HP Commercial Systems Division
|Leading a new lineup into
Winston Prather has spent the first year-plus of his
leadership in the 3000 community preparing for change much the
same mission he had when first joining the Commercial Systems
Division (CSY) more than 16 years ago. Back in 1984 he trained the HP
engineers in the field on the coming PA-RISC architecture and the new
MPE/XL operating system. Early this year CSY will unveil its first
systems ready to accept the successor to that architecture, IA-64.
The new versions of MPE/iX and the 3000 hardware will reflect the
rejuvenation of re-engineering, a mission that general manager
Prather and his division have performed far from the customer
Introducing a new architecture often means rejuvenating
a products value proposition. Few things can chill new sales
like an announced but unshipped product that is promised to beat a
current lineup for value. CSY has been more open about its future
than many divisions across the computer industry, in part because it
had to continue to dispel rumors of the systems decline.
Talking up N-Class servers all year, and A-Class 9x7 replacements
since summertime, has had an impact on installed base sales.
Prather was well-versed in the technical challenges of
leading CSY through this period, having spent four years on former GM
Harry Sterlings staff as R&D director. The nuances in
marketing and channels were his first set of GM lessons, he told us.
Few problems could be more vexing than maintaining sales momentum
during a bridge period for a 28-year-old computer line. The first
four months of Prathers reign involved preparing for Y2K, a
shift handled so smoothly that the expected terror was replaced by
yawns throughout the customer base, deprived of sleep but reporting
Now Prather sets his divisions sights on a year
with some economic uncertainties and thousands of aged 9x7 systems
being herded off HP support. The year also marks the end of the road
for the 5.5 MPE/iX release, the one most companies used as a safe
passage across Y2K. CSY means to sell a lot of computers to customers
who have maintained their 3000 investment by waiting for whats
new. This year the new gear arrives, the starting gun for sales
having been delayed by ample notice of better things to come.
In some ways, Prather has had a more challenging
mission than Sterling accomplished announcing and planning a
transition as Sterling did is one thing, something that took nerve
and optimism. But executing it, moving the customers through Y2K, and
away from widely-installed MPE/iX 5.5 at the same time is something
else. We spoke just before Christmas, when the stock market was being
hammered and doubts about the depth of the economys stall were
rampant. I asked him to talk about what its been like to do the
heavy lifting of the 3000 market from pre-Y2K to post, from PA-RISC
to Pre-IA, and how well HP 3000 customers have responded to HPs
shifts away from product focus.
What would you say youve learned the most about in
the first year-plus of the job?
Im an R&D guy, so Ill tell you what
Ive learned. The most learning for me has been on the sales,
marketing and channel side. I wasnt educated on how everything
went on there. Thats been the most interesting for me. I tend
to flock to areas where I can learn more.
Would you say that knowing the right thing to do in those
subjects is much more difficult than technical issues?
Ive been in discussions about the right way to
market the systems. Whats an effective way to market is an
More of an art, and less of a science?
I totally believe it is.
How do you think the cooling economic growth might impact
Its been interesting to watch the entire tech
sector talk about the slowdown. Its interesting times, shall we
say. Lets cross our fingers and hope for no big recession.
How would you gauge the impact of this past years
heavy lifting in rejuvenating the platform? Lots of work
has been going on, but under the surface. Did the lack of change, or
dramatic HP product releases, maybe lead to a slowing of 3000 growth
I dont think theres been a lack of
change. HP has not injected as much change as we did the year before
with 6.0, but if you look at the product offering customers have
available to them, I think its changed pretty dramatically,
specifically in the Internet space. A lot of the work has been done
by third parties trying to take advantage of customers moving to the
Internet. From a customers shoes, theres a lot of new
product offering. We put a lot of emphasis in two areas: Heavy
lifting in rewriting IO drivers, and we had a lot of emphasis in
Internet enablement. Theres been more change in that Internet
enablement space in the last year and a half than in a long time.
Ive said in speeches weve focused on
really making some fundamental investments. I wonder, do customers
think theres been a lack of new enhancements they can take
advantage of? Because when I go and talk to them, theyre
overwhelmed in the Internet space with the functionality they can
My assumption is that the growth of the 3000 business in
the last year was less than the year previous. We havent spoken
to resellers who are reporting a better year for 2000 than for 1999.
Hows the business been?
You probably know there are even more stringent rules
that have started over the past quarter with the Securities Exchange
Commission about what were allowed to say. I dont totally
understand the new laws, which actually leads me to comment less.
Each piece of data we give out has to be made available to everybody.
The guidance given to people like myself is to even say less.
But let me give you my take on this. I would say that the
last year has not met my expectations for what the business should
have done. And when I think about why, I think about the fact that
theres new products coming. You always know theres new
products coming, but they dont tell you when. Weve been
showing a road map that says were going to overhaul the entire
product line. Well, that causes customers to say if thats the
case, shouldnt I wait for that
I can only assume that were experiencing some of that
now, and Ive gotten that feedback from resellers. Customers
know that were close to announcing new product, and its
definitely impacting new sales.
It really is a difficult place to be in, isnt it?
