Number 104 (Update of Volume 9, Issue 1)

HP puts up big numbers for Q4

HP rebounded during the fourth quarter from the downturn of its enterprise server business, home to the HP-UX and HP 9000 replacements for the HP 3000 line. More than $200 million of HP enterprise and storage red ink during the third quarter turned to $107 million of operating profits in the company’s final 2004 quarter. HP said on Nov. 16 that it’s still not where it wants to be on profits from its enterprise server business. “We’re not yet to our target levels of profitability,” said CEO Carly Fiorina, noting that enterprise servers and storage is a fixed-cost business.

In contrast, vendors who concentrate on the PC arena can enjoy a lift in profits simply because costs drop for components in those systems. Less than a week before HP’s richer numbers surfaced, its competitor Dell announced that its profits rose 25 percent during its most recent quarter. Dell booked more than $12 billion in sales while profits topped $850 million for its quarter.

HP’s numbers outstripped Dell’s, but not on a basis of profit versus revenues. For the full fiscal year of 2004, HP sold $79.9 billion of hardware, software and services, a record for any company that has called itself HP. That historic total now reflects the PC, services and server business from the Compaq side of HP’s products. The consolidated company earned about $4 billion in profits for its 2004 year. But the competition is gaining in the profitability contest. Last year HP's fourth quarter produced only as much profit as Dell managed this year, on 60 percent of HP’s sales.

PCs can be lucrative, but the new HP pulls far more earnings from its printing and imaging side. Cameras, printers and scanners accounted for $1.09 billion of HP’s fourth quarter operating profits, a gaudy 66 percent of all earnings for the quarter.

HP repeated its 16 percent Itanium/Integrity figure as the share of all Business Critical Servers it shipped in 2004; some analysts expected the number to grow beyond 20 percent for the year. HP-UX revenues grew by 19 percent for Q4, while yearly sales for the enterprise storage and server sector increased by 7 percent from 2003’s figures.

For the time being, however, the lucrative ink business continues to generate the biggest single chunk of HP’s profits. The 2004 supplies revenue at HP grew 8 percent since 2003; supplies made up 54 percent of the fourth quarter’s total Imaging and Printing revenues. That’s $3.5 billion in ink and papers sold in 90 days, close to the $4.1 billion HP booked for all of its enterprise servers and storage during the quarter. HP said it shipped 14 million printers during that period, and 47 million during fiscal 2004.

The good fiscal news on the quarter and the year is leading HP to accelerate a restructuring program, but analysts on the quarterly conference call didn’t hear how the company didn’t will remake itself during fiscal 2005. HP expects the restructuring to cost it 4 cents per share in profits over the first half of fiscal 2005. Analysts didn’t ask about the rumors that HP would soon spin off everything but its imaging and printing business.

The print-image business now accounts for 30 cents of every HP sales dollar. Personal Systems was the only HP segment to out-book printers for 2004 revenues. But like those of the enterprise server business, operating profits are slim in these computer segments compared to printers. Only HP’s support business can even come close to approaching print-image profits; support is only a third as profitable as print-image. HP Software, Personal Systems and Enterprise segments only managed $238 million of profits altogether in 2004. Put another way, printing and imaging’s $3.8 billion in earnings were 16 times more profitable than these combined HP computer businesses during 2004.

A few analysts see that gap as a compelling reason to split the company, but HP views its print-image strength as an asset to share across the corporation. It could give the company time to improve its margins on the enterprise products meant to replace HP 3000 servers, at the least. “We continue to make progress on our operating profits in Enterprise Storage and Servers,” Fiorina said. Fiscal 2004 was the first year since 1972 that new HP 3000s were not on the HP corporate price lists.

CAMUS chooses independent user group path

HP 3000 user groups are sticking to their independence this year, even though they’re faced with competition from their biggest vendors. The Computer Aided Manufacturing User Society (CAMUS) voted to remain independent earlier this month, acting in the face of the emergence of a vendor-led user group.

The CAMUS move followed the Interex decision to maintain an independent HP user conference after the vendor announced a technical show of its own for next summer. When vendors like SSA and HP decide to get into the user group and conference businesses, existing forums like CAMUS must decide whether to join the vendor efforts or stick it out on their own.

In January SSA Global will launch a new SSA Global Users organization in North America, a group of ERP systems users who deploy products like the MANMAN ERP software used at HP 3000 sites. Those MANMAN users are also the key constituents of CAMUS. CAMUS, which isn’t run by a software vendor like the new SU-NA user organization, voted to remain independent but also support the formation of the SSA-led user group.

CAMUS president Malcolm Miller told his members in a conference call on Nov. 5 that CAMUS will continue to function as an independent user group. “CAMUS will encourage current members to explore the benefits and opportunities provided by the new user group,” said Miller. “However, until all members are represented and fully supported under the SSA organization, CAMUS will continue with its mission and operations.”

CAMUS officials said they will support the new SU-NA and the MANMAN migration path presented by SSA Global to the new SSA ERP LN 6.1 product. But many CAMUS members running MANMAN have not committed to the SSA ERP roadmap that the SU-NA organization supports. CAMUS will hold out to remain a group that serves legacy application needs. “Our members will continue to need a forum for peer-to-peer support, as well as networking opportunities to informally resolve issues and meet with other users of legacy products,” said Miller.

