Cloud

What HP's walk away from the client signals about the future

John Joyner considers HP's recent surprising announcements about canceling the Touchpad and off-loading its PC/laptop lines. What does this step away from the client mean for the future?

Unexpected in their timing, recent announcements by HP that it is cancelling the Touchpad, and looking for "strategic alternatives" to the HP line of desktop and notebook computers are not so surprising. HP is responding early and decisively to the megatrends of cloud computing and IT consumerization. I agree with early analysis that these are good long-term decisions for HP, positioning HP for the higher-margin opportunities of enterprise software and services, in an IT world of user-supplied computing devices.

This move away from the client platform means HP sees its future in other slices of the information worker ecosystem. A megatrend towards cloud platforms for businesses of all sizes means that a conventional IT network will evolve into a scenario where client devices of various types connect to private, hybrid, and public clouds to get work done.

If you don't provide the client, there are two remaining hardware pieces of the ecosystem: The server and storage components that create the cloud environments, and the networking components that connect devices to the cloud. While the demand for conventional desktop PCs is expected to decline over time, there is no horizon yet in the continuing demand for cloud and networking components.

HP goes after the cloud

The largest public cloud providers such as Google and Microsoft operate with ultra-high density, massive-scale server farms built with custom hardware. Customers ready to migrate their IT off-premise can run their whole operation in the public cloud if that suits their business. For example, Microsoft's Office 365 combined with Microsoft Windows Azure and SQL Azure can completely replace on-premise servers for some organizations.

HP only loses business in this model-unless they are providing the consulting and management services that help transition their customers to the public cloud, and possibly writing native cloud applications for customers. Management and architecture of hybrid clouds (that combine public with private cloud elements) is a nascent industry where HP can lead from a consulting perspective, as well as profit from the private cloud hardware pieces.

Then there are the many organizations that can't or won't migrate to public clouds, but will be compelled by economics to either build private clouds, or migrate to a private cloud hosted by a trusted service provider. In these private cloud scenarios, HP is already a market leader as a server and blade server vendor; see in Figure A the impressive 50% market share for HP blade servers in the first quarter of 2011.

Figure A - HP dominates the market in the Blade Server category with 50% share in the first quarter of 2011.

Private clouds consist of storage, compute, and networking ‘fabrics' designed to rapidly provision and scale servers and applications on demand. Blade server enclosures efficiently bundle those fabric elements, and are the ideal private cloud platform for many organizations and service providers.

Modest impact on PC sales, opportunity for others

An administrative convenience for enterprise customers, and often with cost savings, was the bundling of Server, Infrastructure, and PC sales and service from HP. There is an appeal and logic to getting your PCs, network switches, printers, wireless access points, servers, and storage all from the same hardware vendor. When HP drops their own line of PCs, organizations ‘locked into' the all-HP stack will be forced to make a decision.

Of course, we don't know exactly what HP's plans are for their Personal Systems Division. A possible scenario is a "Compaq" brand that is sold or spun off, and follows essentially a path like IBM and Lenovo. In that scenario, future business owners could buy Compaq instead of HP PCs, and not sacrifice much in the way of quality and features. There could be a modest increase in the per-PC cost for organizations that previously bought their servers, infrastructure, and PCs from HP in ‘big buy' deals.

Dell and Acer, the remaining U.S.-based PC vendors, would be the obvious beneficiaries for organizations that did not choose to buy ‘Compaq' PCs. In any case, the PC buying decision is definitively decoupled from the server and infrastructure buying decision. The opportunity is also there for organizations to embrace consumerization as an alternative information worker solution.

The end of the high end managed desktop

A final possible strategic implication of the HP announcements is a hastening of the end of the "Enterprise Desktop" as a predominant information worker platform. Here I'm talking about the high-end desktop PCs that are purchased and sometimes carefully managed in fleets, expected to last five or more years. HP has always been the market leader in this PC segment.

HP continued Compaq's legacy of offering PCs that cost three to five times what PCs cost in your local consumer PC outlet. Besides having 3 year on-site hardware warranties, these "industrial strength" PCs were optimized for remote management using technologies like wake-on-LAN, predictive hard drive failure alerting, and featured rugged construction and heavier metal chassis.

