader shift from brand name servers to white boxes and commodity devices.

If HP slips in high end hardware sales, the company has to generate new revenue. If the revenue growth is lackluster, then HP will have to terminate more people or squeeze other operating units to generate more revenue. EDS has been a disappointment. There is not much information about how Autonomy is performing. What I think of when I hear about “HP Autonomy” is the $10 billion paid for the search and content processing business. Some of the key executives have departed from Hewlett Packard.

There are quite a few search and content processing options available today. I am not sure how quickly HP can scale Autonomy’s revenue to make up for the alleged decline in server revenue and the investment in Autonomy. In short, HP may have to look for ways to cut costs associated with certain lines of business and find a way to sell high value services to existing Autonomy licensees and customers.

Fascinating shift, if the decline is accurate.

Stephen E Arnold, September 13, 2012

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