HEWLETT-PACKARD Power Play

In a packed media event in New York City on September 12, HP
launched the Superdome, its fastest commercial computer so far. Emerging from
smoke and lights on the stage at Wall Street’s compact Regent Hotel, the
Superdome marked HP’s entry into the top end of the Unix server market as well
as HP’s transition attempt from staid and cautious to more lively and
flamboyant under CEO Carly Fiorina. HP Computing group president Duane Zitzner
said this server was beyond cool and hip and mean and bad. "It’s
spank!" he said, "That’s what the New York Times says is the hippest
word doing the rounds."

HP says the Superdome is the world’s fastest and most
powerful Unix server, backed by new utility pricing models, and service to
ensure uptime. In fact, HP labeled the event as the launch of its
"always-on computing" strategy.

"This is a watershed day for us," said Fiorina.
"We’re raising the bar on what it takes to be in this market."
Completing the HP 9000 family of Unix servers at the high end, the Superdome
ships with up to 32 processors and 256 GB of memory. A 64-processor version
planned for later this year will be crucial for HP’s positioning in the top
end of Unix servers that power dot com and e-enabled businesses.

The launch venue was significant: Wall Street. HP wants to
make a splash with big businesses going for the e, staving off stiff competition
there, as well as impress the stock-market and its analysts into giving it
better valuations. Financial analysts have criticized its Unix server business,
sending shares down. Fiorina took the offensive, saying "we have the best
servers in the market, bar none". In recent months she has also reorganized
the sales force, and countered analyst concerns and competitor jibes.

Hewlett-Packard
has launched the Superdome in a crowded, but rapidly-growing Unix server market.
The high-end of this market is going to get crowded too: Sun has the aging
Starfire and the upcoming Ultrasparc III-based Serengeti, Compaq has the
32-processor Wildfire, IBM a 24-processor S80, and SGI a 512-processor Origin
server.

The Gartner Group says that high-end Unix servers will play a
crucial role in the coming information utility age, because of their advantages
in availability, scalability and affinity to the Internet. "Our clients see
high-end server selection as a key strategic issue, not as a tactical
operational issue," says Gartner Japan’s research director Kiyoshi
Kurihara. "HP’s Superdome will cause more healthy competition in this
important market segment."

HP was once the Unix systems leader, but lost that leadership
to Sun, which gained the most from the Internet boom. HP now rules a narrow band
at the midrange of the Unix server market. It has been slow in the low end,
where Sun is way ahead, and in the high end, where it has not had the models to
compete with IBM’s top-end RS/6000 and even the (non-Unix) AS/400 line. (Sun
had about a third of the $26 billion Unix server market last year, HP had a
quarter, and IBM about 20%, according to IDC. More significantly, Sun grew well
last year, while HP and IBM slowed down.)

Fiorina spoke about HP’s moves to get away from its slow
and cautious image. "Over the years, HP has taken a rap for being too
analytic," Fiorina said, "but this is a radically different
go-to-market approach. Fourteen months ago we were basically getting killed in
the dot-com space...we gave our competition a hole big enough to drive a truck
through. But no more." The new business model launched around the Superdome
includes utility-based pricing, and worldwide four-hour-response support.

The high-end Unix server segment is important also because it’s
typically surrounded by services and backed with lots of other equipment, adding
up to both revenues and margins. And unlike in the low-end server space where
Intel and Windows NT have made big inroads, there is very little at the high end
to challenge the RISC Unix servers. Users for such large Unix systems are big
enterprises with databases tracking thousands of customers online, or a very
complex supply chain. Amazon.com, for instance, is a big user of HP 9000 V-class
servers, and has been using a Superdome.

HP says it already has 150 orders for the Superdome,
including and 16 pre-shipment orders that have been fulfilled, for the
Superdome. The machine, manufactured at its Roseville plant near Sacramento,
California, is now shipping in the 32-processor configuration.

