HP struggles as Dell and Cisco push enterprise servers

HP struggles as Dell and Cisco push enterprise servers

HP is continuing to suffer as a result of Oracle dropping Itanium support while Dell’s enterprise strategy gains momentum, according to the latest market data from Gartner.

The company posted worldwide server supplier revenue of $3.7bn, 28.7% of the total market share for the second quarter of 2012, although revenue was down compared to last year.

Adrian Connell, a research director at Gartner, said,  “HP is having a challenging time (see box below). The business is suffering from weak Unix sales. HP has been suffering since Oracle said it would not support Itanium.”

In spite of winning a legal battle to force Oracle to continue Itanium support, HP was looking to increase the mission-critical aspects of its commodity x86 Proliant PC server platform. “The challenge for HP is to migrate customers from Itanium to x86,”  he added: “HP has always pushed the envelope of the x86 platform.”

Connell predicted that over time businesses still relying on high-end Unix servers will migrate to Windows Server and Linux–based x86 PC-server hardware.

HP is also coming under pressure from competitors in the x86 server market. Dell has been growing particularly strongly and Cisco with its unified computing system (UCS) is making inroads in the server blades market, where HP has previously been strong, according to Connell.

Over the last few years, Dell has been trying to become more enterprise-focused. Connell said, “Its product portfolio is very different compared to three years ago. Dell has also transformed how its sales force engages with customers. In the last few quarters we are seeing concerted benefits.”

Microsoft reports first loss since 1986

Microsoft reports first loss since 1986

Microsoft reported its first operating loss since the company went public, during its results call last night.

The software giant made some revenue gains in the fourth quarter of 2012, rising 4% year-on-year to $18.06bn, but it also reported an operating loss of $492m, equivalent to $0.06 per share.

The main culprit for the loss was online advertising service aQuantive. Microsoft bought the firm back in 2007 for $6.3bn in an attempt to compete against Google’s massive advertising revenues, but the acquisition never paid off and the company suffered a write-down of almost $6.2bn for the impairment of goodwill – touting the business as more profitable than it was.

On top of this, Microsoft also had to defer $540m of revenue related to an upgrade offer on its Windows operating system (OS), again leaving it out of pocket.

Steve Ballmer, CEO of Microsoft, did not want to dwell on the figures showing the first loss for the company in 26 years, but wanted to reassure investors the launch of Windows 8 in October would put the firm back on track.

“We’re fast approaching the most exciting launch season in Microsoft history,” he said. “Over the coming year, we’ll release the next versions of Windows, Office, Windows Server, Windows Phone, and many other products and services that will drive our business forward and provide unprecedented opportunity to our customers and partners.”

Peter Klein, chief financial officer (CFO) at Microsoft, added: “We are focusing our resources in strategic areas that will deliver shareholder value and long-term growth opportunities.”

Although the Windows and Windows Live divisions suffered, other areas within Microsoft shone during the quarter. The server and tools business grew by 13%, due to more sales of its SQL Server and System Center products.

“Our enterprise business is firing on all cylinders and we couldn’t be more excited about the wave of innovation and new releases that position us well for the coming years,” said Kevin Turner, chief operating officer (COO) at Microsoft.