Merced: The New Processor for Hewlett-Packard’s Enterprise Systems Group

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After analyzing the Merced case, there are several routes the CEO could take regarding the direction of Hewlett-Packard’s Enterprise Systems Group (ESG). Ultimately, one of these solutions needs to be executed to ensure HP remains a leader in the enterprise server space. The problem with HP’s current (RISC-PA) processors is they are approaching the end of their technological relevance s-curve. Newer technology is rapidly gaining traction within the computing world and HP needs to find a way to participate in this movement. The transition is presented with several problems, one of which will affect its current client base. The newer chips, named Merced, are a new class of processor, developed with Intel (IA-64), and this is a problem with regards to software compatibility. If HP abandons their (RISC-PA) platforms many of the loyal HP customers will be left in the dark. This opens up the door to current competition engulfing the fleeing HP loyalists. This would have a dramatic affect to HP’s revenue and brand loyalty moving forward. One option to mitigate this would be to continue development of the existing (RISC-PA) platform while investing in the newer (IA-64) Processor. This would allow HP to continue to capitalize on the revenue of its current customer base while preparing for the ultimate death of the (RISC-PA) based platforms. The downside to this is approach, the amount of resources required to perform both functions simultaneously could present problems. If there

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