I think were in a much more difficult place
than many other HP products. Because of the uncertainty from customer
perspectives about the longevity of the product, that has made us
want to be even more open with our roadmap. How many show a five-year
roadmap? I dont know of any. How many people show a one-year
roadmap? They dont, and the reason is that they dont want
to cannibalize sales. To try and give people comfort, we share it,
and I think it hurts us. Its a hard balance, and over the last
year we decided wed be open with it, so people would know there
was a long term future. Im sure it impacted our sales.
Especially in the timeframe were in right now, because people
think its right around the corner.
And now it looks like product introductions could come at
the same time 3000 customers are watching the economys changes.
I think theres a lot of built-up demand because people
have been waiting. How will it all play out? Talk to me in another
year. If I could tell you that, Id be making some money in the
I really believe as we enter the year and roll the product
line, its going to be in the best shape in years. From a
product offering view, I think were going to be in good shape.
Speaking of the product line, whats wrong with using
the L-Class servers for new HP 3000s? The L-Class looks like
its got a lot to offer on price/performance, judging from the
Unix system numbers.
One differentiator between the Unix and 3000 business
is that they have many more price points along the way than we do.
The volume that they turn justifies maximizing the gross margin with
as many different price points as possible. Since we dont turn
the same volume, there isnt as much need to have as many
different gross margin products. Now, that doesnt mean that we
wont support the L-Class. Thats also a matter of timing,
when things are available, and when we can make them available to
Whats important for customers is that we have a broad
range of product from a price/performance perspective. We have the
performance range they need and the price range they need. The fact
that we choose to do it with an N-Class at different price points
versus a different product is really an internal thing.
We should ask customers if they can get what they need. A
channel partner may wish we had 10 different pieces of hardware to
optimize gross margin. But Im looking at it from the
customers view. Were not all in business to make the
channel happy and let them make a lot of money. My scorecard
doesnt include The resellers love me because I let them
make a lot of money. I want them to make a fair amount of
How do you think having a single distributor to cover all
of North Americas resellers has helped the 3000 community in
the first year of the plan? Is every reseller getting the assistance
and resources they need?
The feedback Im getting is very positive,
although if youre hearing something else Id like to know.
I just met with a reseller a few weeks ago who was talking about how
they were new to Client Systems, and they liked it a lot better. They
believe from an operational point of view configurations,
order processing to time to get on the customers dock
Client Systems is doing just fantastic.
Is it part of a distributors mission to generate
demand for the platform?
I would say its not their primary job. Their
primary job is a fulfillment channel. They do provide services to
resellers that help with demand creation. Im not sure exactly
they do there. Theyve worked with resellers to take brochures
we create and customize them for a reseller.
Theres been some significant changes at Client
Systems since it spun off Collaboratek. Key staff have moved to the
new company,. How does CSY feel about the shift in managers from the
team which sold the division on being its only North American
I have only positive things to say about this. We
didnt hire [CEO] Pat Maley as our distributor. We hired Client
Systems as the distributor. Theyre a large company with lots of
capability. I know Pat and Evan [Westenskow, former Marketing VP] and
Gail [Pierce, former CFO] very well, but I also have a huge amount of
confidence in [current President] Mike Murphy. Theyve always
had lots of different irons in the fire, doing dabbling in ideas. Pat
always has been doing other things. A perfect example of that is
3kworld, exploring all sorts of different opportunities. Thats
a very positive thing that came out of that.
Has 3kworld lived up to your expectations so far?
Its lived up to mine, but Id love to hear
what the customers think. The idea behind it is that its a
place to go where you can find out all the information thats
going on in the community. It would be interesting to know what
customers, third parties and tool vendors think. Its another
place I go, like 3000-L is a place I go. I think it has. When it was
starting up I was less interested in any one of the particular ideas
and more interested in the theme in general: a one-stop portal for
the 3000 customer. I think theyve totally met that
CSY Europe gets to manage its business differently than
CSY in the Americas. This is an approach unique to CSY among
HPs server businesses. Why does this segment get enough elbow
room to run its own Web site and offer deals unavailable elsewhere?
Im just trying to do whatever we need to do.
Regions tailor everything to meet specific local needs. We try and
give all the regions that elbow room. Europe has a very different
channel structure. Theres good reasons for the tailoring:
language, currency, customs. They cause a need to have a very
localized program. If it was effective, I think youd see more
of a mass volume distribution model. From a cost point of view,
theres tremendous leverage in going that way. But its
just not effective in Europe.
Youve said that theres been more change at HP
in the past year than any other time during your career. How do you
believe thats that impacted the 3000 community?
There will be less focus on individual product and
more focus on meeting the customers needs. In the past, there
were times when you could see one sales rep in there selling one
product, and another selling a different product but nobody
completely looking out for what the best thing was for the customer.
Weve gone through a huge amount of internal change to make sure
we focus on meeting customer needs. Youve heard us talk about
83 different product lines. Thats whats going away. What
I believe youll see is much less competition between product
lines, and much more focus around how we can work together to meet
The vision is all of HPs product lines coming
together to best meet the customers needs. I know some
customers are already feeling the difference of seeing HP as one
company, instead of 83.
