HP Launches $1 Billion Operation Crescendo Windows Server 2003 Upgrade Offensive

Hewlett-Packard is launching an all-out offensive this week, code-named Operation Crescendo, to capture $1 billion in sales from the Windows Server 2003 end-of-life upgrade opportunity.

"We are all over this," said Hewlett-Packard Enterprise Group Vice President Chuck Smith in an interview with CRN, detailing what HP is terming HP Focus week for Windows Server 2003 upgrades. "The theme is 'One Week, One Message, One Billion.' This is all about driving significant opportunity for HP and our partners."

Among the most compelling offers for partners, Smith said, is free advisory engagements that the channel can sell and deliver; server rebates; and operating system licensing offers.

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The goal is $1 billion in sales or more for HP and partners as customers move to upgrade in the wake of a firm Microsoft pledge to end technical support for Windows Server 2003 effective July 14, 2015. HP sees a huge opportunity to upgrade customers to Windows Server 2012 on HP Gen9 servers.

The $1 billion opportunity for HP and partners is not a stretch given the widely held estimates that there are up to 20 million Windows Server 2003 licenses on the market, said Smith.

"The $1 billion number doesn't scare us," he said. "The $1 billion number is based on server refresh along with software licensing, new operating systems, advisory services to help customers migrate and support for the migration. This is all about server transformation." The Microsoft technical support termination is expected to spark a race by the vast majority of the estimated 2.3 million customers still running Windows Server 2003 to upgrade to a new server infrastructure.

Among the special offers from HP: five free HP EliteBooks, while supplies last, for customers that spend $30,000 in Gen9 hardware and services; added discounts for commercial and public-sector customers under HP Discount Now or Value Express Pricing; and special incentives for HP call center and partner reps building a sales pipeline. "This is a conversation starter and call to action for the customer," Smith said of the offers.

In addition, there are more rebate incentives for partners, said Smith. "There is a promotional period with set targets and if partners come in over those targets they get additional rebates," he said. "There is volume-based rebates to capture the incremental opportunity and individual rebates."

Smith said the program is aimed at getting the channel firmly focused on the fact that this is a huge opportunity. "This is the server equivalent of the XP refresh," he said of the XP end of life last April, which led to a significant increase in PC sales. "We are getting channel teams, sales teams, and partners are all galvanized around the opportunity. "HP has mapped out a global offensive that includes distributor sales blitz floor days, special offers for channel partners and enterprise customer call plans, said Smith.

NEXT: HP Partners See Big Windows Server 2003 Upgrade Opportunity

Mike Strohl, CEO of Concord, Calif.-based HP Platinum partner Entisys Solutions, which ranked No. 253 on the 2014 Solution Provider 500, said that all of the HP incentives coupled with the ongoing HP PartnerOne channel program could provide a 20 percent uplift in profitability on Windows Server 2003 deals.

"HP definitely has our attention with these additional incentives," he said. "This has us focused on what for us could be a $10 million opportunity taking into account the current sales pipeline and the additional demand we expect to create with this program. This is all about getting our sales reps focused on the opportunity."

Strohl stressed the big opportunity with the Windows Server 2003 is around the wide range of consulting services that include migration plans and strategies, and application modernization. "What we are doing is creating a journey plan to make the move to Windows Server 2012," he said. "You have to be able to address the entire IT stack."

Andrew Morlidge, vice president of business development Americas for Zynstra, which provides a managed services solution that includes an HP Gen9 appliance to solve the Windows Server 2003 upgrade issue, agreed. He estimated that as many as 35 percent to 45 percent of customers are looking for a hybrid solution that includes a cloud component. He expects a significant amount of customers to opt for a subscription-based alternative to the on-premises server buy.

"SMB customers are going to be evaluating more than just the server," he said. "They are going to be looking at their overall IT strategy." That bodes well, he said, for solution providers teaming with Zynstra, which is offering customers a subscription with a Cloud Managed Service Appliance that he estimated will save SMB customers 20 percent over an alternative capital expenditure solution over a three-year period.

SMB customers are demanding cloud ease of use and operating-expense-based cloud economics as they evaluate the Windows Server 2003 upgrade, said Morlidge. "Customers are looking for technology that makes their life as simple as possible and allows them to get on with running their business," he said.

Enterprise customers, meanwhile, are looking at security and compliance issues as the impetus for upgrading. One enterprise customer that HP is working with is looking at upgrading more than 7,000 servers running Windows Server 2003, Smith said, noting that the project was put on hold last year and is now on the front burner.

"Many enterprises are becoming very aware it is about cost, compliance and security risk, and they know they have to move," he said. "They realize the Microsoft date is not moving and that they need to modernize and start to put those plans in place."

PUBLISHED JAN. 26, 2015