NETWORLD + INTEROP
SEPTEMBER 26, 2000
"NEW REALITIES: AT THE HEART OF A RADICAL NEW WORLD"
© Copyright 2000 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.
It is my pleasure to speak to you today.
All of you are about to spend the next few days exploring
and absorbing the latest and greatest advances in networking,
telecommunications, and Internet technologies.
My role this morning is to give you a framework … a context
… for assessing all of these incredible technology advances.
So today, I want to focus on four things:
- The shifting technology landscape
- The new business imperatives
- What we believe are the technology tenets of this new
- And how we’re addressing all of this from a systems strategy
perspective at HP
Let’s start with the shifting technology landscape.
You heard us start the discussion about Internet-based services
e-services … more than a year ago.
Any process, any application, any asset that can be digitized
… and delivered over the Web …will be.
It’s about services interacting with other services, dynamically,
Whole chains of transactions will be electronically brokered
… behind-the-scenes … while you do better things with your
You’ve heard us talk about an always-on infrastructure
required to support this swarm of transactions … an Internet-based
infrastructure as available and reliable as water. As pervasive
… as the air we breathe.
And you heard us talk about the rise of millions of new information
appliances – basically anything with a chip becomes a platform
for the delivery of services … an opportunity to serve customers,
to drive revenue streams, to fuel growth.
This world is clearly emerging.
Just look at the market for mobile services delivered over
cell phones that’s developing in Europe and Asia.
In the work that we’ve been doing through our mobile e-services
bazaars in Finland and Singapore, we’ve played a role in developing
the first generation of mobile services that have come to
market … including:
- Transactional services – like banking and travel reservations
- Information services – particularly sports scores, and
real-time news …
- Search services – think of yellow pages and translation
- Entertainment services – like custom ringers, games
- Personal services – for calendaring, or your address book
- Communications services – like SMS, and mail …
All of these services represent huge revenue opportunities
-- SMS text messages, alone, now represent about 8 percent
of total mobile revenues in Europe -- roughly $10 billion
-- and that figure is growing exponentially.
And the mobile market is just one of the interesting Internet
landscapes that’s emerging. There’s the B2B Internet. The
B2C Internet. The broadband Internet. And the nascent embedded
The shifts ahead … the opportunities … are massive …and our
customers see them all coming.
During the last five years, conversations with customers
about Internet technology have typically centered on making
business processes more efficient:
- e-commerce was essentially about making the process
of interacting and transacting with customers more efficient,
- e-business was about making back-end systems and processes
more efficient …
Today those conversations have shifted.
While customers still talk about business processes, they
want to talk to us about something much bigger … more universal.
Today, our conversations with customers are centered on the
topic of how technology is transforming every aspect of their
business and the markets they compete in.
They see that technology is no longer a supporting player,
but is actually the driving force behind business strategy
and business transformation.
We’re entering a fundamentally different phase in the Internet
Neither e-commerce nor e-business changes the fundamental
structure of the business so that it can react to changes
and opportunities in Internet time.
That’s where our e-services strategy comes in.
With e-services you think of your business as a set of independent
services – email, accounting, inventory management, or HR
-- that you enlist and pay for when you need them … not as
business functions with expensive application infrastructures
that you must support and maintain.
With e-services, you can reach your customers wherever they
are – even when they’re on the move – because anything with
a chip in it becomes a platform for the delivery of services.
In an e-services world, all things become revenue opportunities.
Capital assets. Material assets. A key competency. Know-how.
Experience. A world-class process. They all can be delivered
as a service over the Net to generate new revenue.
HP’s mission is to invent useful customer solutions at the
intersection of e-services, information appliances, and an
always-on Internet infrastructure.
We believe the real promise of transformation for this era
lies in understanding the linkages … the connections … the
intersection … of these three forces.
It is by understanding the interplay between them – that
we have the opportunity to use technology to fundamentally
transform the customer experience … to transform the value
creation process … and, in the process, even transform entire
The linkage between business transformation and IT implementation
is becoming inextricable … and this places new demands on
Internet infrastructure providers.
As we look out into that world … the new demands it places
on companies … and the next-generation of technology required
to make it possible … we’ve developed a set of beliefs, a
set of basic tenets, that guide our systems strategy.
