Dive Brief:
- Hewlett Packard Enterprise (HPE) will no longer sell "custom-designed commodity servers" to its "tier 1" customers, said HPE President Antonia Neri on Wednesday, reports Fortune. Neri, who was appointed president in June, said production and retail of "higher-end" servers will continue.
- Customers such as Microsoft and AWS have now outsourced to low-cost server providers in Taiwan or China, according to the report.
- Hardware built for storage is becoming an increasingly difficult market as more companies are transitioning data storage from onsite servers to cloud-based storage through Microsoft, AWS or Google. IBM sold off its Intel-based server business to Lenovo in 2014 because of the decline, according to the report.
Dive Insight:
HPE struggled to make the transition from selling conventional hardware to digital storage options, and its profits reflected that. HPE CEO Meg Whitman continues to make innovative pushes to maintain HPE's competitive edge in a transitioning technical landscape.
Profits continue to decline for HPE in June since its split from HP in 2015. The initial decline was said to be from the split as well as losing business from Microsoft. Last year Microsoft reportedly bought between $2 and $2.5 billion of HPE servers.
The company has continued to streamline its portfolio. For example, HPE sold its software assets for $8.8 billion to Micro Focus in September. Profits for Q3 improved by 3% year-over-year with the acquisition of Cloud Technology partners and cost cuts within the company. The company wants to continue its strategy of simplifying hybrid IT, powering the "intelligent edge" and offer necessary services for these goals, according to Whitman.
HPE's discontinuation of tier-1 designed server sales falls in line with the companies efforts to adapt to changes and create solutions tailored to its clients.
