Russell began his HP career in 1980 selling HP 3000s, a native-born Scotsman with manufacturing software as a specialty. Rising through the HP sales organization — as general manager of the Computer Systems Organization in the UK and then CSO GM for all of Europe, Africa and the Middle East — Russell’s post prior to heading up ESG was as general manager of HP’s Technical Computing Business Unit. As the 3000’s profile continues to rise within HP and across the industry, we asked him about the 3000’s enterprise status in light of its return to favor at HP. Judging from Russell’s outlook on the system’s future, being in the Enterprise Systems Group is much more than just a business address for the 3000.

Does ESG consider the HP 3000 to be a primary platform for a company's enterprise solutions, or more of a specialized transaction server?

In certain applications, it is becoming the primary enterprise server. We’ve seen quite a change in the life of the 3000 recently. It’s had its 25 year anniversary, and it used to be the mainstay of our minicomputer business awhile ago. As we moved more into the Unix segment, the HP 3000 business was declining, very slowly. As an overall percentage of our systems business in the enterprise, it’s smaller.

However, what we have seen — and I’d give a lot of the credit for this to Harry Sterling — is that his division is our best in class in example of being close to your customers. They are really connected through the user group, and Harry personally knows a lot of the customers. Harry really listens to what our customers want, and we’ve worked very closely with the reseller channel and the ISVs. And we have some specific software vendors now who are going for new business on the back of the HP 3000.

We were not winning much new business two to three years ago. The HP 3000 was in its decline. We really weren’t using that as the vanguard for new business.

Across the board, it’s not the leading platform we thrust. In five certain segments that we’ve really got our business behind, generating new business, we are seeing some big-name companies, enterprise customers, choosing systems on the back of the HP 3000. I put that down to a lot of the strategy of the division, clearly linked to what the customers want. That success and turnaround in going for new business has driven the decision to move it to IA-64. We were waiting to see if that would make business sense.

If a customer doing business in a market segment other than one of the five 3000 targets wanted to base their enterprise on the 3000, how would HP feel about that?

Delighted. We have a huge loyal customer base, and these span more than the five areas. Those are areas where we’re leading with the 3000 for new business. Of course, there are many customers who are very loyal and have a large base of 3000s not in those segments. The news with IA-64 gives them a big future moving forward. We’re not trying to move anybody away from the HP 3000.

That hasn’t always been the case, but at least now you’re moving in the right direction.

I’d push back on that. I don’t think we’ve ever been encouraging customers to move. In fact, how many products in the industry have gone on for 25 years? That’s not a strategy of us forcing customers to move. We’ve made it easy for customers to stay with the HP 3000. They’ve put new applications more recently on the Unix platform, and a lot of that is driven by the software vendors, too. The connection here is that we’ve really made it work with some of the software vendors, to get them to make an investment in going for new business.

So let’s look at HP’s own 3000 investments. Some computing components are missing on the HP 3000 but offered on HP 9000s, like Domain FoundationTools and FoundationWare. Under what circumstances is ESG willing to invest in developing this kind of missing component for MPE/iX — and therefore duplicate its efforts? Alternatively, why would ESG want to offer customers technology on 9000s — like Internet business solutions — but not on HP 3000s?

We make one server today in the RISC environment. There is no separate HP 3000 platform. We offer a line of PA-RISC servers. The difference between an HP 3000 and an HP 9000 is the operating system that runs on the platform. The success that we have in the Unix business fuels the strength of the platform, which is in turn a benefit for the HP 3000 customer.

We do look at it as a business. Harry [Sterling] makes those investment calls, based on what the customer priorities are. There is a revenue stream that comes out of the market, and that stream looks more encouraging than it did a year ago because of some of the new business opportunities that we’re winning. We see a good environment for making increased investment decisions. The decision to port to IA-64 was a direct result of that. A lot of what hinged that decision was not just a longer path for existing customers, but seeing the success of these thrusts into new markets. That’s driven the investment decision for MPE.

