HP unifies server division

Almost a year to the day after it acquired Compaq, Hewlett-Packard is consolidating several departments in its Enterprise Systems...

Almost a year to the day after it acquired Compaq, Hewlett-Packard is consolidating several departments in its Enterprise Systems Group (ESG) into one new hardware unit, and creating two other groups to focus on strategy and sales.

The company had been organised around specific technology hardware, with different groups based around HP's Unix servers, its servers based on Intel processors, and storage products.

Those hardware groups will now be combined into a single division known as Enterprise Storage and Servers headed by HP senior vice president Scott Stallard, said Peter Blackmore, executive vice president for ESG.

The acquisition of Compaq's server business was seen as one of the keys to the deal when it closed last year. The ESG group has been unprofitable since the merger closed, but has attained the top share of various market segments because of the combination of Compaq and HP's products.

The decision to reorganise the hardware business was made to accelerate growth and was not the result of reduced profits within the group, Blackmore said. With independent enterprise hardware business units, the merged company found it more difficult to present a common message on how to use its hardware across different types of environments.

HP is trying to emulate rival IBM, said Gordon Haff, an analyst with Illuminata. "IBM successfully brought their product lines under the eServer umbrella, and there's a tremendous amount of technology-sharing there."

Bringing storage under the rest of the enterprise group also takes a page from IBM's book, said Mark Melenovsky, an analyst with IDC. Enterprises are attaching storage to their hardware purchases more and more, and the move recognises the need to integrate those products.

Mary McDowell, formerly senior vice president and general manager of HP's Industry Standard Servers group, will be taking a short sabbatical and returning to HP in a senior vice president role, the company said. McDowell led Compaq's server group before the merger. HP refers to servers with Intel processors as industry-standard servers.

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