HP Wants Midmarket to Get Shorty

The new product, dubbed the BladeSystem c3000 and nicknamed "Shorty" for its 10.5-inch height, is designed to run cheap and small. It plugs into a standard 110- or 220-volt wall socket and the blade enclosure, which can hold up to eight blades in a smaller frame with less cabling, fits tighter quarters—important when space is a major obstacle to growth. The c3000 is accompanied by available services called HP Solution Blocks that allow users to custom order a range of third-party ISV applications or order training and updates from HP.

HP also released a new storage blade—the SB600c—compatible with c3000 and c7000 enclosures.

With the c3000 rolling out immediately, HP believes that it has succeeded in designing a set of hardware and services for midmarket and midsize business, some 500,000 companies worldwide with between 100 and 1,000 employees it considers an untapped market for enterprise class systems, said Ann Livermore, executive vice president of HP's Technology Solutions Group, in an interview with eWEEK.

HP decided to create an easier-to-use system that gives companies enterprise-like computing and storage power on limited IT budgets, space and staff, Livermore said.

"Suddenly, what we see are a lot of midsize companies that need simple-to-manage but big, strong computing capabilities, and so we see a need for small IT sites that have big compute and storage needs," Livermore said. "They have a need for a lot of computing power but have a very small IT staff, and they have limited capabilities around power and computing and limited expertise around particular technologies …. What we are trying to do is hit that segment with this blade offering."

The new c3000, or Shorty, according to HP, addresses a number of these issues by reducing power and cooling costs, reducing the cost for companies looking to set up a SAN (storage area network) and simplifying the cabling. Midmarket IT managers can also use the Solutions Blocks for ordering systems with software application already built-in and ready to run.

Blades are certainly an area of great interest to HP, and the company is not alone. While not as large as the industry-standard, rack-mounted x86 servers, blades remain one of the most important segments of the market to top-tier OEMs. According to IDC's Aug. 23 survey of the server market, blade revenue increased 36 percent, with HP leading the way with a 47.2 percent market share. IBM placed second with 32.3 percent.

The trick now is to expand the blade market from the enterprise to midmarket and midsize companies that are now familiar enough with the technology to begin considering blades as an alternative to traditional rack-mount servers as one way to address issues of power, cooling and space.

Michael Speyer, an analyst at Forrester Research, said HP is already a credible player in the midmarket—IBM and Dell being its two chief competitors—and that technology such as the c3000 will help strengthen that position as the company looks to grow in this lucrative market.

"The midmarket . . . is looking for products that can deliver the [computing] complexity of the enterprise with the management complexity taken away," Speyer said, adding that storage is one area that both enterprise and midmarket companies continue to look to invest in. "A lot of it depends on how big the storage needs are going to get and this solution does give smaller businesses a nicely scalable data center in the box and a small form factor environment. HP is also offering critical apps such as CRM without having to go out and invest in a mini server farm."

That concept is also in line with HP's plans for its own adaptive infrastructure initiative.

"What we have done with 'Shorty' is move that whole adaptive infrastructure into this box," said Livermore. "'Shorty' has all the servers and storage and the technology around power and cooling inside it. It's got the interconnect technology inside of it. It has the management software inside of it. It has got the automation tasks around configuration management inside of it."

As a company, HP has been moving in this direction for some time. At its annual Technology Forum & Expo earlier this year, CEO Mark Hurd talked about the need to reduce the complexity of technology. The key to this, Hurd said, is using the technology HP has gained through acquisitions to create easier-to-manage products that use less power and require less daily maintenance.

HP is not the only company looking to expand its research into these small markets.

In June, IBM announced that it would offer a new BladeCenter S system, a six-blade chassis system as well as on-board storage and switch options, specifically meant for small businesses. Dell is also expected to roll out new blade architecture by year's end, which should add to the mix of options available to smaller businesses.

Still, HP appears to be in a good position to take advantage of the market.

The Palo Alto, Calif., company's third-quarter revenues, released Aug. 16, were $25.4 billion, an increase of 16 percent from the same time last year. Within its Enterprise Storage and Servers, or ESS, unit, HP posted revenue of $4.5 billion, a 10-percent hike over the prior-year period. During that time, industry-standard server sales grew 16 percent, with x86 blade revenue up 81 percent. Storage revenue grew 6 percent.

In her interview, Livermore said that IBM's BladeCenter product falls into the same problem as other servers—it takes existing enterprise technology and tries to shoehorn it into a midmarket product.

"One of the things we have seen is that [the midmarket] is an important and huge segment, but most of the time products get built for big companies and then [the vendors] try to [scale them] down for the midmarket," Livermore said.

As for Dell, Livermore said that another key to the midmarket is HP's channel, a subject that Dell is starting to learn about.

During last week's announcement, HP executives said that the company had about 5,000 channel partners throughout North America ready to sell the new blade architecture to customers.

Even through the c3000 is geared toward the midmarket, HP is not cutting off the enterprise market. Livermore emphasized that the system is equally up to the task of fitting into the branch or remote offices of banks, manufactures and giant retail chains.

Russ Stringer, a server engineer and disaster recovery expert with Blue Cross and Blue Shield of Alabama, oversees an enterprise-class IT infrastructure but is intrigued by the possibility of using the BladeSystem c3000 in his company's remote offices for either storage backup or creating a virtual desktop infrastructure using thin-client PCs.

Stringer has used HP c-Class blades in the company's main data center—the business is based in Birmingham, Ala.,—to save on power and cooling and to consolidate older, rack-mount servers. "As a company, we have made a decision to go to blades for space, power and cooling," Stringer said.

As for the new blades, Stringer said: "I'm looking at one and their standard power supply is 110 [volts], so I don't have to worry about pulling 220 [volts] into a remote office. It also allows us to use our stock of spare parts if something goes wrong."

Stringer plans on testing the new blades first before deploying them in different remote sites.

For HP's Livermore, Shorty looks to begin a new phase of the company's ability to offer a number of software and hardware products to the widest range of potential customers. As these midmarket businesses grow, HP can then step in to sell more advanced systems, such as its more advanced c-Class blades.

"It really brings everything that we have talked about, all the software and all the technology that we have been talking about, into the enclosure that we call Shorty, and because it's a blade, it has the ability to grow," Livermore said. "All midsize companies are looking to grow."

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