It isn’t that we rebuild something completely different. There’s porting that goes on to move it onto the HP 3000. Harry makes the calls based on the understanding of the customer needs. We won’t take every thing and put it on the 3000, but we prioritize based on customer needs.

So it’s his decision to make about investments in products like FoundationWare?

It’s his call.

So that capability is making a difference in how the 3000 division performs?

Yes. Also, we’re getting a lot of leverage for Harry’s investments. Because we only have one server platform, he doesn’t have to carry the full investment of a separate hardware platform. The revenue is all in software and porting some of these features. If we had two separate hardware platforms, it would be difficult for Harry just to maintain the hardware, never mind all the incremental things.

So the bottom line is that if customers want FoundationWare or Domain Foundation tools on the HP 3000, they need to get the message to CSY?

You need to demand it, collectively. As a company, HP has a good track record of listening to what those customers want — or we wouldn’t still have a vibrant product 25 years on, would we?

Was putting the 3000 into ESG just a way of grouping the business, or is it a true repositioning as an enterprise server? Do you think of the 3000 as a dominant platform within your Group, or as an auxiliary system within HP’s business solutions?

Of course it’s an enterprise-level solution. If we were only putting the business into maintenance mode, then it may well be in another part of HP. My job is business growth. It’s absolutely there to go after new business in the segments and continue to do good business with the customers. People run their businesses on it.

You’re looking for more of a statement about the 3000 as an enterprise server. The HP 3000 was always part of the Computer Systems Organization. Certain things moved out of that organization, and what were left were the core server platforms and storage. The reason the HP 3000 sits absolutely alongside the Unix platform is the reason I gave you: We make one hardware platform. It’s absolutely the right place to leverage on the back of all the investments from the High Performance Systems [HP-UX] Division and the Internet Applications Systems Division.

There’s one server line behind all of this. We acquired Convex about two years ago, and that’s not a separate company. The reason the HP 3000 division makes sense is we leverage from each other.

What's the incentive that HP will offer ISVs to stay with the 3000 platform, or develop on it for the first time? Direct financial payments didn't work, so what will you try next?

Ninety-eight percent of the answer to that question is customer demand. What will motivate an ISV to make a port is the ability to sell it to customers who want it. We’ve got a lot of momentum behind these five market segments, but as you’ll hear from Harry and the team, they’ve got a good campaign in place to do some advertising, promotion, create market demand. At the end of the day, pull from the customers is what will motivate everybody in the chain to deliver the solution.

You’re right — I would not support anybody making an investment with a software vendor to port their software so you’ve got it on the platform. That is a complete waste of money unless the demand is there. It will just sit on the shelf. So our energy is going into creating the customer demand.

So you want to find the people who want to get the job done in their business, and suggest to them this would be a good platform to do business on because you have a solution in place?

Yes, and frankly we’ve not had too much trouble with the software vendors in the industry segments we’re in, motivating them to move to IA-64 and taking a long-term view. That’s because they’re seeing the business.

Speaking of segments, you’re got first-hand experience selling the HP 3000 in one of those markets, manufacturing. Can the HP 3000 earn new manufacturing customers today without name-brand manufacturing solutions?

I used to sell the HP 3000 to manufacturing companies. I joined HP as an HP 3000 sales rep in 1980, and my specialization was manufacturing industries. You wouldn’t say manufacturing is an industry focus. This fifth target is aimed at the small- to medium-sized companies who don’t want the complexity of an SAP or a Baan. They want the reliability which the NT platform doesn’t have. That segment is fairly generic and aimed at a particular type of customer requirement.

I think there’s a lot of people who, if we get the right solutions, will stay and develop more with the HP 3000 platform. It’s got what the industry aspires to. This 25 years of pedigree means it’s one of the most reliable systems in the world.

But do you think you can get along in that manufacturing mission without better-known names than your current suppliers?

Yes I do. I think at the end of the day, customers at that level typically don’t have a huge IT department that surveys the industry. All they want is a system that will be implemented at a low cost, low hassle, and will work. They’ll be less bogged down. I think the HP name gives a huge sense of feeling about reliability and supportability. That’s about the full level. They’ll get to know the HP platform rather than the application software. At that level of company they haven’t got the interest in studying the IT industry and going for the big names.

