Q&A: HP's Peter Blackmore on rivals, postmerger strategy

Computerworld - As executive vice president of Hewlett-Packard Co.'s Enterprise System Group, Peter Blackmore is responsible for an $11.4 billion business that incudes high-end servers, storage and software products. Blackmore also oversees HP's worldwide enterprise field organization. In this interview with Computerworld's Jaikumar Vijayan, Blackmore talks about how HP has fared since the merger, Itanium, Linux and the company's software strategy.

Nine months into the merger, how have customers benefited from the Compaq acquisition? First, customers saw the value in bringing the two companies together almost before any other constituent. In other words, a lot of them understood fundamental changes in the technology business and they saw the logic in consolidation. In one fell swoop it gave them a very strong portfolio [of products] and a genuine competitor to IBM. And I think we have not disappointed them. The other thing they looked for in the first nine months is: Did we bring the product road maps together and did we stay close to the customers? We've earned very high praise for the manner in which we did this. That's really the story behind the last nine months, just extraordinarily good execution and staying very close to the customer.
How has the merger changed things for your major accounts specifically? I think what we have brought to those customers is a strong alternative to IBM right across the technology and service spectrum. Both premerger companies were strong, but didn't have the breadth of portfolio. Today, HP has a $16.5 billion server and storage business which is larger than IBM's equivalent. We have a very strong services business, with 65,000 people. It is obviously not as large as IBM's equivalent, but large enough to be very high-depth with capability. So what the customers see from this is an organization that can step up to be a trusted partner and provide a complete range of technology for the infrastructure, data center and everything that surrounds the data center.

Peter Blackmore of Hewlett-Packard Co. Credit: Hewlett-Packard Co.

Why is HP so bullish on Itanium when the rest of the industry seems to be taking more of a wait-and-see attitude? It is very interesting. Both premerger companies came to the same decision. Both had RISC architecture and prior to the merger both had decided to adopt Itanium. The logic was the same in both cases in that we wish to be in the computer business, not the chip business. We saw the advantage of using industry-standard chip sets and industry-standard building blocks with more of our R&D, then going into the value-add beyond that. The clustering, the partitioning, the software and the management tool sets are what offer genuine differentiation. Then you also get the benefit of a different cost paradigm because you are using an industry standard building block.
Now, obviously, I don't expect our competitors who have not jumped on this particular train to say that it is the best game in town. But I think the boot will be on the other foot shortly. Come September or October, when we launch a complete Itanium product, there will be a paradigm shift. It will be a disruptive technology.
Is this where you would have really liked Intel to be at this stage with Itanium? Basically we are doing a lot of the heavy lifting with Intel and they would tell you that it's not just them but a joint proposition. We are very pleased with where we are.
At a time when other companies are ramping up their middleware investments, HP has exited the middleware business. What really is HP's software strategy? Where we are investing the money is on management software and virtualization. Middleware is only part of that. What we've decided to do is have a very strong management software architecture. We will build our own IP where that makes sense and leverage partners on other aspects where they become accepted standards in the market. So we have OpenView as the core of the management software. Above that, we have leadership concepts such as Utility Data Center, which is absolutely world class and is 18 months ahead of IBM and way ahead of anything Sun has to offer. It enables virtualization and dynamic reconfiguration of all the systems in a data center or across multiple data centers. It is a very sophisticated approach to managing the infrastructure. On top of that we have just announced ... a complete set of Web services.
When it comes to middleware we had some assets, Bluestone and so on, that had very small market shares. The market leaders were BEA with J2EE and WebLogic and, obviously, Microsoft with .Net. So we decided to embrace those and retire our assets, which we did. It was absolutely the right decision and customers applauded it. The added value and the differentiation is all in the management tool set and virtualization. You don't have to own the stack as long as you have the integration capability.
What role do you see Linux playing in the enterprise? We see Linux as being absolutely strategic. We see growth in all of the three standards, Windows, Linux and HP-UX, [which is] a standard by default because it has got 32% of the Unix market. We actually have a $2 billion Linux business. We have the highest market share of any of the vendors in Linux on server platforms. It is 30%. We have a big service practice around Linux, around 5,000 of our services people are trained on supporting Linux. So we are doing a lot of leading edge change.
What's driving all of this interest in Linux? The cost performance. The sweet spot for Linux is the four-processor Unix application server and lower. When you take a four-processor Unix application, even if it is mission-critical, you can run it very effectively on Linux. It is not replacing very high-end clustered machines. It is not replacing Windows. It is replacing Unix.
Where does OpenVMS fit in the overall scheme of things at HP these days? It is already well on its way to being ported to IA-64. We will continue to support it on IA-64. It is a very special class of operating system. We are not planning to do anything else other than to continue supporting this environment, as well as the 450,000 users around the world that are on this. So we are going to maintain it and make it run very well on Itanium. The same [is true] with the Non-Stop environment. It currently runs on the MIPS chip. It will be migrated to IA-64 as well.
So what are some of the products and technologies directions users can expect to see from HP the rest of this year and going forward? This whole concept of adaptive infrastructure which UDC and OpenView are a part of ... a big trend, [as is] the trend towards utility computing and IA-64. On the storage side, it is the acceleration of SANs and virtualization. Across the whole of the enterprise there is a focus on interoperability and managing the effectiveness of the infrastructure. This is a big deal to the CIO because they are looking for improvements to the running costs of their technology. [That way] they can hold their budgets flat and reduce the cost of managing what they have [and] invest in new applications.
How do you foresee IT spending for the rest of the year? I think it's going to be flat. It would be stupid to say anything else. I think there are investments that customers want to make obviously. What they are asking for is how can you help improve the cost base so they can afford a bit more of the new. So we are working with them on that. But the overall budgets are going to be flat.
How will any war with Iraq impact the industry? Last time it didn't have a lot of impact. As long as the war is over quickly I think it will be straightforward. Beyond that it is hard to tell.