New HP Enterprise Sees Big Opportunity in China

Silicon Valley Icon Hewlett-Packard is Splitting into Two

Seventy-seven years after Bill Hewlett and Dave Packard began tinkering in a Palo Alto garage， the company that became the foundation for Silicon Valley is breaking up.

Hewlett-Packard in November officially splits into two entities， opening a new chapter for the US technology legend.

As planned， Hewlett Packard Company has completed its split into two companies， today： HP En- terprise （NYSE：HPE） and HP Inc.（NYSE：HPQ）.

Hewlett-Packard Company（NYSE：HPQ） finalized its long impending split on November 2， under which the companys enterprise and core PC manufacturing business would operate as separate corporate entities. Hewlett Packard Enterprise Co （NYSE：HPE*） as the name suggests would develop cloud computing solutions for other businesses while HP Inc would manufacture printers and PCs.

Hewlett-Packard officially split into two entities opening a new chapter for the 76-year-old American technology legend. The aim is to develop a sharper focus both for the enterprise unit and the PC-printer division that made it a household name but has become fiercely competitive and less lucrative in recent years.

In the first day of trading on Wall Street， HPE shares fell 1.6 percent to$14.46， while HP Inc. rallied 13 percent to $13.83.

Following its spinoff from Hewlett Packard， HP Enterprise in November debuted as a corporate technology leader with $53 billion in annual revenue.

Exit the “Public Cloud”Business

Meg Whitman， chief executive officer of the company told reporters that HP Enterprise， spun off from Hewlett Packard， along with its printer and PC unit called HP Inc， has decided to exit the “public cloud” business of making data storage available to all customers.

According to her， HP Enterprise will continue in the “hybrid cloud”business of working with companies to store data both on-site and in outside data centers.

“Its a hybrid world，” she said. “We decided to not play in the public cloud space anymore because its very capital intensive and Amazon is way up in front.”

“The winners in todays market will be those who apply the power of technology to fuel the power of ideas， and the new Hewlett Packard Enterprise is built to accelerate this journey for customers，” said Whitman.

China is a Very Important Market

The newly spun-off tech giant HP Enterprise believes China is the real emerging market and there will be huge technology demand from the country in the forthcoming decades， said chief executive officer Meg Whitman in November.

China is a very important market for HP Enterprise， said Whitman. “Chinas growth rate may slow down a bit， still one of the fastest growth rates of the world. It is a very important longterm market for us， and a very fastgrowing economy.”

HPs previously wholly-funded business H3C is HPs exclusive provider of servers， storage and networking， as well as hardware support services in China.

In May， HP sold 51 percent of its stake on H3C to Tsinghua Holdings， a subsidiary of Tsinghua University， an elite college of higher learning in China.

Whitman said she was confident that partnering with Tsinghua Holdings would help HP Enterprise bestpositioned to capture the demand from China.

Tsinghua University and Hewlett-Packard Announce Joint Venture

The corporate arm of Chinas Tsinghua University announced a joint venture deal with Hewlett-Packard （HP） on computer servers， storage and technology services on May 21.

Under the agreement， Tsinghua Holdings Unisplendour （Tsinghua Unigroup） will acquire a 51% stake in a new company called H3C， taking over HPs servers， storage and technology services in China.

Tsinghua will acquire the H3C stake for around US$2.5 billion， while HPs management teams in China， including those on the H3C venture， will remain largely unchanged.

HP will maintain full control of its enterprise services， personal computer business and other operations in China， while H3C will become the exclusive provider of HP servers， storage and technology services.

“The new H3C will be able to drive even greater innovation for China， in China，” said HP CEO Meg Whitman.

Zhao Weiguo， chairman of Tsinghua Unigroup， said H3C will become part of the countrys indigenous information technology sector that will help to ensure online security and will see brighter business prospects.

H3C is expected to have some 8，000 employees， including about 2，500 engineers， while its annual revenue is forecast at US$3.1 billion， according to HP.

Tsinghua Unigroup is a listed software and solution provider， which became a strategic distribution partner for HP in China in 1999.

The deal between the two companies is expected to be completed at the end of this year， pending regulatory approval.

Sees Cloud Ties With Amazon

The newly spun-off tech giant HP Enterprise has decided not to compete in public cloud computing and will seek partnerships with Amazon and others， chief executive Meg Whitman said in November.

Speaking following a historic breakup of computing giant Hewlett-Packard， Whitman said the new group focusing on software and services will be both competing with and collaborating with other big technology firms.

Over time， she added that its likely that “we will end up partnering with Amazon.”

Whitman said there could be other deals working with Google and Microsoft， which are also major cloud provid- ers.

“Sometimes you are very good friends with a company and at that same time you also compete，” she said.

v“I think we all know that in this world， you have to keep both thoughts in your mind.”