HP World opens as key exec heads roll

Faltering financial results triggered three dismissals

As HP World opens in Chicago this week, the buzz among the expected 7,000 attendees will no doubt be about the disappointing financial results that sent some top Hewlett-Packard Co. executives packing (see story).

A key problem for HP is the principal focus of many attending the conference: enterprise hardware. Enterprise storage and server revenue fell 5% to $3.4 billion, while overall revenue for the company grew 9% to $18.9 billion.

In particular, HP's Alpha server line was down 32%, and NonStop servers fell 25%. There was also a 23% decline in storage systems revenue.

Bill Moran, an analyst at D.H. Brown & Associates Inc. in Port Chester, N.Y., said the decline in Alpha revenue likely reflects falling customer interest in a system that HP will stop producing in 2006 but will continue to support until 2011. The NonStop decline may indicate that customers are waiting for HP to complete its transition from the MIPS processor to Itanium, said Moran.

Management Shuffle

HP CEO Carly Fiorina fired Peter Blackmore, executive vice president of HP's Customer Solutions Group. He was replaced by Mike Winkler, who had been with Compaq. Jim Milton, CSG senior vice president and managing director of the Americas region, and Kasper Rorsted, CSG senior vice president and managing director for Europe, the Middle East and Africa, were also dismissed.

The management shuffle "deflects criticism" away from Fiorina, said Moran. "She has bought herself some time," he added. Fiorina isn't scheduled to speak at HP World.

Product announcements expected at the show include expanded virtualization capabilities in the Itanium-based Integrity server line. A new version of Global Workload Manager will now be able to handle Linux as well as HP-UX, and manage hundreds of servers and partitions. It's now limited to 20 partitions.

HP is also introducing sub-CPU partitioning on the Integrity line, which will allow users to divide the CPU up to 20 ways and run HP-UX and Linux on the partitions.

HP CEO Carly Fiorina
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HP CEO Carly Fiorina
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There are currently two versions of HP-UX: one for the PA-RISC-based HP 9000, and the other for Integrity. But in October, HP will deliver a unified version.

"This is in response to customer demand," said Don Jenkins, vice president of marketing for HP's business-critical servers. "Many customers want to manage one release, patch update, etc., across their environment."

HP will also announce Alpha chip improvements that will boost performance by 16%, officials said. But it is still encouraging users to move to Itanium.

Seattle-based Boeing Employees Credit Union recently moved from Alpha servers to the Integrity line. Scott Wolfe, BECU's IT enterprise architect, said that because of increasing batch processing demands, the company had to either upgrade its Alpha servers or move to an alternative.

An Alpha upgrade "was a perfectly viable option," and something the company debated until the end, said Wolfe. "I don't second-guess anyone who wants to continue with Alpha," he said. But since BECU planned to move to Itanium at some point anyway, now was better than later, he said.

The upgrade to faster processors allowed BECU to reduce the number of processors needed from 16 to eight. That boosted performance and, because of per-processor licensing, cut the cost of its Oracle Corp. software in half, said Wolfe.

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