I think there’s a sense, too, that a lot of those companies feel the big names haven’t got time for them.

What do you see as the unique advantage that the 3000 offers over other HP computing platforms? It’s kind of like asking someone who has several children, “Who’s your favorite?”

The analogy I always use is “If you get two ties for Christmas, what was wrong with the other one?” I don’t think it’s decided on hardware platform or operating environments. It’s decided on the application solution the customer wants. At the end of the day, the customers choose.

The thing that we’ve brought to the HP 3000 that it didn’t have two years ago is a longer life than people thought. The nervousness that people might have had about putting new applications on the HP 3000 — because they’d have to move — has become less and less. They’ve seen some new big names that have signed up, like the regional airlines that just put in new systems, behind all of them an HP 3000.

Some of them might not have known it was an HP 3000. They’re the smaller companies that don’t have a large IT organization doing the in-depth platform evaluation. What they’ve got is a business need, and someone’s come along with combination of service, application software and a platform to run it all on that’s absolutely met the business need. That’s why they’re making the call.

So I’m not going to give you the 28 reasons why this tie is better than the other tie. You choose the tie that matches the jacket, and you make the jacket call first.

We’re in an exceptionally strong position. I have NT platforms, Unix platforms, MPE platforms. We have the platforms to supply the infrastructure to meet the customers’ needs. There’s something else: the services and the application software.

Harry Sterling gets the benefit of a hardware platform built on the fact that we are by far the market leader in the Unix segment. We’ve just gained huge market shares, up eight points in the first quarter this year. We’re shipping volumes of the HP 9000, and that drives a big R&D investment back into the platform.

What do you think has contributed to the HP 3000’s resurgence?

It’s the NT platform. There was a time that what was causing a movement away from the HP 3000 platform was it all had to be Unix. We had to move away and get onto a single operating system. The single Unix never happened, and won’t happen. The NT environment — there isn’t a customer today who has a Unix or NT strategy. They buy both platforms. Customers are getting to used to the idea there might be bigger issues to solve than worrying about whether you’ve only got one operating system or not. I think the desire to rush off the HP 3000, or comparable platforms that are proprietary in nature, and move them all to Unix — people have gone, “Well, that’s not the real issue.” That’s made a lot of our customers much more open to continuing with the HP 3000.

How much do you think the Year 2000 has contributed to the resurgence?

A huge amount. To my business overall the Year 2000 has been a huge challenge. I’ve invested a huge amount of R&D to Year 2000 compliance, but the opportunity for business has been huge, and still is. Customers have abandoned trying to fix existing systems and deployed new ones, based on new application software. New Year 2000 compliant systems have been deployed that have required the customer to upgrade their platforms. So it’s been a bittersweet thing for me, because making my products compliant is not the sort of thing where you just updated the brochure. We have R&D engineers working seven days a week, 24 hours a day on some of this compliance stuff. On the other hand, the business growth has been phenomenal.

The Year 2000 issues have provided a pretty safe tunnel for the HP 3000. Do you think the 3000 is going to wind up getting on the outside of that tunnel and losing its safety?

I certainly don’t think on the second of January in 2000 everybody’s going to say, “Right, everything’s okay.” I think Year 2000 issues may continue a little bit past the Year 2000. I don’t believe it’s all going to dry up. There has been a lot of business growth fueled by that, but on the other hand that probably reduced some of the investment in the new business systems a company needs.

Once the Year 2000 issues are behind us, I think there will be an increase in growth as companies catch up with some of the new systems they would have liked to put in but had been diverted to fixing Year 2000. There is nothing business strategic about fixing Year 2000 issues. You’re investing money in standing still. Once companies have done that, they’ll have to invest money in moving forward. We see a quite rosy picture for all platforms, including the HP 3000.

HP Vice President

General Manager,
HP Enterprise
Systems Group