HP Enterprise to Move Toward Subscription Model, Chasing Amazon

(Bloomberg) -- Hewlett Packard Enterprise Co. will make all its products available through subscriptions, Chief Executive Officer Antonio Neri’s biggest move yet to shield the server maker from growing cloud-computing competition.

HPE’s computer servers, storage hardware, networking gear and software will be available through a pay-per-use or subscription model by 2022, the San Jose, California-based company said Tuesday in a statement.

Neri took over the company in February 2018, and has focused on keeping HPE relevant in a changing market for information technology. Cloud vendors such as Amazon.com Inc. and Microsoft Corp. have seen booming sales while global server demand has stagnated. First, Neri downplayed the threat from the public cloud companies, investing $4 billion in edge computing, which lets clients process information on hardware far away from data centers and he touted as the next wave of computing. Recently, HPE has taken a more pragmatic approach, forming a partnership with Google that will help clients adopt a hybrid model -- to move information between their own corporate data centers and large public clouds.

HPE made the subscription announcement at its annual Discover conference in Las Vegas. This is the company’s most significant effort to generate more recurring revenue, which can help boost overall sales. HPE’s revenue has shrunk in the last two quarters compared with a year earlier.

“We will reshape HPE and transform the market, with a new and better way to deliver as a service,” Neri said in a statement.

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Alistair Barr

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