HP transforms into a software and services led company

HP CEO Meg Whitman
HP’s Q2 2015 financial performance demonstrates a continued slow transformation into a software- and services-led company.

In the Networking group, a soft quarter was masked by inorganic growth stemming from the acquisition of Aruba Networks. The acquisition injects growth into HP’s relatively stagnant enterprise WLAN business and delivers capabilities in analytics and cloud-managed Wi-Fi, enabling HP to capitalize on long-term growth opportunities as WLAN hardware becomes increasingly commoditized.

In addition to WLAN, HP is evolving its network functions virtualization (NFV) and software-defined networking (SDN) strategies to extend its value proposition for both enterprise and service provider customers. HP is willing to risk cannibalizing core hardware revenues to rank among the leaders in these disruptive segments.

HP’s large-scale NFV contract with Telefonica boosts the company’s standing in virtualization

As suppliers recognize the need for architectural and platform compliance, HP will be able to capitalize on that need with its OpenNFV Program, which pulls together its assets in networking, x86 servers and storage. A recent example is HP’s prime contractor role with Telefonica, for which it is providing its end-to-end OpenNFV solution as well as systems integration services as part of the operator’s UNICA initiative. The solution comprises HP’s Helion OpenStack and NFV Director for orchestration, servers, storage and networking equipment.

Telefonica has an aggressive road map for NFV deployment, and the operator is working closely with a range of vendors to build reference platforms and solutions for virtualized domains. TBR believes the high-profile deal will lend credence to HP’s NFV unit, which was created in February 2014, and boost the vendor’s standing as a viable option for NFV deployments.

Upselling legacy Networking install base to SDN solutions drives HP to a leadership position in SDN

Traditional network hardware vendors, including HP, seek to leverage their install bases to drive sales of new SDN-enabled solutions, which consist primarily of a combination of programmable hardware and SDN controllers. Hardware vendors such as Cisco and HP have the early lead in enterprise SDN due to their install bases and strong relationships with networking decision makers. Vendor market positions in SDN largely mirror their positions in the traditional network hardware market.

HP’s involvement in developing OpenFlow also helped the company establish a leadership position in SDN. Like Cisco, HP focuses on upgrading its legacy install base to new SDN-enabled products such as the FlexFabric 7900 series. HP continues to find new ways to strengthen its SDN market position, launching an SDN App Store and new open-source switching platforms in partnership with Cumulus Networks over the past year.

Michael Soper, telecom analyst at Technology Business Research
[email protected]

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