CAMUS has its officers working inside the new vendor-led user group, drafting bylaws, defining membership guidelines, and planning for the first SSA user group conference next May in Atlanta. “We want the SU-NA organization to be successful and will put resources toward that success,” said Miller. “But we have to be sure that all of our members have a home before we simply merge with other user groups.”

GHRUG looks for board members

The Greater Houston Regional Users Group is looking for three new board members to serve in 2005. The group is one of the few HP RUGs still mounting annual meetings. Membership chairman Bill Goodoff needs to receive nominations by December 6. He can be reached at goodoff@hal-pc.org.

About that annual meeting: GHRUG is planning a one-day All-Texas conference on March 4. The All-Texas meeting’s history goes back to 1990, when user groups from Austin, the Dallas Metroplex, Houston and the Texas Big Bend gathered in Galveston. While most of the HP landscape has changed since then, next spring’s meeting will still welcome HP 3000 presentations, if the community responds to the call for speakers.

GHRUG suggested migration-related topics on the 3000, or MPE/HP-UX interoperability sessions. Download the call for speakers at www.ghrug.org/documents/Call4Spkrs_030405.pdf. Propose a talk by Jan. 29, 2005. You can get more details from conference coordinator Terry Leatherland at HP: 281.201.4145, or e-mail at terry.leatherland@hp.com.

Acucorp guides Finnish firm to Unix COBOL

COBOL solutions provider Acucorp, a company which engineered a 3000-friendly COBOL alternative for MPE/iX customers, has partnered with Ordina Denkart to help Finnish IT services firm Oy Porasto migrate from its HP 3000s. Oy Porasto used Acucorp’s extend product suite and Ordina Denkart’s MPUX ViaNova, Oy Porasto Ab to migrate its business-critical HP 3000 applications to the HP-UX and the HP 9000 platform, taking advantage of Acucorp’s enhanced support for the 3000’s HP COBOL II.

Oy Porasto provides pensions insurance applications and services to pension funds and foundations. More than 30 pension foundations use Porasto’s applications and services to support their technology efforts. Porasto carried out extensive evaluations and testing before selecting Acucorp and Ordina Denkart as the way to migrate their HP e3000 applications.

“We were faced with very little time to re-write, with the only alternative being to migrate,” said Matti Merilainen, Porasto’s IT Director. “After evaluating and testing the various alternatives, we chose Acucorp not only because of the compatibility between ACUCOBOL-GT and both HP COBOL II and MPUX, but also because of the excellent features ACUCOBOL-GT offers, which will be very useful in our future development work.”

In addition to supporting migrations from HP COBOL II, Acucorp’s extend solutions provide technologies for deployment in a Services-Oriented Architecture (SOA) or on the Web; graphical user interface (GUI) development; thin client architecture and distributed computing; relational database access; and programmer productivity. Once its migration is complete, Porasto will continue developing and modernizing their applications using Acucorp’s extend.

Microsoft passes on Itanium for high-performance

In a development that means either more bad news or has little impact on Itanium, Microsoft said its latest release of Windows for High Performance Computing won’t support the HP-Intel chip. Itanium grabbed a few of the top 100 spots in the latest Top 500 HPC benchmarks, a contest where live customer installations vie for the rank of fastest computers at Linpack calculations.

Microsoft supports Itanium with its Windows 2003 Server environment, but its software developer toolkit for Windows Server 2003 Compute Cluster Edition. Microsoft is no big player in the HPC marketplace, a sector where Linux is becoming more popular with every month and Unix environments vie for the fastest slots. Microsoft plans to support Itanium 2 in a second release of Windows Server 2003 Compute Cluster Edition; no date is set for that release of that version. HP’s Integrity servers, alternatives to the HP 3000 which also run HP-UX and Linux operating environments, use the Itanium 2 processors.

Microsoft could be as much responsible as Itanium’s unpopularity for the omission. But to the software giant, the Integrity servers and Itanium architecture still look too fast and cost too much for its HPC targets. The company says its Cluster environment is aimed at departmental clusters. Microsoft said in an Infoworld report that Itanium-based systems are still beyond the budget of such users. Intel says that the Itanium chips will achieve price parity with the popular Xeon processors by 2007.

Patches help sites avoid LargeFile aborts

Repair work is continuing on the LargeFile capabilities of MPE/iX, but in the meantime HP has patches to prevent system aborts customers are experiencing when they use LargeFiles.

HP says that patches MPEMXQ1A (for 6.5), MPEMXQ1B (for 7.0) and MPEMXQ1C (for 7.5) prevent “a system hang or process hang when IO operations are being performed on files greater than 4Gb in size. If the large file resides on a mirrored user volume set, mirrored volumes can become disabled. These problems are caused by improperly-formed file extent entries for files that are greater then 4Gb in size and have all of their file extents preallocated.” Error #-68 or a System Logical Sector are displayed on the system console, followed by the name of the malformed file.

HP’s patches prevent the improperly formed file extent entries from occurring when a new file is built. Another patch, MPEMXP5, allows the system to work properly with those files that have already been built with improperly formed file extent entries.