Belief # 1 …
Solutions must be engineered for the rigors of relentless
always-on Internet environments …
Always-On Internet Infrastructure is quite simply a requirement
of digital life. Downtime costs real money.
E-Bay reportedly lost $5 million from two outages that took
their service offline for 30 hours.
MCI WorldCom had to offer 20 days of free service to compensate
3,000 business customers affected by disruptions in its data
And, according to a June report from Lloyd’s of London …
firms lost $20 billion in 1999 because of computer outages
And when your IT strategy is your business strategy, your
entire valuation as a company can be dependent on the performance
of your systems.
E-Bay’s stock fell 25% during the time of its reported outages.
And as technology becomes even more mainstream in industries
like healthcare, the stakes get even higher.
It takes years of experience driving five:nines levels of
performance into your systems … years of inventing at the
edge … years of experience managing complex customer environments
… to get it right.
So, here’s what we mean when we talk about Always-On
Internet Infrastructure … and this is important because its
sets a very high standard– one that very few, if any, vendors
It includes a combination of:
- The best front-end planning, design, configuration and
performance tuning services.
- Best-in-class hardware and software solutions … including
our networked storage solutions and our integrated software
offerings for managing and securing systems and networks.
- It acknowledges the fact that customers have discrete
needs within their computing environments, needs that require
different computing platforms … therefore NT, HP-UX and
Linux, all receive mission-critical levels of support.
- And finally, when we deliver Always-On solutions it includes
world-class experience in monitoring, managing and supporting
I would encourage you to visit the HP booth to see our server,
storage, networking and management solutions … all fundamental
building blocks for Always-On Internet infrastructure …
Belief #2 …
Open systems are the best way to help this new universe
evolve to its fullest …
Technology is changing so fast, that to bet a business on
proprietary technology … or on a single technology … commits
an IT environment to becoming a legacy environment.
Frankly, we don’t believe the technology that enables business
ecosystems to flourish can be pre-determined – openness is
key to flexibility in this new dynamic market.
So in a world characterized by rapid technology advances,
intense competition, and dynamic markets … the only way to
help our customers avoid paralysis is to provide flexibility
… to embrace, support and promote open, industry standards-based
technologies and platforms. Period.
Now, belief number 3.
Our systems must anticipate and embrace the key computing
and technology shifts ahead.
Next generation infrastructure has been at the heart of HP’s
vision and strategy for over 20 years.
Long before the Internet became mainstream, HP was describing
the shift toward pervasive computing— a world where information
systems were so pervasive, so ubiquitous … so invisible that
they are part of everyday life for most people … and so natural
and reliable to use they operate like information utilities,
paid for by usage, servicing a world of persistently communicating
In the early 80’s, we bet our company on the tenets of this
- Open systems
- Scalable architectures … specifically RISC
We mobilized the company to capitalize on these opportunities.
And today HP is indeed recognized as the champion of open
systems, a leader in Unix and one of the inventors of RISC
The point is … we have some experience at predicting and
leading key technology shifts.
So, here’s what we believe to be the next key technology
shifts … and we’re embracing them as part of our systems strategy
The first is the shift to IA-64.
We believe IA-64 will become the scaleable processing
architecture for the Internet age.
The long-term performance and scalability of IA-64 is essential
to supporting millions of devices generating billions of transactions.
IA-64 is crafted for dynamic Internet-based interactions
and transactions, optimized for security-based computations,
and designed for rich media processing and object-oriented
And, in keeping with our belief in industry-standard components,
IA-64 will actually promote computing harmony ... by standardizing
multiple applications and operating systems on a single, industry
standard hardware platform. This standardization will eventually
mean more choice and lower costs for customers as they deploy
their computing infrastructure.
You may already know this, but it’s worth repeating, that
HP’s EPIC technology -- Explicitly Parallel Instruction Computing
– is the foundation of Intel’s IA-64 architecture.
This gives us a huge competitive advantage in the areas of
compatibility, technology and time-to-market as this new platform
comes of age.
While we clearly think IA-64 is important … big architectural
shifts like this one take time. We’re very pragmatic about
this, which is why we continue to invest in building a strong
roadmap for our industry leading PA-RISC architecture.
