The new HP: server wars hot up

The emergence of the new HP could be good for users as rival vendors compete on price, performance and cutting edge technology in...

The emergence of the new HP could be good for users as rival vendors compete on price, performance and cutting edge technology in the Intel server market.

Figures from Gartner Dataquest on worldwide server shipments for the first quarter of 2002 show how much HP has suffered during the protracted merger process, with sales down 13.3%.

Compaq led the field with 22.8% of market share, Dell was second with 17.8%, IBM third on 14.3%, followed by HP with just 8.6% of the market. While the merged HP/Compaq will clearly lead the market, it has to convince users that its new product range is compelling.

The new HP is pulling the plugs on its Netserver range and making Compaq's Proliant 32-bit server family the core of its offering.

Some HP models will survive at the low end of the Intel server market while Compaq's e-class products will form the core of the blade server product line. Some HP blade servers, aimed specifically at the telecoms market, will remain in production.

The new company has pledged to honour the terms and conditions under which all products were purchased and to provide or make available hardware maintenance services for five years after the date of last sale of any industry standard server product.

"HP is carrying through a logical rationalisation of the product range," said Thomas Meyer, European server group manager at analysts IDC. "Compaq has market share and the installed base, while HP had intrinsic problems in its product line."

He said HP risked alienating users and channel partners with the speed at which it was dropping the HP Netservers, but added, "at least the future is clear".

The new HP's rivals are all making a bid for market share. "IBM, Sun and Dell, are all hoping to make a killing from the merger," said Meyer, however, he added, "They may have been surprised by the speed with which HP laid out its product roadmaps."

Dell, he said, is likely to wage a price war at the low end of the market to win volume from HP, while IBM is likely to attack HP across the whole product range.

Compaq has traditionally been the driving force in PC server innovation but IBM has put considerable effort into technology.

IDC analyst Martin Hingley said IBM's X-architecture is providing mainframe-like resilience on its xSeries PC servers. IBM is also offering xSeries high-end clustering via its SP switching technology.

"IBM will be price aggressive and its products are feature rich and it is working hard with its channel partners and offering attractive financing options," said Meyer. "Fujitsu Siemens, while less of a force in the UK than Europe, will also be marketing aggressively," he added.

For IT departments, Meyer said, it is an excellent time to shop around. When considering suppliers, he said: "Don't just think about the price of the box, see what long term agreements are on offer. Ask to see the vendor's strategic roadmap and see what else they can offer you."

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