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Dave Wilde
e3000 Business Manager


December 2002

Moving the 3000 Into HP’s Gray Areas

Dave Wilde is leading HP through fresh territory in its final year of selling HP 3000s. The business manager for HP’s 3000 operations is overseeing the details of establishing a homesteading practice for customers who choose not to migrate. It’s work that serves as a counterpoint for HP’s assurances that all the pieces are in place for customers who must move their applications onto other HP systems.

After this year’s HP World, customers left Wilde and HP with a host of questions about what else HP can do to assist 3000 owners in staying on the platform. Emotion hadn’t cooled, as HP reported to some publications, but a practical dialogue began between the vendor and its customers about how homesteaders will manage in a world without HP’s resources. One persistent question began to surface, too: why HP wants to remain a force in a computer community where it will cease sales in 11 months, and end support in four years. It was just one of several queries we wanted to follow up on after the conference, during the months when HP is planning its next set of homesteading announcements. We spoke with Wilde in the weeks after HP World by phone, where he explained HP’s objectives in the 3000 homesteading market and what he’s willing to consider.

Why does HP want to force its customers to use HP hardware while running new MPE licenses on Intel-based systems? Why can’t HP let go of MPE?
The decisions are guided by a couple of factors. One factor is that we clearly want to retain a relationship with customers, to keep them as satisfied HP customers. Clearly as we move forward, we want to structure things in ways that are good for our customers, and continuing to play a part in our customers’ long-term satisfaction is important.

I recognize some of the concerns that people might have — on one hand, walking away from the platform, coupled with this may feel a little bit odd to people. But there’s a fundamental philosophy at play here. It’s important to HP that we continue to play a role in understanding the customers’ needs and in addressing those.

As an example, this licensing question that came up about the emulators: we feel strongly that going forward we’re going to have a market-leading offering in the server space. We would like customers who want to move forward with MPE to do that with HP hardware.

We said HP hardware. In the shorter run that could be HP PA-RISC hardware. It’s not only Intel-based solutions.

What’s going to make the HP solution a better deal for the customers, as well as better for HP’s sake?
We’re going to have a market-leading offering. Where customers are staying with HP-based solutions, it’s in the interest of the customers to have access to market-leading hardware.

Does HP still want these customers?
Yes. For customers who have a need to run things beyond HP’s end of support date, we’re trying to address things so they’re retained as HP customers. The things we announced which HP would try to enable after HP’s end of support date are really targeted at those customers who have more stable environments and smaller environments, and it’s more practical for them to run things beyond HP’s end of support date. It’s not our belief that’s going to be beneficial to or attractive to customers with large organizations, large applications and dynamic environments.

I understand HP’s beliefs haven’t changed. But is it true that you recognize some portion of your customer base won’t be moving away from the system?
Some of our customers have told us that they need more time to plan their transitions, and others have told us they do not intend to transition. They want HP to work on solutions, and work on solutions with our partners, to make that sort of environment more available to them.

Are you willing to recognize there’s a subset of your customer base that can’t afford to do this transition?
Yes. Their drivers are that it’s may not financially the right move for them, either because they can’t afford that transition or they’re deciding it’s not worth it for them to make the investment [in a transition]. We’re trying to have a set of solutions for them to help them address that, without going so far as to say we think that’s the right answer for the majority of the customers. We recognize there’s a significant segment, and we’re trying to be responsive to that.

Nobody has heard from a large enough segment of the customers to have a number that's representative, right?
Yes. I’ve heard different numbers, and I’d rather not get into guessing what the size of that segment is. I’d believe that it’s far from the majority, but it’s a very significant segment.

How soon can HP have a proposed MPE license fee in place, so the companies which are considering building a hardware emulator can gauge their market?
One of the things we said at HP World was that I prefer not to trickle information out one-off. It has a tendency to confuse the message and also tends to be inefficient in terms of getting substantive announcements to our customers. We were able to announce a solid bundling of new information, as well as consolidating that with existing information, and I like that model much better.

The model that seemed to resonate with the folks at HP World was roughly quarterly announcements, while providing updates when available. That would indicate around the end of this calendar year.

I will state, and I think this is important, that with this licensing HP is not looking towards structuring the MPE license to make the emulator financially unattractive to customers. We don’t want to state anything about particulars until we’ve thought the costs through and what some of the customer needs are.

Gavin Scott of Allegro said he thought it would be a lot more attractive to any company offering a hardware emulator if they could ship a demonstration version of the emulator off with enough MPE for a test. This involves someone shipping off MPE other than HP. Is that prospect possible?
I’m very open to different alternatives and approaches within the boundaries we announced at HP World.

