HPE focuses on hybrid IT and IoT as revenue drops

CEO Meg Whitman continues on her quest to refocus Hewlett Packard Enterprise as the company posts its fourth-quarter results

Hewlett Packard Enterprise has announced a drop of 7% in its fourth-quarter 2016 revenue to $12.6bn, as the company refocuses on the hybrid cloud and internet of things (IoT) markets.

In a transcript of the earnings call, posted on the Seeking Alpha financial blogging site, CEO Meg Whitman said: “We believe the world is going to be hybrid and our mission is to make hybrid IT simple. To do this, we offer market-leading technology across a traditional datacentre, software-defined infrastructure and private cloud. We are focused on winning in key growth areas in the traditional datacentre, like big data analytics, high-performance compute, all-flash storage and networking.”

The company has undergone a number of major divestments following its split from HP a year ago and Whitman is confident it is now better placed to respond to the evolving marketplace.

In May, HPE announced that its Enterprise Services arm would be merging with CSC and in September the company sold its software infrastructure products to Micro Focus.

HPE also bought into the high-performance computing market by acquiring SGI.

Whitman said: “We saw growth this year in key areas of the portfolio, including high-performance compute, Cloudline servers, all-flash storage, converged systems, mission-critical systems and networking with Aruba.”

Revenue in HPE’s Strategic Enterprise Services business grew 30%, which Whitman said was driven by the company’s Helion Managed Cloud and Virtual Private Cloud products.

The Aruba business is where Whitman sees an opportunity for HPE in the IoT market. “Through our Aruba offerings in security, analytics and connectivity, and our edge line converged IoT systems, we are building an ecosystem of partners and bringing unique solutions to this fast-growing market,” she said. “I like to say we are going to be the IT in IoT.”

Sales of HPE’s traditional storage products fell by 11% in the quarter.

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Asked about the storage business and the trend to deploy flash storage in datacentres, Whitman said: “All-flash now makes up 50% of our 3PAR portfolio and, interestingly, still comprises only 10% of the datacentre. So we see more running room in our all-flash business.”

Whitman said HPE was introducing deduplication technology, which was a gap in the company’s storage portfolio. She said this should boost sales of HPE’s all-flash array.

In terms of HPE’s competitors, Whitman described Cisco as “aggressive”, and admitted it was hard to see what Dell/EMC was doing because it was no longer a public company. But she felt that a more focused HPE was in a stronger position.

“We like our win rate,” she said. “We like our strategy of getting smaller and more focused, while they are still integrating a very large acquisition.”

Whitman said HPE had won a lot of business following the sale of IBM’s x86 server business to Lenovo. “We haven’t seen them pop back yet,” she added. “They may be just about ready to get up off the mat. We will see in the next six to 18 months.”

Interestingly, Whitman said HPE also saw Huawei as a competitor. “We are actually seeing some Huawei pressure in Latin America and a little bit in Europe, not in the US, and we are trying to basically make sure that, in my view, it’s easier to hold share than to gain it back,” she said. “So we’re making some investments in areas that they’re trying to make inroads into.”

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