HPE supply chain problems drive up server prices

HPE supply chain problems drive up server prices

Hewlett Packard Enterprise (HPE) reported revenue of $7 billion for the third quarter of 2022, a 1% increase over the same quarter last year. Its Intelligent Edge business reported revenue of $941m, up 8% from the prior year; Aruba Services’ revenue grew by double digits compared to the previous year; And Intelligent Edge as-a-Service ARR3 was 60% higher than the prior year.

of HPE High performance computing (HPC) and Artificial intelligence (AI) business grew 12% to $830m, while its compute business revenue fell 3% to $3bn and its storage business revenue fell 2% to $1.2bn.

“Customers continue to prioritize investments in IT and find HPE’s industry-leading cloud portfolio to be particularly relevant in today’s complex macroeconomic environment, where technology innovation is critical to accelerating business transformation and delivering critical business outcomes,” said Antonio Neri. , president and CEO of HPE.

During a conference call with financial analysts covering the results, Neri discussed the company’s growth Greenlake infrastructure-as-a-service offeringWhich has doubled compared to last year.

According to Looking for alpha replication Income calls, Neri claims are more than that Two million devices are now connected to Greenlake and an exabyte of customer data being managed by HPE Services.

“The momentum is reflected in an annual revenue run-rate of 28% and total orders as a service growing 39% year-on-year, bringing our year-to-date order growth to 86%. These indicators show sustained demand for our as-a-service solutions, even as supply constraints limit some installations,” he said.

During the earnings call, company executives were questioned about continued supply chain issues, which have led to a backlog in orders for HPE hardware.

“Inside Calculated, demand was strong, the backlog has steadily increased to another record and is now five times normal,” said HPE Chief Financial Officer Tarek Rabiati. “Revenues were down 1%, reflecting a continued difficult supply environment, with new multi-sourcing options for certain components and some improvement expected in the next quarter with demand steering toward new solutions.”

To address the backlog caused by the supply chain crisis, Robiatti said the company is engineering new products that are less dependent on component shortages and “steering demand” for those products. “We’re multi-sourcing even the most constrained components, and that’s helping work through the backlog,” he added.

One of the effects of this strategy was an increase in the average selling price and average order price of HPE hardware, which according to one analyst, increased between 10% and 20%.

Neri suggested that this new generation of servers includes features with a number of options available Non-volatile memory exp (NVMe), NVMe on Fabric (NVMe-oF) and Smart Network Interface Card (smartNICs), will meet two-thirds of HPE’s customer needs.

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