Bezos to McNealy: Drop Dead!

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Bezos to McNealy: Drop Dead!
C. McNulty - June 12, 2000

Event Summary

NEW YORK, May 31, 2000 -- Hewlett-Packard Company announced an agreement with aimed at supporting the Internet-based infrastructure and enhancing the selection of HP products available at the world's leading online retailer.

With this announcement at HP's meeting for security analysts, HP becomes the primary Internet infrastructure provider for and will supply 90 percent of their applicable infrastructure requirements. By doing so, HP will expand its role in supporting the company's operations to include the advanced Internet servers and storage that will power Amazon's Web site, distribution and supply-chain management processes, as well as PCs for Amazon's employees at work. HP will also provide always-on infrastructure support services to ensure the company's systems work effectively during peak e-tailing sessions. This agreement means Amazon will become one of HP's top five customers.

Market Impact

It's about time HP had a high profile enterprise win. HP has enjoyed a well-earned power climb toward the top of the PC charts. To date, this growth has been sparked by the retail and consumer sectors. We have previously predicted global unit sales for HP to reach 9.9 million units during 2000 (See TEC article HP "Medals" In U.S. PC Olympics.) A diverse rally is a robust rally. With recent investment analysts revising global 2000 PC sales forecasts upwards, adding HP to the 10 million unit club (current members - only Dell & Compaq) is almost a given.

HP's marketing has been rather quiet during the last few months. Sources inside HP have informed TEC that CEO Carly Fiorina has been focusing company attention inward, but to expect a more aggressive HP marketing strategy to come out during the next few months. Amen to that, brother. Or, more appropriately, sister.

The loss follows another high profile loss for Sun. Network Solutions Inc. selected IBM's S80 over the Sun Enterprise E10000 to run in the Internet's top-level domain A root servers. One wonders if Sun can still call itself "the dot in dotcom."

Carly Fiorina's HP is out of the bunker, and on the attack. Sun has no realistic desktop offering for enterprise customers, and Dell lacks a high end RISC offering - but we expect the battle will be between Compaq & HP.

User Recommendations

There are really only three companies in the world with a capability for desktops, servers, and mid range RISC systems - HP, IBM, and Compaq. Of the three, IBM has been de-emphasizing its desktop business. As discussed above, enterprise customers of either Compaq or HP should pit one against the other. Both companies will be hungry for your business.

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