HP recently announced it is shutting down its Helion Public Cloud and referring customers to Amazon. This really highlights two major things.
First, HP realizes it needs to prioritize its cloud initiatives and has chosen to compete in the private and hybrid cloud space. This also allows them to continue to push their OpenStack efforts in various cloud configurations.
Furthermore, it enables them to turn potential public cloud competitors into partners and customers for various HP Solutions. Probably a good approach for the new HP and its growth strategy going forward.
Second, this announcement underscores Amazon’s dominance of the public cloud space. It is bigger than its next four largest competitors combined. In its recent earnings announcement, AWS generated over $2 billion in revenues and $521 million in operating income for Q3 2015 with 78 percent year-over-year growth. Much faster than most other software companies – even SaaS poster child Salesforce, which grew a decent 24 percent YoY.
When major companies in IT like HP cry “uncle” and cede large markets, it’s a sign they’ve given up. They no longer want to compete with the Amazon juggernaut in its aggressive “race-to-the-bottom” pricing. So the question is: How will Google Cloud, IBM SoftLayer, Dell/EMC and Microsoft Azure evolve their strategies in light of Amazon’s dominance?
Let me know what you think.
Chris Kocher is a founder and managing director of Grey Heron, a high-tech business strategy consulting and advisory firm. In addition to managing pioneering products at HP and a business unit at Symantec, he has advised over 100 high-tech companies. He specializes in increasing revenues and growing company valuations by helping management teams identify new business opportunities and developing strategies to accelerate adoption in evolving markets like IoT, big data, cloud and mobile. Contact him at kocher@greyheron.com.