The objective is to help make this solution work, right?
Yes. Another objective is to make sure that expectations are clear, so we don’t oversell and overset expectations for customers.

Are you willing to get into a position where HP’s just collecting royalties for MPE?
I’m open to lots of alternatives. There are many issues from a customer and partner perspective: legal issues and constraints in the future that we want to make sure don’t result in an untenable position for anybody. That’s one of the reasons we want to be, not vague, but non-specific at this point. We’re in a gray area we haven’t been in before.

What’s HP’s position on third parties taking over portions of the delivery chain beyond the end of sales date next Oct. 31?
We’re working on partners with different elements of the value chain. That’s something we’re definitely doing in the transition space. Another area is remarketed systems, and we have a very strong relationship with Client Systems’ subsidiary Phoenix Systems. We’re definitely interested in working with them. We’re open to documenting what we’re doing so customers and partners’ interests are also protected, along with HP’s interested.

Documenting what?
Suppose the emulator runs on HP solutions. We want to make sure partners aren’t left in a bad position in case HP makes future decisions that are inconsistent with that announcement. We’re very open to different arrangements, subject to representing reasonable business needs from HP’s perspective.
The point is that I’m very open to needs not just from HP’s perspective, but also from a customer and partner perspective. We’ll be working with the OpenMPE group and with partners and customers who are expressing concerns.

What’s the thinking behind maintaining the current pricing model for current A-Class performance?
Doing things like releasing all the horsepower that’s available in one chassis has a ripple effect that’s not acceptable for the pricing model. But we’re heard that customers who have bought into an A-Class chassis may some needs for more upgradability. One of the questions we asked was if there was a price associated with an additional upgrade within an A-Class chassis, would they be interested? That’s a price consistent with our overall pricing model. There seemed to be some interest in that which we’ll continue to look into.

Is this a way for a customer to avoid having to find an N-Class system to upgrade to after HP’s sales of N-Class systems stop?
Yes. If there’s enough interest and demand, and we can structure it in a way that it fits in well with our established pricing model, it’s something I’d be open to trying to structure.

Why so much attraction to a pricing model that was conceived before HP decided to leave the 3000 market?
It just isn’t practical for us to restructure the pricing model. We feel we structured it in a way that there’s appropriate value in the system for what we’re delivering. It’s a reference to purchases that have already been made.

You recently made a healthy reduction in that cost to customers with the new pricing. Why not continue in that with the A-Class?
Within limits we’ve obviously tried to offer strong value while recognizing the customers’ expenses they’ll be incurring through these transitions.

Is simplifying HP’s support through such an upgrade — which would give the 6.5 customers something to upgrade to in December 2004 — a factor in creating an A-Class upgrade?
There might be some impact there. But there’s enough customers in different segments that some customers incrementally going to upgrade probably doesn’t fundamentally change the support picture from HP’s perspective. What’s more meaningful to me is if it gives customers more degrees of freedom.

How long do you think CSY will continue to operate as a virtual entity with HP after 2003?
CSY is the value chain that delivers 3000s to our customers. In that respect, it exists though 2006. How it’s managed internally is a subject that nobody can predict. From a customer perspective, for me the goal is that customers would see a 3000 business orientation through HP’s end of support date.

What’s the contact for that virtual CSY beyond end of sales? It’s looking like the reseller channel will be folding its tents next year.
From a channel perspective, what’s the contact point? We’re working closely with Client Systems in the Americas to identify different ways they can support customers. We’ll be continuing to work with all our partners. We’ll need to stay tuned as things move forward.

From an HP perspective, I’m the business manager, and I’m the go-to guy. We’d like to make sure the virtual CSY value chain is also represented cleanly and consistently to our customers. Exactly how that’s implemented over time may change. It works best where our customers would be able to work with HP in a centralized fashion.

Having said that, I continue to feel like I have an important role in adding value.

What about you? How long do you want to be the 3000 go-to guy?
I basically want to do this as long as two things are true. One is that I feel like I’m continuing to add value, and that HP wants me to continue doing that. Whether that’s months or years, nobody can predict. There’s no timeline for the end of that right now.

I didn’t expect a few years ago to be in the business, let alone in this particular role. Things have worked out in a way that I’m pleased to be in this role, and feeling like I have an opportunity to add value. It’s hard to tell these days what the future holds. Things are changing very quickly, both inside and outside the company.

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