HPE looks to shore up server sales

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HPE looks to shore up server sales

Hewlett Packard Enterprise chief executive Meg Whitman said the server powerhouse is poised to make channel changes aimed at shoring up its declining industry standard server (ISS) sales.

"We need to shore up core ISS rack with improvements in the channel, improvements in [channel price] quote-to-cash and more focus on the distributors and VARs for the volume related ISS rack business," said Whitman.

The ISS rack system business is all "volume based" channel business where HPE's ability to move quicker with partners to beat competitors is critical, said Whitman. "There is weakness in ISS racks; we are not executing as well as we could and we aim to fix that," she said.

Whitman said she liked HPE's win rate against Dell EMC. "We like our strategy of getting smaller and more focused, while they are still integrating a very large acquisition," she said.

Whitman anticipates HPE's server business will grow at 1-2 percent next year with a focus on faster growth including high performance compute and hyper-converged systems.

Even as HPE is making moves to turn the ISS tide, Whitman said the company was aggressively investing in higher growth enterprise offerings which are growing including the hot selling HC380 hyper-converged offering, Synergy composable infrastructure, SGI high performance compute systems, 3Par all-flash, and the Aruba wireless networking products.

HPE is also poised to benefit from tighter partnerships in 2017 with global system integration "alliance partners." These partners include Accenture and PwC, along with India-based outsourcing giants who no longer view HPE as a competitor now that it is in the process of the spin-in merger of its US$20 billion HP Enterprise Services business with systems integrator CSC. "It's been fascinating to me how much more traction I think we are going to get with those alliance partners," she said.

HPE is also doubling down on its go-to-market strategy on tier two and tier three enterprise accounts "that offer better growth at a higher margin," said Whitman.

Whitman also pointed to improved sales numbers in the Technology Services business, which was up two percent in the most recent quarter when adjusted for currency. "Even a slight return to growth in TS actually helps mitigate margin pressure in ISS rack," she said.

HPE also remains firmly focused on reducing sales expenses for the company in the wake of the HPE Enterprise Services spin-in merger with CSC, and the US$8.8 billion spin-in merger of HPE software assets with Micro Focus.

Those spin-in mergers, which remake HPE into a US$28 billion hybrid infrastructure super power, are going to enable the remaining company to be faster-moving and more laser focused on the software-defined infrastructure market, said Whitman.

"In the volume business we can react very quickly from a pricing perspective, from a VAR perspective, probably much more quickly than we could have before," she said.

HPE's overall sales for the fourth fiscal quarter to 31 October were down 7 percent to US$12.47 billion, compared with US$13.44 billion in the year-ago quarter.

Among the company's major wins in the fourth quarter, said Whitman, was a blockbuster hybrid IT deal with a global healthcare company that replaced a 19-year relationship with EMC. "We will provide services and technology to deliver simplicity, operating efficiencies, and automation as the company modernises and realigns their core storage and compute platforms," she said of the deal.

Also in the quarter, Whitman said, HPE's Aruba unit won a wi-fi "preferred provider" pact for all of Nordstrom's stores, distribution centres and corporate sites and a wireless network rollout deal at Penske Truck leasing.

HPE's Technology Services business, meanwhile, scored a five-year flexible capacity infrastructure service with a large European auto manufacturer and a five-year data centre pact with a large global bank based in Europe.

Once the spin-in mergers are completed, HPE will have a total addressable market of US$250 billion growing at 2-3 percent per year, said Whitman.

Over the last year, she said, HPE had delivered the "financial performance we promised, fulfilled our commitment to ground-breaking innovation and began to transform the company in ways we believe will deliver an exciting future for customers, partners, employees and investors. I am excited about the path we see ahead and very much look forward to the journey."

This article originally appeared at crn.com

 

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