Q1) In summer 1998, what is the position of the Enterprise Server Group (ESG) in its industry? How has it evolved? Why?
Ans. Davis was the general manager for Enterprise Server Group (ESG) (Exhibit 1 & 2). In summer 1998, HP had to decide whether it should recommend a large share of its outlay to its Performance Architecture (PA) that is UNIX based or should shift its resources to the development of a new chip that would hold the future of enterprise computing. ESG was formed in 1997. The creation of ESG was welcomed by companies like IBM, Hewlett Packard, Compaq and SUN. It was responsible for producing scalable, high performance computing systems and it ran complex applications helping customers run their businesses. ESG's products were built around RISC microprocessors and UNIX operating systems which led to a tremendous increase in the performance of the computing systems. By 1997, ESG had an installed base of more than 1.3 million and had sales of almost 10B. HP's net revenue and net sales kept increasing from 1992 to 1997 (Exhibit 3 & 4). HP had maintained number one position in UNIX server vendor, by sales, since 1993, through its HP-UX products. In 1994, as HP joined hands with Intel to develop the IA-64 architecture, its competitor, SUN started a campaign that HP was not committed to RISC-UNIX systems. This had eroded HP’s customer base. The current situation was critical because any reduction in the resources allocated to the Performance Architecture (PA) would lead to erosion of market share and revenue.
Q2) Why did HP get involved in developing the IA-64 architecture?
Ans. ESG's products were built around RISC microprocessors and UNIX operating systems which were increasingly powerful and reliable. SUN, IBM and HP were some of the known makers of RISC- based computer systems. On the other hand, Intel Pentium Pro Microprocessors and Windows NT had combined into a powerful WINTEL system and were capturing the market share rapidly because of...
Please join StudyMode to read the full document