Our next generation PA-RISC platform, the PA-8700, which
is due out in volume in 2001, is faster than any competing
architecture in the industry. And development plans are already
in place for the PA-8800 and the PA-8900 processor so that
we can continue to provide our customers with a world-class
growth path on the RISC platform.
The bottom line is we believe in the shift to "explicitly
parallel computing" that’s embodied in IA-64 … but we’re
not compromising an inch on our commitment to the RISC architecture.
It’s essential that our customers – and HP – remain competitive
on the volume platforms of the day.
The second shift we see is the shift to open source.
In our view, open source is inevitable and natural.
And while, in some quarters, the debate rages as to whether
or not open source software is ready for prime-time, mission-critical
computing ... the fact remains that open source development
initiatives, Linux being a prime example, are by all measures
extremely successful and mainstream.
At HP, we saw the important benefits of the open source model
early on – the reduction in software development costs, accelerated
time-to-market, the creation and provision of high quality
code and the ability to customize code to address unique requirements.
Most importantly, we recognize that Open Source is at its
core – OPEN – which, as I mentioned earlier, we believe is
absolutely essential to offering customers the best IT solutions,
and the most flexibility for the future.
As a result, HP is already at the heart of supporting key
open source technologies and initiatives … let me run through
a few of them:
- Of course, Linux will be supported across HP’s systems,
software, and services
- In fact, we’re porting Linux to PA-RISC to ensure customers
have access to Linux-based software applications on the
world’s best hardware platform
- HP is a founding member of the IA-64 Linux Project --
an industry consortium focused on porting Linux to IA-64
While Linux is a shining example of the power of the open
source movement … it goes far beyond Linux … and it certainly
does not mean the extinction of other operating systems.
As I said earlier, different operating systems are beginning
to support different application requirements. We believe
NT, HP-UX and Linux are all important and we remain firmly
committed to supporting all three on their existing chip architectures
as well as on IA-64.
We’re also making investments in open source initiatives
like our work with "sourceXchange" – a web-based
service that expedites software development collaboration
between corporations and developers.
And I must mention e-speak – an HP open source initiative
developed in HP Labs – aimed at creating a platform for the
development of e-services.
I’ll talk more about e-speak in just a minute.
These technology shifts are components of what we see
as the next major architectural shift in computing … the shift
to services-based computing.
We’ve been through the mainframe and client/server computing
eras. And now we’re in the Internet server-computing era.
The next major architectural shift, the new center of gravity
for computing advances will be, and to some extent already
is, in the area of services-based computing.
Some people are calling this "XML-based computing"
… others call it "federated" or "collaborative
computing." Others are calling it "peer-to-peer"
computing … although we think peer-to-peer is just a precursor
of what’s ahead.
As I said at the outset of this speech, HP put a stake in
the ground around service-centric computing – our e-services
vision – more than 18 months ago.
In this new model of computing … networked devices, resources
and services can be brought together, connected, and harnessed
dynamically to create solutions, perform tasks, solve problems
... and then be disconnected, when no longer required.
Services-based computing architectures will loosely couple
together everything from technology resources … like processor
cycles, storage, I/O, memory and devices … to business and
consumer services … like restaurant reservations, transportation
services, or financial services.
The modularity of e-services opens up the transaction architecture
of the Net – to make business more flexible, more fluid. This
is when the capabilities of the Net shift from "do-it-yourself"
We will see these connected services and applications in
many different environments.
Consider the mobile environment – every time you show up
in a new city a whole new set of location-specific services
… services that you have expressed an interest in … will make
themselves available to you and your mobile device.
Mobile e-services relevant to Atlanta are what you want when
you’re here … but when you’re in New York, you may want e-services
that point you to the best new restaurant in mid-town, for
example. This is what services-based computing is about.
Or what about at work? When hundreds of ordinary desktop computers
can be coupled together on a regular basis … maybe every night
… to make their excess capacity available as a service to
create a virtual supercomputer for demanding engineering and
design tasks. This is what services-based computing is about.
Will traditional Internet infrastructure like servers and
storage play a role in this new world? Absolutely. More than
ever. With every architectural shift the demand for infrastructure
But true services-based computing requires capabilities and
technologies beyond today’s Internet server-based computing
model… like security approaches that enable truly safe interactions
between anonymous devices and systems … or the ability for
Internet resources and services to advertise and locate one
another to complete a task or a transaction … or the ability
to manage multiple interactions between services simultaneously.
