PALO ALTO — Hewlett-Packard is dropping its public cloud offering, ceding the territory to Amazon Web Services and Microsoft’s Azure.
The move illustrates how disruptive cloud storage companies locked in a key portion of the market while older tech companies were focused on traditional data center hardware, which made it harder for them to launch public clouds.
Palo Alto-based HP will focus on the private cloud and traditional networking services that its large corporate customers want, while supporting Amazon and Azure for their public cloud needs, HP Cloud executive Bill Hilf said in a blog post Thursday.
“We have made the decision to double-down on our private and managed cloud capabilities,” Hilf said. The public cloud part of its Helion platform will sunset Jan. 31, 2016, he said.
In a public cloud, a company uses a third-party service like Amazon’s to access data and applications over the Internet. Private clouds are behind a company’s firewall and run by its IT department or managed by a service like HP’s.
HP spent at least $1 billion on its public cloud, said Patrick Moorhead of Moor Insights and Strategy.
The announcement comes on the eve of the split-up of HP into two companies, one focused on enterprise and the other on PCs and printers.
“They want to get all the bad news out before the company splits officially,” Moorhead said. “Anytime you have an abrupt change like this, it never looks good, but I think long term it was the right thing for them to do.”
The public cloud is a small part of HP’s business, said analyst Jack Gold with J. Gold Associates. With the price of storage on large public cloud platforms “falling through the basement, unless you have scale, why do it?”
HP CEO Meg Whitman, soon to become chief executive of Hewlett Packard Enterprise, has made a hybrid of traditional IT and private cloud a cornerstone of the new HP Enterprise, which officially begins life next month when the company splits in two.
The company’s customers want cloud designs that are integrated with their traditional IT systems, she told analysts in September. “It will be hybrid.”
Underlining the competitive nature of the business, Dell — which is buying storage giant EMC — announced its own hybrid offering Wednesday.
Amit Daryanani, an analyst with RBC Capital Markets, said in a note that while HP is acknowledging it can’t compete with large vendors like Amazon, “we think it’s a strategic positive that allows the company to divert resources with better return potential.”
Contact Pete Carey at 408-920-5419. Follow him at Twitter.com/petecarey.