Weve been told that the HP 3000 business was one of
about 17 businesses that made the cut. True?
No individual product made it onto what we call
Product Categories. Servers is a category. Workstations are a
category. Storage is a category. Theyre very broad. Unix and
MPE and number of other server businesses are part of our server
category. There wasnt which product line gets to exist anymore.
Servers is the category where the HP 3000 exists.
Just the same, those corporate reports and analyst
briefings never seem to mention anything but the Unix individual
products. Were hungry for news of the 3000s successes in
HPs business report.
Theyre going to mention where the volume is:
printers, Unix servers, the larger volume products.
That 3000s lower volume is now a fact of life,
Yes, and I know this bugs a lot of people, but it
doesnt bug me. HPs annual report is targeted at
shareholders. It will talk about where we get the majority of our
revenue from, and then technologies.
The fact that the 3000 business is a much smaller business
than the 9000 portion is a fact of life. It doesnt bug me. I
understand that there are people who wish that wasnt the case.
But it just doesnt bother me the way it bothers some people.
Is it possible that those bothered people are worried
about a product that has lesser volume, and fewer mentions? What can
you say to them by now?
What helps me deal with this is when Im talking
to customers, they are much less concerned about this than when I
read 3000-L. Its a whole different world. 3000-L is a wonderful
group, about 2,000 people on it, but they are not representative of
the majority of our customers. Theyve very vocal and adopt new
technologies much faster than the rest of our customers. They are
leading edge, and lead customers to new technologies. But they also
are much more concerned about things than when Im out talking
to the CIOs.
can get highlights of issues that might come up from reading 3000-L,
but those issues never seem to come up when I talk to the CIOs.
Theyre interested in do you have a product line that will meet
my needs. Do you have a roadmap, and do you have the support, those
kinds of things.
And its not all of 3000-L. Its a subset of them
out there that are very vocal, very technical, very knowledgeable and
maybe amplify concerns. Many of them send me private e-mails and I
try to reply to as many as I can. Theyve been very helpful,
giving me heads-up on issues. Its a very important set of
customers. We do have to keep in mind that they dont
necessarily represent the sentiments of the majority of our
How is Channels on Tap progressing will it provide
new business for the platform in the next year?
Its a possibility, depending on which vendors
are hooking up with the program. The two that are participating are
Telenomics and Paymaxx. The objective is to link service providers
with application providers, so customers can have application
How about the Apps On Tap initiative?
The idea there is to hook up the ISVs and ISPs, and
HP helps facilitate the arrangement.
Do either of these programs present themselves as a major
source of new business for the 3000 in the year to come?
I havent thought about it that way. My view is
from a customer perspective. I havent thought about them from a
revenue perspective. I dont think thats the objective.
Its really trying to help the customer find applications and
deploy them however they want.
Do you believe the 3000 market needs additional
application partners to generate more business?
Would I like more? Absolutely. Do I think its
feasible to expect these ISVs to port to a platform theyre not
on now? To be honest, I dont. If I look at the industry
dynamics in general, I just dont see it happening. Which is
why, by the way, youve seen us invest in technologies like
Java. These will hopefully allow application portability without a
lot of effort. Theres nothing that HP can do on the 3000 to
change the industry dynamics. Our strategy has been to maximize the
ones we have, and at the same time invest in technologies that enable
Will that actually happen? I dont know. But
weve invested to the point that if it were to happen, we could
benefit from it.
Do you think new application partners are essential to the
continued growth and health of your 3000 market?
I dont think its as black and white as
that. What really does matter is much more the customers than the
applications. If customers continue to invest, then the platform will
be around forever. And if they dont, it wont. Thats
the fact of the matter.
know this isnt palatable for a number of the extreme
supporters. I work for a company that, to be honest, wants to meet
the customers needs and it doesnt have to be a 3000. As
much as I love the 3000 platform, Im here to meet a
customers needs using all the products that HP has. If we meet
their needs in the future with Unix or Linux, thats success for
Were less product-focused in our future than we were
in our past. Were going to be more focused on meeting customer
needs more than the success of any product line. Which I totally
believe is the right thing from a customer point of view. I consider
myself a part of that community of extreme 3000 supporters. From that
perspective, Im not sure how [the new focus] rubs me. But the
bottom line is that it comes down to what customers choose. And the
good news is that theyre still choosing the 3000.
How did this years dot-com meltdowns impact
CSYs growth plans?.
Theres probably a company you used to buy from
before the Internet buying that now sells on the Internet, too. I see
revenues shifting. The Internet pure play companies had no office.
Its now a catching up of the bricks and mortar companies. The
answer will be somewhere in the middle.
Do you think this mix will offer opportunities for the
Somebodys got to have computers, and
somebodys got to have Internet-enabled software. The real
indicator is going to be the economy in general. I have high
expectations for the year, because well have the best product
lineup weve had in a long time. Ill temper that with the
bad timing of the economy potentially shifting at the moment. From a
meeting customer needs perspective, I think well be in the best
shape weve been in for a long time.