Market Share and the Tale of Two Strategies
February 28, 2018 • Blog Post • Antonio Neri
IN THIS ARTICLE
- While some vendors are pursuing share for shares sake, HPE is focused on providing solutions that deliver high-value and differentiation to our customers
- HPE's strategy is working - with strong growth in hyper-converged, high-performance compute and Synergy
CEO Antonio Neri shares his thoughts on IDC's server market share results
Last night, IDC published their server market share resultsfor calendar Q4 2017. What it demonstrates more than anything else is a tale of two strategies. While HPE remains the leader in this market, its clear some of our competitors are more focused on share than profits. Our strategy could not be more different.
Within the compute market there are a number of different segments and they are not all created equally.We think about them as volume markets and value-and-growth segments.At HPE, we are aggressively segmenting the market to ensure we are making the right investments in the value-and-growth areas where we can bring differentiated value like hyper-converged, high-performance compute and Synergy, while also profitably supporting our customers in more commoditized parts of volume segments like rack and tower.But, as I have said many times before, we are not going to chase market share just for share's sake. We are going to drive profitable share.
HPE announced last fall that we will no longer pursue the low (or zero) margin, custom-built, commodity server business with a very narrow set of Tier 1 service providers – Apple, Amazon Web Services, Facebook, Google Cloud, Microsoft Azure in the U.S. and TenCent, Alibaba and Baidu in China. While this segment of the market is large and growing, there is simply no profit to be had by HPE or our competitors because there is very little value we can bring.We still do substantial business with these companies, but we are focused on delivering solutions that provide differentiated value for them like our value-and-growth compute, storage and networking offerings.
And, our strategy is working. It was announced in our Q1 2018 results last week that HPEs hyper-converged business with Simplivity continued to grow more than 200 percent year-over-year. HPE Synergy, the industry's first and only composable infrastructure offering, grew more than 40 percent and HPE's high-performance compute business showed double-digit growth as well.
Over the years I have developed a deep appreciation for IDC and the market share data they produce. When looking at these numbers, the picture they paint is quite clear. Some vendors are pursuing share for shares sake, whereas HPE is focused on providing solutions that deliver high-value differentiation to our customers. We believe our strategy will prove to be the best for our customers, and HPE in the long term.