PALO ALTO - In an effort to improve its position in the midrange Unix server market, HP is cutting prices on its core offerings by about 20%, rolling out enhanced customization options and expanding its server capacity-on-demand program.
HP last Thursday announced price reductions for its HP 9000 midrange Unix servers, which includes the 16-processor rp8400 and the eight-processor rp7410 and rp7405. HP also reduced prices on components such as CPU and memory, as well as support by as much as 25%.
The company also is expanding customization options for customers and is taking its on-demand services a step further by offering cell boards and memory on an as-needed basis. Cell boards are what the memory and processors plug into and can hold up to four processors and 16G bytes of memory. In the past, customers had to pay for cell boards and memory that supported all the processors in the box, even if some of those processors were idle standbys.
Dimitris Dovas, worldwide marketing manager for midrange Unix servers in HP's Business Critical Systems unit, says the moves are in response to increased competition in the midrange Unix market.
IBM and Sun also reduced server prices earlier this year. HP holds the No. 1 spot with about 40% of the $1.9 billion market, according to IDC. IBM is second with 35% of the market, and Sun ranks third with 14%.
"There has been a lot of intense price competition in the midrange, and average sale prices have fallen," says Jean Bozman, research vice president at IDC.
"With the major vendors competing so intensely with each other and with the average price dropping in the midrange server space, customers are benefiting because they're getting a lot of value for lower prices," Bozman adds.
HP is working to reduce customers' total cost of ownership, and one way of doing that is to let customers pay only for what they use, Dovas says. HP, IBM and Sun all offer some type of on-demand services.
With last week's announcement, HP has extended beyond only offering CPU processing power as needed to offering memory and cell board capabilities on-demand. That means that customers can get servers with idle memory and idle cell boards and activate them as needed to meet spikes in workload, he says.
Customers pay a fee upfront and then pay for the hardware as it is activated, Dovas says.
HP also is taking advantage of increased supply-chain efficiencies in its factories to offer more customization options without additional charge, Dovas says.
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