HP's Livermore Talks Services, Targets IBM

HP Americas Partner Conference

"We want to be the best of all companies in helping customers get the best out of IT," she said.

Services, regardless of whether they are provided by HP or its channel partners, is the key area where solution providers can improve both their revenue and margins, Livermore said.

"We want to work closely with you to make sure you use our services to extend your reach, and we use your services to extend our reach," she said.

Victor Villegas, director of marketing and alliances at Adeara, a Sunnyvale, Calif.-based solution provider, said that hearing vendors talk about services is always a tricky subject from a partner's point of view because solution providers also offer services.

"But her message was not threatening," Villegas said. "Our billable services staff is fully booked. It's nice to know HP is there to help when we need it."

Thanks to IBM's selling of its PC Division to China-based Lenovo, HP is on track to break Big Blue's long-standing streak as the No. 1 IT provider by year-end, a possibility that was not lost in Livermore's keynote address. "This is a great opportunity to talk to you about how we're going to kick IBM butt," she said.

It was nice to hear Livermore discuss beating IBM, said Ken Faircloth, senior account manager at KTI Kanatek Technologies, an Ottawa-based solution provider. "IBM is the bogeyman," he said. "But it would also be nice to hear more about how HP will beat EMC."

Villegas said that by mentioning only IBM, Livermore was focusing on the main competition for HP and its channel partners. "She wasn't bashing IBM," he said. "But it is clear her main competition is IBM. She didn't mention anybody else. It makes it clear to us what to do next."

In a meeting with CRN after her keynote, Livermore said that, for solution providers looking to add a new services practice or increase their existing services capabilities, the first place to look would be to attach services to the products they already sell. "When you sell a ProLiant [server], along with it sell storage or support service," she said. "And if you sell services with every ProLiant that you sell, or along with every blade system, that creates an annuity stream where you can then keep renewing the services on an on-going basis."

HP also sees a lot of interest from managed print services, Livermore said. "Partners who have expertise in HP printing and imaging products, a good set of services is around managed print services and helping the customer do with printing what many do with the desktop, managing the whole lifecycle. Being able to do the design, the implementation, the management and support of the printing to drive down the operations costs for customers."

HP is also very focused on providing services for its mission-critical servers and storage and related mission-critical applications, Livermore said.

Going forward, HP is doing a lot of work today around application modernization, which is taking a customer's installed application base and either updating those applications or moving them to more of a service-oriented architecture. "We've done a lot of work associated with that," she said.

HP is also preparing to roll out new services aimed at the desktop space this Fall, but is not yet ready to discuss specifics, Livermore said.

"But broadly, there isn't as much support and services sold around the PC environment compared to what customers need," she said. "But we find customer examples where their cost of ownership is awfully high because they don't support their PC environment very well. So we think there are a lot of opportunities to improve that working through our channel partners." One of the most strategic products for HP going forward is in the blade space, Livermore said. She cited analyst reports predicting the blade market moving from $1.2 billion last year to $2.5 billion this year and $10 billion by 2009.

HP is strong in the x86, Unix and storage space, which comes together in a blade enclosure, Livermore said.

"Think about what you can blade," she said. "You can blade Unix. You can blade x86, whether it's Windows or Linux. You can blade storage. You can blade PCs. They're all inside of a smart enclosure that has power and cooling and management and virtualization built in. And suddenly, there's the HP portfolio, all on a blade."

Nobody else has that full range of components, Livermore said. "If you look at us vs. IBM, we have a bigger, better volume product business than they do in terms of x86 and PCs. They don't have a PC business anymore. So now we can do things at the cost structures of PCs. If you think about a bladed solution, it's basically a data center in a 17-inch box."

Because IBM lost its PC business, it is also losing out on the opportunity to take advantage of PC cost structures in its server business as well, Livermore said.

"A one-processor x86 server, it's a PC on its side," she said. "When you basically think about what's inside of it and the cost points you have to get to, we think our competitor who decided to exit the PC business is going to come back and feel that. Because you're going to need the same pricing capability, the same low costs, the advantage in buying in volumes of components, to win in the low-end of the x86 market."

Even so, while HP's largest competitor in terms of overall portfolio is IBM, her company does not take any competitor lightly.

"One of the biggest mistakes a business leader can make is to take any competitor lightly," she said. "Because even ones who may be struggling or weakening at some point in time, you gotta watch out for them. So we're not solely focused on IBM. But they certainly are a very big competitor for us."

When asked about Sun, Livermore did not refer to that company by name. However, she said she has seen very unusual pricing actions across the board — to retain an installed base or get a new footprint — from struggling vendors.

"Companies that are struggling to gain back share sometimes do odd things," she said. "Or they sometimes compete in a more aggressive manner. So it's hard sometimes to predict the behavior of a wounded animal."

HP can be aggressive when it comes to opening new accounts, Livermore said. "But no one questions HP's viability," she said. "And no one questions whether we're going to continue to be the top or one of the two top players in every segment of storage and servers. We've got the credibility and pure market strength. So companies don't question about whether we're a good purchase now, or five years from now."