Hardware keeps rolling beyond HP channel

HP 3000 system supplies look plentiful from non-HP resources

As the HP 3000 crossed over its 30-year service mark this month, the computer was growing more than respect and a reputation. The system that drives MPE and IMAGE has gained a sales resource at the same time that established third parties report supply of the systems was as healthy as ever.

While Oct. 31 marked the one-year countdown to HP’s end of sales for HP 3000s, the day afterward was the 30th anniversary of service for the business server. Just a few weeks earlier a new resource for used HP 3000s appeared in the customer base, when Denver-based Phoenix Systems announced it will sell computers directly to end-users.

Phoenix was established in 1999 to source refurbished HP 3000s through HP’s authorized hardware resellers in the US. The spinoff from HP’s new hardware distributor Client Systems recently expanded its sales mandate, moving beyond its mission of providing used systems only through software resellers and integrators. Now Phoenix is working to sell direct to the customer base, bypassing the reseller part of its channel for used systems.

At the same time, a pair of established resources for HP 3000 systems say the future for selling the system looks as steady as ever. Even though HP will stop making the 3000 in less than a year, there’s no problem getting hardware to sell to customers, say these third parties. The segment of the marketplace that will be making its migration will provide ample hardware to the customers who are homesteading on MPE-IMAGE.

“There’s a lot of people out there who aren’t converted yet, because we’re a long way from 2006,” said Danny Richardson of Genisys. The Pacific Northwest-based supplier of HP 3000 systems and peripherals expects a healthy outlook on 3000 gear from outside of HP’s authorized channel. “In another one or two years, the 3000 supply will totally outpace the demand,” he said.

Supply of HP 3000 systems runs strongest in the Series 9x9 model line for now, since that’s the computer many customers are trading in when they step up to the N-Class and A-Class systems. Phoenix is getting supplied with its models through HP’s remarketed systems organization. That HP group takes in older 3000s in trade, then sells those older systems to Phoenix in an exclusive arrangement in North America.

Phoenix’s general manager Gary Marcove said he’s not focusing on competing with resellers like Amisys and Ecometry which are reselling HP 3000s distributed by Client Systems. But Phoenix will be another resource where customers can purchase direct.

“Our mission is not to directly compete with the resellers,” Marcove said. “But since sales of the 3000 are going away next year, we want to have availability for the end-user community so they can buy directly from us.”

Phoenix pricing was always a barrier to the success of the venture, with bottom-line costs higher than third-party resources like Genisys or Epic Systems. Marcove said he’ll be price-competitive with these third party channels. Phoenix meant to turn some heads at HP World with a $3,695 bundle for a Series 928LX, including an unlimited-user license of MPE-IMAGE.

Phoenix also reports it has stock on hand in the 929-989 lines, a part of the product line far more likely to be of long-term use to customers. Richardson said a lowball price on a small 9x8 system doesn’t demonstrate the same price competition as selling higher-end 9x9 computers.

Phoenix also makes a selling point of the fact that all of its systems carry licensed copies of MPE/iX, and the company loads the latest 7.5 release of MPE onto each system it sells, and can add HP subsystem software such as compilers. Genisys and Epic can only sell the software which was part of a system’s original license.

While loading MPE onto a system is a service that only Phoenix can perform legally in North America, licensed HP 3000 systems are just about all that third party resellers like Genisys will sell today.

“We won’t buy a 3000 unless we can get a valid license,” Genisys’ Richardson said. “We determine that by having people send us a copy of an HP support agreement for the system that’s been valid within the last year.” He added that customers are using their HP support agreements as license transfer proof, because many managers don’t have easy access to their systems’ original bill of sale.

Richardson noted that as customers cancel their HP support agreements in the years to come, they should ensure they’ve got documentation of the bill of sale to preserve their ability to transfer licenses.

Phoenix sells its systems with a promise of making them eligible for HP’s support at the time of sale. Richardson said that support eligibility for used systems sometimes takes a while longer for third-party resellers’ stock, depending on how the local HP office handles the transfer onto HP support.

“The rule of thumb is that HP will wait 30 days before putting something under support,” Richardson said. “They’re mostly concerned with getting a lemon.”

But these resellers offer 60- or 90-day warranties on the 3000s they sell, to give customers coverage while waiting for the HP support process to commence.

Neither third party resellers or Phoenix reported much A-Class and N-Class stock on hand late in October. But all suppliers expected that to change as customers move away from the 3000 in the years to come and trade in systems.

Both Genisys and Epic carry stock on hand in HP 3000s, as does Phoenix. But the third parties are purchasing from the open market to create their inventory, something that Phoenix is avoiding at the moment.

“If I don’t have a customer, it doesn’t make much sense for us to be buying systems,” Marcove said of his open market purchasing. This year Phoenix inventory comes through the HP Trade Up program and leased system returns. Epic and Genisys have a similar arrangement with HP for used HP 9000 systems.

Epic’s president Paul Daniels said supply of systems is not an issue, even if Phoenix retains its exclusive arrangement to buy HP’s used 3000 systems. These third parties have seen other HP computers fall off the vendor’s price list, and so have a pretty good idea what the forecast will be for the afterlife when HP stops manufacturing a computer.

“The 3000s are going to be available for the foreseeable future, at least seven years,” Daniels said. “The whole process is the same as it always has been when HP discontinues a line. People have a platform they’ve depended on for a number of years, and they’ll hang onto it as long as they can. Others will jump ship quickly, and they provide inventory to those who hang on.”

In time, Daniels added, Phoenix may have to begin bidding on the available 3000 equipment in the open market, but “classic brokers will be paying more” for the used systems in the open market, “and typically we can sell it for less.”

Having an HP-authorized channel that sells used systems directly to end-users is a new element for HP 3000 buyers. But license processes and the availability of systems remains little changed from one year ago. Used supply of 3000s, either from HP or otherwise, is ample and won’t be affected by licensing.

“The SLT process on the 3000 is the same as it’s always been,” Daniels said. “If the custodial string of the licenses is intact, HP’s going to transfer the licenses. While I hate looking into a crystal ball, I see the 3000 market being pretty robust for the next five to seven years.”