This is the era when e-speak comes of age … because e-speak
is central to delivering on this services-based model of computing.
E-speak … today … enables the automated discovery AND interaction
between web services. It actually delivers capabilities significantly
beyond those that generated so much hype in the recent Universal
Description, Discovery and Integration standard announced
by Microsoft, IBM and Ariba. And e-speak is open source!
We believe that a vendor-neutral, totally open, industry
standards-based approach must be applied to the new technologies
and standards that are emerging to enable this next generation
of computing. Which is why we’re judiciously evaluating the
proposal made by the UDDI consortium.
Stay tuned for more details from HP in this space.
Over the past couple of weeks, if you’ve been following HP,
you may have noticed some of the announcements we’ve made
related to this systems strategy.
Let me spend a couple of minutes putting recent events in
context for you.
On September 11, we confirmed we’re in discussions with PwC
to acquire their management consulting services practice,
which would significantly accelerate our move into the IT
This is consistent with our belief that the days of talking
to one company about business strategy and another company
about technology implementation are, frankly, over.
As I mentioned before … the linkage between business transformation
and IT implementation is inextricable and our conversations
with customers are evidence of these changes.
We validated our views in a recent study that we commissioned.
We asked Boston Consulting Group to conduct a blind survey
of more than 100 CIOs around the world.
Here’s what the study confirmed:
- CIOs are, in fact, looking for consulting and technology
partners who are experienced at working together.
- While CIOs once valued neutrality regarding technology
implementation, today they value a point-of-view on how
and what technology can speed business transformation.
A point of view that keeps the client’s best interest in
the center of the engagement.
- And time-to-solution … time to revenue … the speed of
implementation … matters. That’s why they value the linkages
between consultants and technology players.
And that’s why you’re seeing a sea change in how systems
vendors and consulting practices go to market.
While we’ve been growing our consulting business organically
through aggressive hiring and strategic partnerships – and
we’ve made great strides in doing so – we believe the best
way to accelerate our growth to address this market shift
is through an acquisition of a premier consultancy.
Fundamentally, this acquisition is about combining world–class
technology solutions with world-class consulting services
to help customers transform their business.
Now, let’s shift the conversation to Superdome.
On September 12, we launched the latest addition to our Unix
server line-up, Superdome, our new high-end server … that
combines world-class technology with world-class service,
support, and financing. In fact, Superdome represents an entirely
new approach to delivering value in this market … so different
… that we believe it changes the rules of the game.
Superdome is strategic to HP for a number of reasons:
First … with Superdome we’re now delivering the industry’s
most powerful Unix server line-up … top to bottom … bar none.
Second … Superdome represents a radically different approach
to working with customers AND leveraging ALL of hp’s resources
to develop total solutions.
Third … With Superdome we’re introducing a completely new
go-to-market, pricing and implementation process for customers.
In fact, we’re raising the bar on what it means to be a leader
in the high-end Unix market.
We’re providing up-front planning and integration services
to assure customers this is the right system for their business
and it will easily slip into their existing IT environments
when it’s installed. Or we won’t ship it.
We’re delivering a utility-based pricing model where customers
pay for the server capacity they need … exactly what they
need, when they need it – just like they pay for electricity
or phone services.
We’re automatically assigning a dedicated support team the
moment the customer makes a purchase ... to support and monitor
the system. In other words, you’re not just buying a server,
you’re buying a service and support team along with it.
And finally, Superdome is engineered to support the key computing
and technology shifts that lie ahead … things like IA-64 and
multiple operating systems such as Unix, NT and Linux … providing
customers with the ultimate flexibility and investment protection
for the future.
Superdome is more than just world-class technology it’s a
world-class customer experience.
So, we’ve talked about how the technology landscape is shifting.
We’ve talked about the new business imperatives.
We’ve talked about HP’s strategies for helping customers
transform their businesses.
As you explore and discuss new technologies over the next
few days at this conference … keep in mind that a new game
is emerging … it’s a different game … and the rules of competition
Almost a year ago … I stood in front of the HP garage … the
birthplace of Silicon Valley … and I asked the world to WATCH
This is a very good time to stay tuned.
Thank you. Enjoy the conference.
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