HPE latest quarterly filing hints at ProLiant shift

HPE has reported net revenue of $6.7bn for its second quarter of 2021, up 11% from the prior-year period.

The company said its Aruba Central SaaS (software-as-a-service) platform continued to grow, up triple-digits from Q2 2020. Overall, it reported growth of 41% in “as-a-service” revenue.

Its Intelligent Edge business reported revenue of $799m while revenue in HPE’s High Performance Compute & Mission Critical Systems (HPC & MCS) was $685m, up 13% from Q2 2020.

The HPE Compute business reported an increase in revenue of 12% to $3.0bn and its Storage business grew 5% to $1.1bn. The company reported strong growth in its Nimble software-defined storage family of products, driven by what it described as “strong momentum” for hyper-converged infrastructure.

Antonio Neri, president and CEO of Hewlett Packard Enterprise, said: “We are strengthening our core compute and storage businesses, doubling down in our growth Intelligent Edge and HPC businesses and accelerating our pivot to as-a-service, while also advancing our cloud-first innovation agenda to become the edge-to-cloud platform-as-a-service choice for our customers and partners.”

During the earnings call, Neri hinted at future plans for the company’s ProLiant server family. The latest IDC Quarterly Server Tracker puts HPE jointly first, alongside Dell Technologies, with a 16% market share. The bulk of HPE’s servers are x86-based ProLiant machines, which are used to run on-premise, private and public cloud workloads.

According to the transcript, posted on the Seeking Alpha financial blogging site, Neri described plans to move more ProLiant customers towards pay-per-use subscription service for hardware. “ProLiant is 23 years in the making and our installed base is incredibly large,” he said.

The average server renewal rate for ProLiant customers is between four to five years, said Neri. While there is a pent-up demand to modernise server infrastructure, he said HPE was not just looking at meeting demand for replacing hardware, but also delivering a cloud experience to be consumed “elastically as-a-service”.

Neri said the company is aiming to pivot the installed base of ProLiant customers “to more of a consumption base over time”, and the company also plans to offer ProLiant customers what he described as “optimised solutions”.

Neri positioned the company’s Greenlake “as a service” offering as an accelerator to move customers to a consumption-based model server infrastructure. “It’s not just replacing the old infrastructure or the capex, but being able to repatriate on-prem workloads where it makes sense, or actually hold workloads on-prem because now we can deliver a true cloud experience in our consumption-driven model,” he said. 

According to HPE CFO Tarik Robbiati, the company’s financial service portfolio also has a role to play in providing leasing to those customers who do not want to move to a consumption-based model for modernising server infrastructure. “We benefit from extended leasing with our financial services portfolio, which has been doing extremely well with our asset management business as people tend to use the infrastructure more,” he said.

The server optimisations Neri referenced have been developed by Nvidia as part of its Bluefield-2 datacentre processing unit product family. This uses an array of Arm processor cores and what Nvidia describes as “infrastructure-specific offloads” to enable system builders to offer software programmable hardware-acceleration engines. Dell Technologies, Asus and SuperMicro are among the manufacturers planning to launch server products based on Nvidia Bluefield-2.

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