HP is turning to Taiwanese manufacturing giant Foxconn to try and gain traction in the market for hyper-scale servers. The companies today announced a joint venture that will develop servers targeted for the huge cloud builders, a market where HP has struggled to compete in recent years.
Foxconn is best known as the manufacturer of many Apple products, including iPhones and iPads, and has worked with many American server vendors as well. That includes a lengthy relationship with HP, which will be expanded with the new joint venture.
In turning to Foxconn, HP appears to be acknowledging that its challenges in the hyper-scale market won't be solved by Project Moonshot, its ambitious in-house effort to develop low-power servers for the major cloud builders.
Hot Competition in Hyper-Scale Market
The Foxconn deal is HP's latest effort to improve its competitive position in the booming cloud market, where Facebook, Google, Microsoft and others are buying tens of thousands of servers customized for cloud workloads. Much of that business has been won by contract manufacturers like Quanta, Wiwynn, Hyve and AMAX, which have captured market share with aggressive pricing.
Those firms have gained momentum through the growth of the Open Compute Project (OCP), a movement founded by Facebook to design open source hardware for hyper-scale market.
HP is a member of OCP, but apparently sees the partnership with Foxconn as a more promising route to relevance in the hyper-scale market.
“With the relentless demands for compute capabilities, customers and partners are rapidly moving to a New Style of IT that requires focused, scalable and high-volume system designs,” said Meg Whitman, president and CEO of HP. “This partnership reflects business model innovation in our server business, where the high-volume design and manufacturing expertise of Foxconn, combined with the compute and service leadership of HP, will enable us to deliver a game-changing offering in infrastructure economics.”
What About Moonshot?
The big question: what does this mean for Project Moonshot, HP's highly-touted in-house plan to innovate in the development of low-power many-core servers for the hyper-scale market. It's been two-and-a-half years since HP unveiled Moonshot, which initially focused on ARM chips from the now-defunct Calxeda but later expanded to include low-power chips from Intel, AMD, Texas Instruments and Applied Micro.
HP's announcement said the Foxconn server line will serve as a compeiment to its ProLiant servers, including those from the Moonshot initiative. HP said the Foxconn deal addresses the need for "a new approach to server design that brings together cloud solutions expertise, quick customer response and volume manufacturing."
“Cloud computing is radically changing the entire supply chain for the server market as customers place new demands on the breadth of design capability, value-oriented solutions and large-scale and global manufacturing capabilities,” said Terry Gou, founder and chairman, Foxconn. “In partnership with HP’s server leadership, we are embracing this new opportunity to change the industry, capture growth in this emerging market, and deliver end-to-end value as we expand our global leadership in design and manufacturing.”
Corrected: Foxconn is based in Taiwan, not in China, as a previous version of this article mistakenly said.