Hewlett Sees Server Prices, Margins Steady
By Peter Henderson
SAN FRANCISCO (Reuters) - Hewlett-Packard Co. (NYSE:HWP - news) expects to hold the line against price cuts and maintain profit margins on its family of server computers in the next six months, in part thanks to a new product introduced on Tuesday, an executive said.
Mark Hudson, worldwide marketing manager for H-P's 9000 line of enterprise servers, the engines of complex networks like the Internet, told Reuters that the new, L3000 low-end server would help keep H-P keep prices firm.
``We actually feel very good about being able to maintain our margins and our price over at least the next six to nine months, because of our technology being ahead of the competition,'' Hudson said.
Hewlett-Packard's chief competitor in the market for servers, Sun Microsystems, Inc. (NasdaqNM:SUNW - news), has launched a line of products based on its new UltraSPARC III microchips and is expected to roll out new offerings next spring or summer.
H-P's L3000, with a starting price of $39,000, tops its entry level server line aimed at Internet Service Providers and departments of major companies, among others.
Price pressure among computer makers has made analysts nervous about the outlook for the industry's profits, but Hudson said his forecasts generally held true for the entire server line that he manages.
``We think we will be able to maintain our ASPs (average selling prices). That doesn't mean they won't decline some, but it doesn't mean they will just be falling off the table,'' he said.
``So overall, it is a portfolio to look at that we think will be able to have a steady, healthy margins as we go into FY 01.''
Sanford C. Bernstein computer analyst Toni Sacconaghi said H-P had a tough task taking market share from industry leader Sun. ``Share gains have been by no means correlated to performance,'' he said.
He estimated that H-P low-end UNIX server sales were $312 million, or 2.4 percent of overall revenues, in the fiscal 2000 fourth quarter which ended in October. Revenues for the entire UNIX server line were about $3.9 billion for the full year.
H-P's full-year revenues were $48.8 billion, and executives said entry level server revenues jumped 127 percent in the fourth quarter compared to a year earlier. |
