HP Enterprise (HPE) is so enterprise-focused that enterprise is part of its name. The company offers IT products and services that include servers, storage, networking (wired and wireless), converged systems, and software and services geared, for the most part, to large companies with big information technology needs. About half of HPE’s revenue comes from its technology infrastructure group. The US and Europe are its biggest markets. HPE is one of the two companies created with the breakup of do-it-all computer company Hewlett-Packard. HPE got the enterprise-focused capabilities while HP Inc. got personal systems and printers. On their own each company will be big enough to rank among the top 60 companies in the Fortune 100.
HPE reports results in four segments. The enterprise group puts together IT infrastructure for customers and it generates some 70% of HPE’s revenue. Enterprise services, 37% of revenue, is HPE’s professional consulting business. Software, 7%, enables customers to automate IT and run analytics. The financial services unit provides financing plans for customers who buy HPE products and services.
Key suppliers are Intel and Advanced Micro Devices, which supply the processors that go into many HPE computers.
Customers in the US account for 38% of HPE’s revenue. Add Canada and Latin America and the Americas are responsible for 43% of revenue. European customers generate 38% of revenue with those in the Asia-Pacific region and Japan accounting for 19%.
HPE’s manufacturing and assembly plants are in the Czech Republic, Mexico, Shanghai, and Singapore. The company operates major product development facilities, data centers, and Hewlett Packard Enterprise Labs around the world.
Sales and Marketing
HPE customers are mostly large companies and government agencies. The company reaches them through its own sales staff and resellers, distribution partners, OEMs, independent software vendors, system integrators, and consulting services companies. HPE account managers maintain relationships between the company’s businesses and large enterprise customers.
HPE spent some $220 million on advertising in 2014 (ended October), up from $157 million and $167 million in 2013 and 2012, respectively.
HPE broke out the financial results of its units from overall results of Hewlett-Packed for 2014 (ended October). HPE reported that revenue fell 3.9% to $55.1 billion in 2014 from 2013 and that net income fell about 20% to $1.6 billion for 2014. Cash flow from operations slowed to $6.9 billion in 2014 from $8.7 billion in 2013.
A factor in the revenue decrease was key account runoff in enterprise services. The profit decline was attributed to higher restructuring charges, investments in research and development and higher sales, general, and administrative expenses.
HPE has many strengths in enterprise computing. Its systems and services are among the market leaders in a number of areas. It has experienced developers and engineers to implement current systems as well as researchers to develop new technologies. It retained much of the intellectual property portfolio and global research and development capabilities that made the original HP a well-regarded and profitable company for so long. HPE also has a strong sales and support network around the world and longstanding relationships with channel partners and key customers.
As IT requirements change, HPE wants to help its customers find their way to new technologies. It is emphasizing itself as they key partner in helping customers move from traditional technology platforms to emerging and growing IT systems such as cloud computing, big data, enterprise security, applications, and mobile capabilities.
A key part of HPE’s strategy to help customers set up and manage hybrid cloud systems that combine a company’s own secure systems with the flexibility of public cloud systems.
Part of the reason to break up HP was to allow the new entities to concentrate on their core businesses. While HPE won’t be distracted by personal computer and printer issues, it won’t benefit from the profits thrown off by the high-margin printer business.
HPE doesn’t lack for competitors in enterprise IT. Longtime rival Dell is in the process of buying storage system company EMC to get even bigger. Other competitors across HPE’s portfolio include Cisco Systems, Lenovo Group Ltd., Oracle, Fujitsu Ltd., Inspur Co., Huawei Technologies, NetApp, Hitachi Ltd., Juniper Networks, and Arista Networks.
Mergers and Acquisitions
In August 2016 HPE bought SGI (formerly Silicon Graphics) for $275 million. SGI's high performance computing products are used for data analytics and data management. The plan is to combine SGI's supercomputing capabilities to beef up HPE's enterprise offerings to provide faster and higher capacity analytics to customers. The deal is expected to close in early 2017. SGI reported a loss of $39 million on revenue of $529 million in 2015.