These long-lived PCs in fact offered the lowest Total Cost of Ownership (TCO) to a business that did want to standardize on software images for just a few hardware models with long availability and support lifecycles. But even that low TCO is still a lot higher cost than not trying to deploy a standard desktop or notebook PC and software image at all. Table 1 may get you thinking about some of the implications of the consumerization of IT.

Enterprise Desktop Consumer Devices in the Business
100% Employer-provided hardware Employee brings and supports their own devices
100% Employer-provided software Mix of employee and employer-provided software
Wired to the LAN, always the same network Wired or wireless, roam across networks
Gigabit speed on the LAN Variety of speeds including wireless phone
3 to 5 year lifecycle management Employee may change devices frequently
Conventional ‘fat' client/server applications Web-based and/or cloud aware applications

Table 1 - Implications of Consumer Devices as Enterprise Desktop replacements

There are some industries, such as healthcare, financial services, and government, where consumerization is not expected to work. The business will always need to provide the hardware and software for sensitive industries. However, for many other firms, there may arrive a logical tipping point where it is an easy decision to allow, encourage or even require employees to provide their own client hardware!

About

John Joyner, MCSE, CMSP, MVP Cloud and Datacenter Management, is senior architect at ClearPointe, a cloud provider of systems management services. He is co-author of the "System Center Operations Manager: Unleashed" book series from Sams Publishing, ...

20 comments
birumut
birumut

Great!!! thanks for sharing this information to us! sesli chat sesli sohbet

Michael Kassner
Michael Kassner

HP is kicking Cisco's butt in networking, particularly since they bought 3Com. They want to own everyone's networking hardware.

bentbrewer
bentbrewer

I've had the suspicion for a few years now that they would get out of the home market. In my experience, they are the number one product requiring hardware support. They easily brought me a few hundred dollars a month in resolving hardware issues for my small private computer support business. I am not sure if the home laptop total cost of ownership is tracked but HP's consumer laptops have to be one of the most expensive.

Charley.McGee
Charley.McGee

Well, I guess HP still wishes it was IBM who, by the way, dropped its client systems YEARS ago. Anyone remember the Personal Systems Group? I have to admit, I just cannot get all worked up about "cloud computing". It is just the modern term for centralized processing services. We used to do that with big iron. Now we can do it in a single rack (or less). Ah well....big wheel in the sky keeps on turning.

jjheinis
jjheinis

HP's greatest mistake was when Carly F. spun off HP's scientific instrument division (now Aligent). It was a cash cow. Instead, she went for the commodity market which is haunting the remains of the original successful company.

geek49203
geek49203

I guess I don't understand the terms here. I thought that "the client" aka "the customer" was the entity (corporation, government, etc) writing the checks? I guess I saw them running away from the Consumer. And quite frankly, having worked HP's phones the first day that HP launched the Pavilion computer series, I never did understand why they ditched their high-end corporate stuff (ie, their medical division) in favor of $69 printers and $800 computers. Then again, I rarely agreed with anything that HP did in that era.

jdb
jdb

My small consulting company only sells HP Servers, Desktops and Printers. We do so because HP offers us a complete line from a single vendor. If we can not get HP PCs, we will look at options I'm sure Dell will be happy to be our single source. I think it short sighted for HP to cut off the revenue from desktops when some of their more profitable divisions will also loose.

Charles Bundy
Charles Bundy

"Employee brings and supports their own device" You may not have a standard hardware footprint, but you can still have a standards based service and security posture. Even assuming you mean an employee can "technically" support their individual device, that doesn't mean they should be making decisions about AV, administrative access, firewall, document interchange, et-al.

