HP Climbs to the Top of the Enterprise Operating System Market

ARC survey in the enterprise operating platforms category.

As always, OSs are being sold bundled with the hardware. When there's a choice, the integrator works with the customer to pick the appropriate choice. One-off sales of OSs to end-users or businesses continue to be rare. Upgrades are another matter, and tend to be handled by resellers/integrators, except for those companies with strong enough IT departments that they go it on their own.

HP-UX's strength may be hard to believe, with one story after another telling of problems with the HP-Compaq merger, but the numbers speak for themselves. Overcoming strong opposition from Caldera/SCO with its Unix and Linux lines, Microsoft with W2K Server, Novell with NetWare and Sun with Solaris, HP, with the addition of Compaq's enterprise operating systems, was easily the most popular enterprise OS vendor around.

How Did HP Do It?

How? Well, it's simply that HP-UX has kept both its enterprise operating-system VARs and end users happy. Mike Cox, executive vice president of sales and delivery for Logical Networks,perhaps HP's largest HP-UX reseller but also a top VAR for IBM AIX on the pSeries and Solaris on Sun boxes,thinks that in no small part, HP-UX's current success carries over from its past.

"HP-UX has a very large and satisfied loyal base from when HP was successful in the early days of the PA architecture and client-server computing," he says. "With this very large and rich installed base, selling into that installed base continues to be very easy to do."

Dan Kusnetzky, IDC's vice president of system software research, agrees that the satisfaction level of HP-UX's installed base is important. The bottom line, he says, is it "offers VARs a way to make more money than in working with someone else."

Mike Wardley, HP's worldwide marketing manager for HP-UX, thinks another important factor is consistency. "[HP-UX has always been absolutely rock-solid. The thing just works. It's dependable. You can depend on HP doing the right thing by their partners."

Cox agrees. "We have always liked HP as a partner, and they continued to be an excellent partner even in the postmerger days," he says. "Immediately on the deal being made official, we were contacted by the new HP Partner Program head, and it wasn't just us but all the other top HP and Compaq partners, to start a dialogue. This resulted in the PartnerOne program HP is bringing to market effective with the new fiscal year. It's a robust and exciting program."

In short, the new HP went the extra mile not only to keep its solution provider in the loop, but to actively ask for their help in building its new partner program.

Solution providers seem to concur. Those surveyed for the 2002 ARC survey ranked HP No. 1 across the board in VAR support issues and in service and sales partnering, communication and ease of doing business.

But make no mistake, that's not to say everything is perfect in the postmerger HP.

"In the midmarket,our sweet spot,some customers, because they're not called on directly by HP, may not be as informed of the benefits of the merger, and therefore it's up to us to inform them of the specifics of the merger," Cox says. "That works, but HP does it more effectively when they directly inform the customers."

The Technical Side

In May, industry analyst firm D.H. Brown released a report entitled "2002 Unix Function Review." In the review, HP-UX 11i won all five of its report categories against the likes of AIX 5L and Solaris 8. "HP's focus and investment in HP-UX have effectively moved this key operating environment to the forefront of the Unix industry," says Tony Iams, vice president at D.H. Brown,

Kusnetzky, however, thinks that "the top Unix OSs all provide a range of features that are the foundation for businesses' work." That said, "HP-UX is world-class, just like AIX or Solaris, so that's pretty much a wash in the buying system. Each has strengths in different areas, so the buying decision must center on what makes the channel partner more money."

Wardley agrees: "If technology were all we had with HP-UX, it would be a problem. The enterprise OS buying decision is like buying a car." A customer doesn't simply look at the color and horsepower and pull out his or her wallet; the buying decision is based on service as well as support. "It's not just the technology, it's what the whole channel itself looks like," he says. "It's only when you look at all the pieces of the value chain that HP-UX shows itself to be an excellent proposition."

As a case in point, he adds, "Forty to 50 percent of my time is spent on dealing directly with channel matters. The channel is very important to us."

The technology is also important to the channel. VARs ranked HP No. 1 in product quality/reliability, feature richness, ease of integration and the all-important overall revenue/profit potential.

To continue that trend, HP is proposing in its ambitious road map to support no fewer than five enterprise operating systems: Linux, HP-UX, Tru64 (the former Compaq Unix software), OpenVMS and Windows. Dig a bit deeper and it's even tougher, with HP supporting four different Linuxes,Debian, Red Hat, Mandrake and UnitedLinux,and both the Windows 2000 Server family and, when it finally arrives, .Net Server.

That's a tough job, but HP is determined. Kusnetzky, though, is none too sure they can do it if HP's financials get tighter. However, "They can't afford to keep both [HP-UX and Tru64, but the installed base has said, 'If they kill our Unix, we'll walk away,'" he says. And, with HP-UX's 12 percent of the shipping Unix market and Tru64's 4 percent, HP certainly has reason to keep both markets happy.

The overall plan for HP-UX and Tru64, as detailed in HP's road map, is to keep improving Tru64 until 2005, while transferring its most popular features, such as TruClustering technology and Advanced File System, to HP-UX by 2004. Even then, HP plans to support Tru64 until at least 2011.

The Best of the Rest

Microsoft didn't fare so well in the enterprise operating system arena, placing third, and it's easy to see why. As one Microsoft VAR, who requested anonymity, put it, "We're totally [annoyed about MS trying to steal our bacon by competing with us." And, when Orlando Ayala, Microsoft's group vice president of worldwide sales, marketing and services group, said at Microsoft Fusion in July, "I don't want revenue any more at the expense of customer and partner satisfaction. I don't want it," it was clear it wasn't just one VAR's venting he was responding to.

In addition, Microsoft's .Net Server delays haven't helped Microsoft's partners any. And its new licensing plans, introduced in July, have also made life more difficult for VARs. Dean Nelson, account manager for Troubadour, a Houston-based integrator, speaks for many when he says Microsoft's new licensing is "very difficult to understand, [and creates bad blood in our client base. Clients felt like they were being forced to make decisions without any good information. We were able to add value by figuring it out for our clients, but the margins are too low to focus too much on license."

At Fusion, Ayala also said, "We've got to get that health back in a major way with our channels." He is so right.

In the enterprise operating system space, "One thing is true of Microsoft, Solaris, Novell and Caldera/SCO, and that's that all of them have only one string to their instrument," Wardley points out. "So...if your one market segment does poorly, you do poorly. Sun is especially having trouble right now because of this." But, he continues, "If one market isn't working well, like telecom is right now, finance, on the other hand, is strong." In short, he says, "HP is a very diverse company with lots of different products that enable our partners to ride out the storm."

Where can HP go from here? Well, according to Cox, it can go further up. "I genuinely believe that HP's real goal is to make the best partner organization in the industry, and I think in PartnerOne that they've really done it," he says.

Wardley agrees that HP can do better. "Last year, we looked at how we were doing business in the channel, and the big issue is always not getting enough help from HP in marketing and support."

One way HP will address this is with Software Depot. With this Web e-commerce package, now used by 20 North American channel partners, HP hosts a Web site for its solution providers, which enables them to market and to sell, while HP handles the ordering and does the operating system provisioning. The benefit, according to Wardley, is that it "bolsters the channel's partner position while it increases our sales, makes ordering easier and faster for the customer, and removes supply-chain and inventory headaches for the partner."

Will it work? Will PartnerOne turn out to be the best thing since sliced bread? You'll be able to tell us next year when we once more report on the state of the enterprise operating system channel. We can say one thing, however. If HP lives up to its promises, it'll be hard to beat.