June 2005

Later-model used HP 3000s start to surface

N-Class systems, while still dear, emerge at discounts

No more HP 3000s, said the vendor late in 2003, ending the sale of its next-generation N-Class servers. More than a year after the last of these computers shipped from HP, the systems have begun to pop up in broker inventories. No more new HP 3000s has become a matter of semantics, since the N-Class systems are lightly-used at worst.

HP took awhile to perfect its engineering on the N-Class for MPE/iX users, polishing the new PCI interface from late 1999 until the first rollout in May, 2001. Six months later the vendor tugged out the plug on its 3000 futures, giving the N-Class one of the shortest chances at success for any HP 3000 model. By some estimates, more than half of all N-Class purchases took place after HP cancelled its plans for the platform and issued the 2006 end-of-HP-Support date.

But the system sold anyway, in spite of the vendor’s dubious future for it. Companies that needed the faster connectivity of the N-Class peripherals or greater memory capacity purchased the server, sometimes at HP prices that topped more than $600,000 for a four-processor unit.

Now the used equipment market — the source where the majority of HP’s 3000 customers shop for their systems — is seeing a new influx of N-Class servers. As migrations get finished at large customer sites, these fastest HP 3000s are being traded back to HP, or sold directly to third-party brokers.

One supplier, Cleveland-based Bay Pointe Technology, reported this month that its inventory includes several N-Class systems, despite the relative value left in machines that are more than several years old. The nearly-new systems are emerging after companies shift off the 3000.

“For somebody to make a $300,000 to $500,000 commitment, and then the box is out there already — that amazes me,” said Bob Sigworth, sales manager at Bay Pointe. Companies sell off HP systems on both MPE and Unix sides of the N-Class product line, he added, sometimes quickly because of a merger.

The stocking distributor for HP 3000 and HP Unix equipment had two N-Class systems — a 750Mhz 3-way and a 550Mhz 3-way — available at the start of June. The vendor posts messages on the 3000 newsgroup offering the servers, one of several touting the newest generation of 3000 during the last two months.

A second-hand source

Bay Pointe calls itself a stocking distributor for HP 3000s, a distinction that means it often already stocks the systems it sells. But sometimes when a customer inquires about moving up to an N-Class 3000, Bay Pointe must go to an outside source for the servers: Phoenix/3000, the used-equipment group of Client Systems.

N-Class servers find their way to Phoenix from HP’s trade-in and returns stock. Sigworth and other brokers say that makes the Phoenix/3000 pricing high, but Gary Marcove at Phoenix/3000 says HP doesn’t fix his prices for the used systems.

Marcove said his prices reflect demand. “We’re supplying as much as we can, but it’s hard to find those systems out there,” he said. “The customers who are staying on the platform for three to five years are actually looking at the N’s.”

Phoenix sells most of its stock to brokers such as Bay Pointe, Genisys and others, he added. “Not too many deals go direct. “We want to use these resellers, because they have hands-on contacts with the customers.”

Client Systems didn’t set up Phoenix to sell 3000s to third-party brokers; the unit was established to give HP’s authorized resellers a source of used hardware. But after HP disbanded the authorized HP 3000 channel, Phoenix had to find new outlets for the 3000s it sells.

“There’s no 3000 channel anymore through HP,” Marcove said. HP sells the traded-in N-Class systems to Phoenix, which tries to gain some margin on the boxes when they resell to outside brokers.

The fewer stops a system makes before it sells into a customer site, the lower its sales price might be. Users who sell their systems directly to brokers deliver a less costly server for the next 3000 shop to purchase. License transfers keep such purchases legal, so long as a customer can forward a sales invoice to HP’s License Transfer unit. That’s less problematic with newer servers like the N-Classes.

Servers that pass back into HP’s trade-up chain can keep prices higher than what customers will pay for 9x9 Series 3000s, which are widely available outside of HP’s refurbished network. HP sold the three-way N-Class 750Mhz system sold for $499,900 list price when new, without disk or tape storage. The same system is now selling for $399,000, including disks, through the broker channels.

Still less popular

Sigworth said that he’ll sell six Series 9x9s for every N-Class that moves through his inventory. “A N-Class is not for everybody,” he said. But he adds that the lifespan of discontinued systems is longer than what most customers would expect.

“Anytime anyone drops a product, people think it will be gone in two or three years,” he said. “There’s still people writing COBOL programs today, and if you’d have tried to tell me 15 years ago that would be true, I’d have said they were nuts. There’s so many third-party service providers for the hardware and the software. The systems are just not going to go away.”

Neither is the demand, according to Phoenix’s Marcove. “There are some big companies out there that haven’t moved off the platform yet, so they need these critical systems,” he said. “It takes awhile to close these deals because they’re not cheap in any way, but we’re doing it.”

Often, the top of the line Series 989 can step in for an N-Class request. As a server that can outperform the lower ranges of the N-Class, the 989 multiple-CPU configurations are much more available, according to Danny Richardson of Genisys.

Another stocking distributor of 3000 systems, Genisys sold 10 of these 989s in the first five months of 2005. Richardson said. They’ve also got an N-Class system in stock that he expects to sell quickly. “That will sell in the next 2-3 weeks,” he said. “They’ve been fairly hard to get, because people are still holding on to them, and the A-Class, too.”

Enough conversation with the used equipment channel can give a customer the feeling that any purchase is possible. Making a reasonable margin off an N-Class system is easier when it arrives directly from a customer site. When told that Bay Pointe was selling a $399,000 N-Class, Richardson chuckled. “Tell them I’ll sell them the one we’ve got at that price,” he said. HP 3000s supplied through the used market have become a more fluid resource, one whose later models are just beginning to surface.