Windows Server 2003 EOL: HP seeks to cash in as IBM-Lenovo deal yet to close

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Windows Server 2003 EOL: HP seeks to cash in as IBM-Lenovo deal yet to close

Archana Venkatraman

Windows Server 2003 will reach its end of life in less than a year and, as enterprises look to refresh their infrastructure, HP is playing the stability card to win more enterprise deals as rivals IBM and Dell are mired by uncertainties.

Windows Server 2003 and Windows Server 2003 R2 will reach the end of extended support on 14 July 2015. Windows Server 2003 is the equivalent of Windows XP in the server world, and experts estimate that there are 11 million machines still running it, with many hosting mission-critical services.

HP Discover 2014 - Keynote - Meg Whitman

Microsoft has reported that more than 22 million licences need to be migrated.

HP’s own research found that 60% of customers have no migration plan in place with only 12 months to go before support ends.

“Windows Server 2003 represents a huge opportunity for us,” said Iain Stephen, vice president for HP servers in EMEA. “Server 2003 EOL is only just beginning to click and it is a big transition decision that enterprise IT takes seriously. It is not just a regular operating system update – it involves a big server refresh.”

Stephen estimates that big companies have tens of thousands of machines running Windows Server 2003. “As they plan their move to Windows Server 2012, those that are on IBM x86 server platforms will question the platform they are on because of the uncertainties,” he said.

“If the IBM-Lenovo deal hadn’t happened, enterprises wouldn’t have even thought of changing their x86 server provider. But now they will and it represents a big opportunity for us.”

Green light for Lenovo

Just weeks ago, US officials gave the green light for Lenovo to acquire IBM’s x86-based server business for $2.3bn. The deal is yet to receive final approval from the European Commission and regulators in China and Canada.

The divestment allows IBM to focus on system and software innovations that bring new value to strategic areas of its business, such as cognitive computing, big data and cloud, said Steve Mills, senior vice-president and group executive, IBM Software and Systems, at the time of announcing the sale.

“When enterprises are going through a big infrastructure refresh project, supplier uncertainty is the last thing they want,” said Anton Loeffen, chief executive of cloud service provider Eshgro. “CIOs try to bet on certainties and they see IBM is moving more towards being a services and cloud company, while Dell is too busy with reinventing themselves as a private company.

“This is a good time for HP to cash in on the Windows Server 2003 end of life.”

But HP is not just playing the stability card to snatch server deals; it is also collaborating closely with Microsoft and launching new cloud-ready and software-defined-ready x86 server products. HP has just launched Gen 9 ProLiant servers, which are based on Intel’s upcoming Haswell chips and on DDR4 memory technology to coincide with the Windows Server 2003 server refresh sweet-spot.

It has also created an HP Microsoft Windows Server 2003 program to help partners move clients to a new Microsoft OS, servers, storage and networking wrapped with HP support and financial services.

“In big companies, compliance is critical,” said HP's Stephen. “When companies refresh their servers, they cannot have two versions of servers amid the IBM Lenovo deal as it will lead to compliance issues.”

HP leads the pack

Among server providers including HP, IBM, Lenovo, Dell and Fujitsu, HP leads the pack. Gartner's figures for Q2 2014 show that HP achieved 7.3% year-on-year growth to achieve a 34.7% server revenue share for the quarter.

Meanwhile, IBM saw its server revenue shrink by 14.9% for Q2 2014. 

HP’s 7.3% growth is a strong result given its 5.2% decline in shipments, said Gartner analyst Errol Rasit. Although the EMEA market does not enjoy the same hyper-scale demand as North America, HP benefited from strong multi-node server sales to boost its growth, he added.

Second-ranked IBM recorded single-digit x86 growth, despite announcing the divestment of this business, but the company’s top-level result was hit by a cyclical low point in mainframe sales and ongoing weakness in its RISC systems business, said Rasit.

Third-placed Dell’s recent momentum continued, with its revenue for Q2 2014 up 13.5% and its shipments up 5.5%. “We see Dell as our biggest competitor in the Windows Server 2003 refresh market,” said Stephen.

Windows Server 2003 EOL requires enterprise customers to start thinking about their overall strategy for datacentre platforms, as well as their product and services roadmap, in order to minimise potential operational risk to the business, warned Mohammed Safder, worldwide lead, HP IT Strategy Consulting Services, on the company blog.

He urged IBM/Lenovo customers to “review IBM x86 buying decisions” and “to ask IBM to disclose future product roadmaps”.

HP chief executive Meg Whitman (pictured) previously said the sale of the company’s x86 server business to Lenovo in February was an opportunity for HP. “We have a near-term opportunity here to gain share in our enterprise services or server business, so we are all over it,” she said.

HP aims to snatch at least 5% more market share because of the uncertainties affecting its rivals.


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