HP’s Unix server sales are particularly strong in
Asia-Pacific–revenues grew 51 percent in the last quarter, as against 13
percent worldwide. Similarly, its IT services revenues grew 42 percent in the
region, versus 17 percent worldwide, adding to an overall 36 percent revenue
growth against 15 percent worldwide, in the last quarter.

Pay as you go

With the Superdome launch, even more significant than the
technology and power may be HP’s "utility model" pricing. As with a
power utility, where you pay for the electricity you actually use, HP will let
customers opt for a number of flexible packages which cut down up-front
investment.

"We have placed a bet on the future of computing,"
Fiorina said, "and it’s on utility computing. The option to pay by usage
lengthens the life of systems and equipment, and drops the entry barrier."

Customers can still buy the systems outright, but there are a
number of alternatives. One, the utility model being introduced with the
Superdome. Another is HP’s "ICOD" or instant capacity on demand
model, introduced in June for its V-class servers, and now available with the
Superdome.

In the utility model, a customer installs the Superdome at
his premises but does not buy it: he pays HP for the actual resources he uses.
Software in the server tracks the company’s usage of power, storage and other
resources, sends HP a periodic e-mail. A monthly bill is generated, similar to
an electricity bill. This is probably unique for hardware, though it is not
uncommon for systems, software or support.

With ICOD or instant capacity on demand, a system may be
shipped with a larger number of CPUs and memory than a customer needs, but
without the higher cost. Say, a customer wants a four-CPU system now, but
expects more capacity demand in the near future. He pays for four CPUs, and gets
a V-class server or Superdome with eight or twelve CPUs–but with only four of
them enabled. Later, if traffic increases, he can pay for more capacity, and HP
will unlock additional CPUs remotely without bringing the system down.

This is similar to software vendor practice. Adobe sells CDs
with hundreds of encrypted fonts, and as you pay, you get the unlock codes for
the fonts. HP also plans a "seasonal" option to ICOD: the system can
be upgraded remotely on the fly with additional resources released for a peak
season like Christmas, and then reverted to a lower-cost configuration for
regular seasons. This will be available from next year HP’s high-end Unix
servers.

PA Now, IA Tomorrow

The high-end server project at HP was originally code-named
"Halfdome", after a granite peak in Yosemite National Park, USA. The
name almost carried on to the final product. Then HP marketing realized that
"Half" didn’t make an inspiring name, and "Superdome sounds a
lot sexier." Though it joins the HP 9000 family of A, L N and V-class
servers, this won’t be called something like an X- or Z-class server: the
Superdome name sticks.

The Superdome uses four-processor cells each with separate
own memory and I//O. Using a high-speed bus and switches, eight of these cells
are assembled into a 32-processor configuration. Two of these 32-processor
blocks can be joined into the full-fledged 64-processor Superdome scheduled to
arrive later.

Like the entire HP9000 family, the Superdome runs on the HP
PA RISC processors. The Intel-HP IA64 "Itanium" processor family will
be supported in late 2002, for which the server will need "only a
cell-board upgrade", Duane Zitzner told Dataquest. A cell-board is similar
to a motherboard for a single cell. (So far, only SGI has announced
dual-processor future support in the Unix server market.) Further, like the
V-class, the Superdome can be clustered in groups of four for
supercomputing-class power for technical power users.

Will the Superdome help HP close the gaps in the Unix server
market? Definitely. Will it, along with the always-on paradigm, help reinforce
HP’s e-strategy and visibly transform HP into an Internet infrastructure
company? That is more doubtful. HP has not yet communicated a clear and
consistent Internet strategy that serves as the foundation for all its product
and tech divisions, unlike Microsoft and .Net. It looked like e-speak was it for
HP, but not quite: there was not a squeak about e-speak at the Superdome event.
"Well, we can’t cover all technologies at every event or product
launch," Zitzner said. Now, always-on could be HP’s new Internet age
mantra, but this is one act HP needs to get together fast

Prasanto K Roy in New York
City