Hewlett-Packard has begun taking orders for Project Moonshot, its low-power server project. It has also pinned its hopes on converged storage, betting that revenues from the segment will offset declines in the traditional storage business.
Unfortunately for HP, both revenue and profits declined in its first quarter of fiscal 2013, with revenues falling in every product division. Profits fell 12 percent from $1.8 billion to $1.6 billion, while revenues fell 6 percent to $28.4 billion.
In the enterprise space, enterprise revenue fell 4 percent. Of all its divisions, revenues in the Personal Systems Group fell the most, by 8 percent, forcing chief executive Meg Whitman to defend—again—the company’s decision to remain in the PC market.
“But I truly believe that this is a business, we need to be in for three reasons; first, nobody understands computing like HP, from the data center to the device,” she said, according to a transcript provided by Seeking Alpha. “Second, the future is convergence. As the complexity of these computing ecosystems [goes] up, our ability to bring pieces together becomes a competitive advantage. And third, the security, as these devices become more central to our businesses and our lives they present greater risk to both enterprises and individual.”
HP’s industry-standard server revenue declined by 3 percent, not helped by what executives called a “tepid” market. Business Critical Systems revenue declined 24 percent year-over-year, driven by continuing pressure on Intel’s Itanium processor; the business now comprises just 4 percent of segment revenue. HP’s trial against Oracle regarding Itanium support goes to trial in the second quarter; HP expects damages to be awarded.
Nonetheless, HP claims its ProLiant line remains the number-one server brand for 67 quarters in a row, with an estimated 32.1 percent of total x86 unit shipments share in the fourth calendar quarter. HP executives also insist that the company is focused on improving its hyperscale business, which has yet to turn a profit.
One bright spot was “Project Moonshot,” the low-power server initiative HP began in 2011, beginning with the Calxeda Atom architecture. HP has since moved to the Intel “Centerton” Atom processor with its next-generation “Gemini” server.
“Moonshot grows through the year,” Whitman said. “We are just taking our first orders now for the first space of Moonshot and we are excited about it, because of the characteristics of that technology… frankly it won’t hit its real, I think sort of full potential till 2014.”
The other positive was HP’s converged storage business, consisting of HP’s intellectual property such as 3PAR, StoreOnce, StoreVirtual and StoreAll. While traditional storage declined 21 percent to $833 million, HP’s converged storage actually grew revenues by 18 percent. The hope is that the converged storage business will grow fast enough to offset the declines on the traditional side, HP executives said.
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