HP Revamps for Convergence
HP has good reason to convey a clear and consistent message: This is a business unit with annual revenues of $9 billion, about 10 percent of the IT giant's total sales. Its customers include fixed and mobile network operators, equipment vendors, and any company that is creating and distributing digital content -- quite a lot, really.
The company says it's backing the newly named group with more marketing dollars and people, and has a legacy that will help it bring the entertainment and telecom worlds together. At the heart of that is HP's server technology, which is used in the telecom, IT, and digital content industries, and which underpins the IPTV systems that Alcatel (NYSE: ALA; Paris: CGEP:PA) and Microsoft Corp. (Nasdaq: MSFT) are delivering to carriers. (See Microsoft, Alcatel Renew Deals and Brocade, HP Team on SAN Integration.)
But HP has much more, including a service delivery platform (SDP) and development environment for application developers and carriers. Its SDP has already been chosen by Telefónica Móviles SA and SK Telecom (Nasdaq: SKM), and it is also active in the closely related IP Multimedia Subsystem (IMS) market. (See HP, Telcordia Hop SDP Bandwagon, HP Launches SDP Service, and HP Tackles IMS.)
Joy King, worldwide marketing director at the CME group, says HP is "working with nearly all our major carrier customers to develop SDPs" and help them develop a migration plan towards an IMS/SDP architecture. "A service delivery platform and Web services strategy is an evolutionary step towards an IMS environment," and HP has set up three IMS centers -- in China, France, and the U.S. -- to support service providers. (See IMS & SDPs Must Work Together.)
HP has also been active in the service-oriented architecture (SOA) sector, has long been a player in the OSS market (most notably with HP Openview), and from a number of mergers and acquisitions over the years it has an entrenched position in signaling, messaging, switching, HLR (home location register), and location-based service capabilities. "We have core telephony and IT expertise that others don't," boasts King. (See HP's New Curve, EST, KTF Use HP's OSS, Sprint, Alltel Renew, Amdocs, HP Land China Deal, Brocade, HP Team on SAN Integration, and Hewlett-Packard, Compaq Merge.) She says the unit hasn't waited for its new identity to start working in the converging telecom/entertainment space. The company announced a partnership with Flash platform firm Macromedia Inc. last September, is working with Siemens Business Services on a project for the British Broadcasting Corporation (BBC), and launched its Digital Media Solution at this year's NAB event in Las Vegas. (See HP Takes Flash Approach to SDPs and HP Touts Contracts.)
King also believes the enormous amount of integration services work that IPTV deployments will need will provide a rich seam of support services work for the division, a market HP will be able to target from its relationship with the Alcatel/Microsoft partnership.
But what has changed here exactly? HP is already active in these areas, so isn't this just a new identity for an existing business? King refutes that suggestion, saying HP is increasing its investment in CME product R&D and marketing, building more focused sales teams to target large individual content companies as HP sales teams already do in the telecom sector, and is hiring a new senior executive to head up its push into the media and entertainment worlds, with an announcement to be made soon.
IDC analyst Elisabeth Rainge also reckons there's more to this than just a name change. She believes it positions HP better in the current market and puts it more in line with the likes of Accenture and Oracle Corp. (Nasdaq: ORCL). (See Oracle Unveils SDP Plans.)
"It makes it much easier for people outside the company to understand what HP is doing," she says, adding that it'll also help the company's own staff to "promote what HP is all about."
And Rainge endorses King's view that HP has a good telecom legacy to draw on. She says this development is grounded on experience and product diversity that goes back years. "HP has been selling direct to carriers for years. It has a lot of proof points," says the analyst.
That's a plus point King is keen to hammer home, especially when it comes to claiming competitive advantage over long-standing rivals like IBM Corp. (NYSE: IBM).
When asked about any potential acquisition activity to supplement HP's current portfolio, King declined to comment, but she was happy to give her opinion about IBM's recent purchase of OSS stalwart Micromuse. (See IBM Tiptoes to Telecom With Micromuse.)
IBM's Micromuse acquisition was a bold step, and a necessary one, as it didn't have that sort of capability in-house. "What IBM purchased is what HP already has. IBM is a well respected IT company, but it has limited experience of telephony. We are in a better position because HP has real telephony knowledge, and that's why we are being chosen to work with demanding and innovative carriers such as SK Telecom."
HP will be showing off some of its IMS capabilities next week on Intel Corp. (Nasdaq: INTC)'s stand at Globalcomm 2006 in Chicago.
— Ray Le Maistre, International News Editor, Light Reading