Hewlett Packard`s Merced Decision

Hewlett Packard 's Merced Decision

Introduction to the company , competitors and situation . What is Merced What is its market demand

HP was founded in 1939 in Northern California . It is an international company involved in manufacturing instrumentation , healthcare , computer and communications products . In 1997 it had grown to 43B in sales and 3 .1B in net profits . It is an industry leader that has developed new products and outstanding corporate culture . In 1997 HP redirected its efforts on enterprise computing by launching the Enterprise Systems Group . In 1997 the group had a

sales of almost 10B . However , the market was estimated to be more than 60B . HP had maintained number one position in UNIX server vendor by sales since 1993 through its HP-UX products . The company had been able to stay ahead of competitors , for example Sun Microsystems had not been able to manufacture their own RISC processors . On the other hand as HP is developing IA-64 architecture its competitors , notable Sun has started a campaign that HP is not committed to RISC-Unix systems . This has eroded HP 's customer base . In addition , Sun has launched a campaign to persuade smaller competitors that had their own UNIX operating system into using Solaris , that is Sun 's UNIX operating system . In this manner it had been able annex Siemens-Nixdorf , NCR , and Fujitsu to its bag

The current situation is that HP needs 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 . The changeover was imminent but the problem was when the changeover should take place . The new chip was having an IA-64 architecture that was being developed with Intel and the date of launch of the workstations and severs based on the new chip depended on the launch time recommended by the partner that is Intel . The current situation was critical because any reduction in the resources allocated to the PA would lead to erosion of market share and revenue . Sun had already started a campaign that HP was not focused on UNIX systems and so the customers should change over to Sun systems . On the other hand allocating resources to the new IA-64 systems was important . It was the technology to which the company would have to change over . The dilemma has worsened because HP 's partner in IA-64 Intel has decided to delay the launch of the new system by further six months

Merced is the new chip developed by Intel for data transfer . This chip along with its corresponding architecture called IA-64 will be the backbone of the new enterprise computer systems to be developed by HP Based on this computer chip HP needs to develop workstations and servers

The market demand for Merced is related to the time it will have in the market before the second generation McKinley chip is launched . McKinley has a much higher performance level . The current delay in...