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Meg Whitman, CEO of Hewlett Packard Enterprise in New York City in November, 2015. Andrew Burton/Getty Images
Meg Whitman, CEO of Hewlett Packard Enterprise in New York City in November, 2015.

HPE Bets on Core Data Center Hardware Sales to Drive Profits

Getting out of low-margin services business, company now has to boost hardware sales volume

Once it’s done shedding its Enterprise Services business, Hewlett-Packard Enterprise is betting on its bread-and-butter data center hardware business – servers, storage, networking, and software to manage all of the above – to continue driving the bulk of its revenue.

The company, which only recently separated from the former Hewlett-Packard’s printer and PC business, announced earlier this month that Enterprise Services would spin off and merge with Computer Sciences Corp.

In an analysis of recent revenue and profit trends of HPE’s various businesses, The Next Platform’s Timothy Prickett Morgan points out that enterprise technology services are a people-intensive, low-margin business, and says that this is probably the biggest reason CEO Meg Whitman has decided to get out of it.

While its bread-and-butter server business has been essentially flat, it’s generated a lot more profit for HPE than Enterprise Services. Second to servers in terms of revenue is Infrastructure Technology Outsourcing, which is being shed as part of the Enterprise Services unit.

The only clear way for the company to drive meaningful revenue growth now appears to be simply selling higher volumes of commoditized data center hardware, Prickett Morgan concludes. Driving volume in hardware sales is HPE’s first line of defense against the market behemoth that is about to be born as Dell closes its $67 billion acquisition of EMC.

Read more at The Next Platform.

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