Hewlett-Packard wants to remind everyone that it's still in the high-end server business. It wants you to know that since its blade-ish Superdome machines shipped at the beginning of the fall, sales are ramping up in line with competitive RISC/Unix iron from IBM and Oracle/Fujitsu.
HP's PR machine, looking for something good to say about its Business Critical Systems division – which peddles the high-end Superdome and entry and midrange Integrity blade and rack servers as well as selling and supporting vintage AlphaServer, HP 9000, HP 3000, and NonStop gear – says that in the final quarter of its fiscal 2010 year ended in October it shipped nearly 400 of the Superdome 2 boxes.
HP is pretty much the last of the Itanium server makers and supports its HP-UX, OpenVMS, and NonStop operating systems on the Integrity and Superdome boxes. Windows Server 2008 and RHEL 5 are the last Windows and Linux releases supported on any Itanium servers, and HP also supports these on the Integrity and Superdome machines either as the sole operating system box or on its home-grown IntegrityVM virtual machine hypervisor.
In its most recent financial report, HP said that sales in the Business Critical Systems division rose by 10.1 per cent to $695m. While this is a huge improvement, the Itanium-based machines are utterly dwarfed by sales of ProLiant and BladeSystem machines based on Xeon and Opteron processors, which accounted for $3.53bn in revenues in Q4 and which grew by 32.3 per cent compared to the year-ago period.
Let's take a look at some history of fourth quarters at HP for the BCS unit. BCS was a considerably larger and more important business for HP back in 2004, when the unit had $1.03bn of sales in the fourth quarter of that year. (Itanium-based machines were only $161m of that total six years ago.) Two years later, BCS sales were $987m in Q4 2006, but Integrity's share had grown to $444m. In Q4 2007, BCS bounced up to $1.02bn and in Q4 2008, as the Great Recession was taking hold, it fell to $935m but Itanium-based machines accounted for 83 per cent of revenues.
In 2009, there was no recovery for Integrity machines at HP because of Intel's successive delays in bringing the "Tukwila" quad-core Itanium 9300 processors to market. The delays in new iron - which usually also have better pricing in the server racket as well as much better bang for the buck - coupled with the weak economy hammered the BCS product line, which had a 33 per cent revenue drop in Q4 2009 to $631m.
The point is, a 10.1 per cent bump to $695m is great, but it is not as large a bump as what HP needs to get BCS back up to its former $1bn or so normal for a fourth quarter. The vast majority of HP's BCS sales are driven by its HP-UX Unix variant, and all of the Unix vendors are being crunched on the revenue front and have long since seen their shipment numbers massively compressed. The RISC/Itanium Unix racket is lucky to have 50,000 unit shipments per quarter these days--compared to well over 2 million units for x64-based boxes. Those Unix boxes are generally more scalable, but they are also a hell of a lot more expensive, too, and drive very tidy profits and expensive (and very nearly captive) software stacks.
Still, HP has a right to be optimistic in that the Superdome 2 machines are getting some traction, despite all of the Itanium bashing that goes on in the IT press and analyst community. The HP-UX-Itanium combo is no less tenable from a technical or economic standpoint than IBM's Power-AIX combo or Oracle's Sparc/Solaris combo. All three are seeing dwindling sales, as the latest numbers out of Gartner yesterday for calendar Q3 server sales show. The good news for HP is that it has the dominant position in Xeon and Opteron server sales, but the bad news is that its Integrity and Superdome businesses do not throw of the kinds of legacy profits that Big Blue's mainframes do.
Lorraine Bartlett, vice president of worldwide marketing, strategy, and operations for the BCS unit, told El Reg in an email exchange that the Integrity blade servers, which were announced at the same time as the Superdome 2 machines back in April, are picking up steam, too. Bartlett would not supply numbers, but said that sales of Integrity blade servers more than doubled sequentially from fiscal Q3 to Q4 and that the vast majority of Integrity blade servers sold in fiscal Q4 were using the quad-core Itanium 9300s. El Reg drilled down into these SMP-capable Tukwila blades here and walked you through the HP-UX price cut on the new blades in May.
With the price cut on HP-UX 11i v3 for the new Integrity BL860c i2, BL870c i2, and BL890c i2 blades as high as 50 per cent per socket and hardware prices staying more or less the same as prior Integrity blades but yielding twice the oomph, it is no wonder the business is doubling sequentially. The question is, how long can that revenue stream keep roaring?
IBM is asking itself the same question about Power7 servers and System zEnterprise 196 mainframes, too. It is hard to say what Oracle and Fujitsu have planned for their big Sparc iron, since as far as anyone outside the companies knows the two have not yet come to an agreement about future Sparc chip and system development. Maybe that is part of the Sunrise SuperCluster announcement coming up later this week. ®