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HP Exec Blames Server Shortfall on 'Internal Execution Issues'

Posted on: Saturday, 28 August 2004, 06:00 CDT

Q&A

When HP missed earnings expectations for its third quarter two weeks ago, the company placed the blame squarely on the shoulders of its Enterprise Servers and Storage division - leading to the sacking of three senior executives within that unit [QuickLink 48813].

Ann Livermore, executive vice president of HP's Technology Solutions Group, manages servers and storage as well as the vendor's software and IT services units. She spoke with Computerworld and the IDG News Service at HP World.

Why did the enterprise computing group lose money in the third quarter? There were really a couple of main areas where we didn't execute as well as we needed to this quarter. In the United States, we were transitioning to a new system and set of business processes for our order management and manufacturing operations, and that transition caused more disruption than we had planned.

In Europe, we had some issues around our channel management processes. We also had, in a few instances in [Europe, the Middle East and Africa], more aggressive discounting than what we had originally planned for. So the good news - or the bad news - is that they are all internal execution issues we can address ourselves. They're not things that are fundamental weaknesses in our business offerings.

You're getting rid of the Alpha chip and moving from PARISC to Itanium. Is there any sense that the decline in sales may be indicative of customers just not wanting to move to ltanium? No. What we're seeing with ltanium is that our quarter-to-quarter ramp is as we've expected. And our Unix growth last quarter was 8%, which is a good year-over-year growth rate.

When you say Unix growth was 8%, do you mean on Itanium? Unix growth overall.

What was it just on Itanium? You know, I didn't bring with me the specific breakdown in terms of what the PA-RISC growth was versus the Itanium. But the thing we're seeing that we like from an itanium perspective is that the ISV [independent software vendor] applications and ports are going really well. Our ISV partners have all believed that the migration has been easier than what we planned.

IBM is sticking with its Power architecture, and Sun is sticking with UltraSparc. Is anything in your financial results or in the feedback you get from users giving you grounds for doubt about HP's ltaniumonly strategy? No. And we don't have an Itanium-only strategy. From a customer perspective, we have a very simple set of architectures: We have Itanium, and we have x86. A lot of the power of HP from a computing perspective is we do offer both.

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An expanded version of this interview can be found on our Web site:

QuickLink 48879

www.computerworld.com

McMillan is a reporter for the IDG News Service.

Copyright Computerworld Inc. Aug 23, 2004

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