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HPE pins hopes on intelligent edge as hybrid strategy flattens

HPE has reported third-quarter net revenue of $7.8bn, up 4% from the equivalent period last year.

Revenue in its Hybrid IT business was $6.2bn, up 3% year on year, although growth was flat when measured in constant currency. Its Compute business reported revenue growth of 5%, while there was a 6% decline in its datacentre networking revenue, and revenue in its Pointnext business declined by 1%.

Describing growth in the so-called “intelligent edge” during the earnings call, posted on the Seeking Alpha financial blogging site, HPE CEO Antonio Neri said: “Performance remains strong, with revenue of $785m, up 10% year on year. We saw particular strength in our campus segment, driven by our secure cloud offerings.

“Looking forward, Intelligent Edge is a significant long-term growth opportunity for us, therefore a key area of investment. I said that because there is a major transition happening right now, driven by the explosion of the data created at the edge. The edge is the world outside the datacentre.”

When asked about the growth in storage, Neri said: “We grew storage as a segment by 1%. When you look with the combination of that segment plus the other platforms, including hyperconverged and composable, actually total growth is 12%. And within that also, we saw big base of storage growing 70%, because that’s the demand.

“So, we see the explosion of data continue. And you have to store the data somewhere. And obviously more hybrid cloud capabilities are needed going forward.”

Commenting on the results, Berenberg analyst Josep Bori said: “While Intelligent Edge continues to perform strongly, up 8% year on year in constant currency, the much larger Hybrid IT (80% revenue mix) decelerated to 0% growth as the easy comparables were left behind, leading to a combined 1% growth year on year in constant currency.”

Last year, analyst Gartner reported that the enterprise server market was under pressure from enterprises moving workloads to the cloud. At the same, the hyperscale cloud providers have been kitting out their datacentres using equipment from original design manufacturers (ODMs), rather than buying from the established server firms. This has resulted in HPE pulling away from the hyperscale market. 

Bori said Berenberg remained cautious over HPE’s exit from the tier-one/hyperscale market. “As this market continues to gain share of worldwide IT workloads, we remain sceptical about the long-term strategy,” he said.


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