Konrad Frank
Konrad Frank

It depends how smaller competitor like ECT, stay on the market and will get their share of the cake. Because the real innovation is made be the small company. Thats the reason why Cisco bought 3Com.

bkindle
bkindle

just installed a new 48 port gigaswitch today from HP/3Com, it's a beast, and quite too!

chrisbedford
chrisbedford

I'm sure if you did a more scientific analysis than "I am not sure" you'd find that you just have a higher exposure to HP-branded kit. And even if not, your sample-of-one statistics don't carry a lot of weight in the face of the billions of $$$ of sales HP makes every year. In a recent survey right here on TR the big manufacturers of end-user computing stuff were all fairly even, but (and I don't bother remembering details like this) I seem to recall that at least three other vendor's hardware were rated as less reliable / more likely to be back in the shop / more expensive to own. Just for the record, overall my customers' Acer laptops have been much more expensive to own, followed by Mac and Sony.

person125545
person125545

totally agree, and 'cloud computing' should indeed remain in inverted commas! Of course eventually the trend will be for companies - or individuals- to realise they can run their own 'cloud'..

bkindle
bkindle

HP has had a leadership problem for many many years now, and this guy from SAP is carrying on the legacy. But when you are brand loyal, it seems to always come back and bite you in the .........

bni1369
bni1369

Within 2-5 years from now, the only I/T Department(s) will be Administrative Assistants who will assign, maintain and add / delete LAN accounts, add / delete cloud-based company apps, and approve / disapprove LAN accounts based upon security parameters that will be pre-configured by the particular 'cloud' itself. There will be no need for an I/T manager???s approval for firewall access, no need for an I/T Department's input as to what apps are approved or how they are implemented, no need for an I/T Department's "take" on software, applications, security matters, etc, etc. Like it or not, the days of 'conventional' I/T Departments are quite over. What is ???in the cloud??? will be largely automated and outside of the control parameters we currently deal with every day. This will have two major effects: first, the need for extensive anti-malware protection on server, desktop systems and portables will be negated, as most of those systems will be replaced by virtual machines; second, security will, again, be controlled mostly by the purveyors of ???the cloud??? that is being used as a provider (say, AT&T, RIM, Wuala, Ubuntu1 or Dropbox for example), thereby negating the need for (sigh..) an I/T Department. You say I???m being a pessimist? Well, I???ve been in this game a long time and I see clearly where this is all headed. The ultimate goal is simplicity. Simplicity = lower cost(s), less breakage, fewer purchases, more easily achieved redundancy (as in backup), and less room for intrusion. Yes, I agree that this is not a ???perfect scenario???, but it is happening.

JSHolliday
JSHolliday

I think the BYOD (Bring Your Own Device) is a solid plan for companies that have implemented so sort of VDI (Virtual Desktop Infrastructure). Then you run something simple like Citrix Receiver, let them access their desktop from any device (tablet, workstation, laptop, smart phone). I think this type of solution provides the employee with anytime/anywhere access to work while mitigating some of the infrastructure costs inherent with having company owned assets such as laptops and desktops.

seanferd
seanferd

Entirely anecdotal: I've now seen 8 new HP laptops with drive controller failures. Annoying, and a loss of time and productivity to have to take it back for a new one. But when the warranty is up, all you have is a doorstop or an expensive repair. Makes me wonder whether HP has been doing on purpose. :p

Charles Bundy
Charles Bundy

to have watched several cycles of distributed versus centralized computing initiatives. And no matter where we are on the roller coaster business wants accountability. And in all the hype that is the one thing cloud computing doesn't seem to provide! My take? Just like the Internet, core technologies and ideas from the Cloud will be internalized to provide accountability...

Lazarus439
Lazarus439

I think BYOD will work only in dispersed, mobile work forces. If the company requires the employees to work at the office, it better be prepared to provide the tools necessary for the work to be done. I.e., if I have to come to your building, don't expect me to bring my own computer/iThing/etc.

bkindle
bkindle

I have seen different brand PCs/Laptops have the same brand and size of hard drive, and both have the same issue - similar component that goes bad. A lot of people immediately place blame on a major brand such as Acer/HP/IBM/Dell/etc, etc, and fail to place the blame on the component manufacturer. It's the quality of hardware components used, not necessarily the name brand.

Lazarus439
Lazarus439

Just like the "Paperless Office" and the "Year of Linux On The Desktop". Some organizations will move to the "cloud", but I think it will only be those who corporate culture and business processes are compatible with it - and whose regulatory environment allow it. I also think the hype about the cloud ignores show stoppers like industry-specific or data-intensive applications that go beyond the typical "office" suite (email, word processing, etc).

Editor's Picks