HP: Cloud Threat Looming
November 24, 2008
TradingMarkets.com published “HP Says It Powers 41 Percent Of Computers on Top 500 List.” You can read the full text of this article here. The title suggested to me that this was a routine PR type story, the French verb gonfler covers this type of pumping up action. For me, the most important comment in the article was:
Over the last several years, we’ve seen an explosive growth of blade servers for a widening range of high-performance computing applications – from digital media creation and online gaming to more traditional HPC applications such as computer-aided design,” said Earl Joseph, program VP, High-performance Computing, IDC Research. “Previously, customers’ only choice for HPC was a high-end, multi-million dollar supercomputer. Now, blades offer a highly flexible, scalable, lower-budget alternative to the proprietary systems that historically dominated the Top500 list.”
HP has reported good financial results and is one of a select number of companies to expect good numbers into 2009. But I looked at these figures and asked myself, “What happens if Ford, GM, and Chrysler go out of business or sharply curtail their investments. What happens if the Top 500 become the Top 400 or Top 300?” Then I asked myself, “What happens if the commodity cloud computing option makes significant inroads into the biggest companies who have to decide between their concerns about security and keeping the lights on?”
The news story suggests that today’s rosy tinted picture could turn gray. Branded hardware costs more than commodity hardware. But what really spikes the cost is the support and service that branded hardware drags like a snake moves its rattles through the sagebrush.
After reflecting upon this news story, I concluded that HP could find itself in a revenue pickle that cutting prices on its slick servers won’t be able to correct. Help me understand what I am missing?
Stephen Arnold, November 24, 2008
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