On April 10, 2012, HP announced a comprehensive business cloud strategy called the HP Converged Cloud. Building on its existing portfolio of traditional, managed, and private cloud products and services for corporate IT organizations, HP is adding its first public cloud Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) offerings. This business cloud computing strategy is well suited for HP because it elevates rather than disrupts existing corporate IT models for customers and HP. It responds to rising customer interest in cloud computing while remaining focused on HP’s core strengths of IT managed services and premium hardware systems based on open industry standards.
HP’s most recent financials reveal just how fundamental IT services and enterprise servers, storage and networking hardware are to its business (HP Q1 2012 Net Revenues, $30.7B total):
Source: HP, 2012
With a quarterly run rate of $9B in net revenue and $0.9B in earnings from outsourcing, technology and consulting services fees, HP has the expertise, staffing, business processes and credibility to build and operate world class cloud data centers for its customers. With a quarterly run rate of $5B in net revenue and $0.6B in earnings from enterprise storage, server and networking systems sales, HP is heavily dependent on business and technology cycles that drive customers to replace systems on a regular basis. HP benefits from cloud adoption both when its customers buy systems for private or hybrid cloud environments and when they buy public cloud services delivered from HP or HP service provider customer data centers filled with HP systems.
HP’s Converged Cloud strategy aligns well with what organizations are looking to get from cloud computing and cloud providers. According to our Q1 2012 Enterprise IT seven-country survey, the most important factor when selecting cloud services and providers is the ease of managing the solution. Since the easiest type of management is relying on a trusted 3rd party to be responsible for management, HP will benefit from having a top management services practice that can itself exploit the HP Converged Cloud Architecture to manage public, private and hybrid cloud data centers for customers.
In announcing the HP Cloud Services Ecosystem partner program as part of the HP Converged Cloud, HP is asserting its position as a leader in the multi-player cloud ecosystem. This signals to HP’s current and future partners that HP is committed to a collaborative approach for pursuing cloud opportunities and responding to customer needs. HP describes this program as a step on the path toward an HP Cloud Services Marketplace that will offer customers the experience of purchasing HP and partner cloud services using one account and billing statement. HP’s new partner ecosystem is already enabling HP to elevate its portfolio far beyond its traditional managed Microsoft and SAP services. Launching this marketplace in the next year could prove to be the most important element of HP’s cloud vision in the long term.
For more analysis, see our Extended Enterprise Software Strategies Insight, HP Converged Cloud Manages Customer Needs and Its Own Strengths in the Cloud.
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