Philips Taps HP for Utility Computing

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Philips’ semiconductor division has chosen to use an HP
Utility Data Center (UDC) as it looks to pare information technology (IT)
costs with technology that adapts to changing business needs on the fly.

Financial terms were not disclosed. But Nick van der Zweep, director of
Utility Computing for HP, said Philips is the first customer to set and run
a UDC independent of HP, nothing that HP has long employed UDCs in-house, or
outsourced them to companies such as Ericsson.

An HP UDC automates and virtualizes functions such as the software that
powers server operations and allows for the speedy reconfiguration of
servers and storage in response to the evolving needs of those applications.
It is a centerpiece of the company’s overarching

Palo Alto, Calif.’s HP is competing with IBM , EMC , Veritas , Sun Microsystems
and Computer Associates in the drive to
sink their claws into customers’ data centers by offering computing
capabilities that may be called upon on-demand. This new customer can be
considered a win by HP over its rivals.

van der Zweep told internetnews.com the HP UDC is currently running
at Philips Semiconductors’ largest site in Nijmegen, based in the
Netherlands.

“Their semiconductor division is made up of different departments and all of
them have different data centers with different infrastructure from
different vendors,” van der Zweep said. “All of them were managed
differently. They ultimately went in and centralized and consolidated the
mess with a UDC.”

One of the attractive characteristics in enterprise computing these days is
the ability to manage and view assets from a single, dashboard-like view.
Accordingly, the HP UDC at Philips is managed from a single console where
server and storage resources can be allocated within minutes without
requiring an administrator to physically re-configure the servers and
corresponding infrastructure.

One of the upsides to the UDC, is that Philips was able to use servers it
owned in the UDC, which automatically raises return-on-investment for the
business. It also allows Philips to manage IT as a service based on HP’s IT
Service Management methodology, and relies on HP OpenView management
software. And in the spirit of utility computing akin to the way an electric
company conducts business, Philips and HP are also working on setting up a
pay-per-use storage environment.

“The UDC will help Philips cut 45 percent of the division’s IT costs from
2001, when the dot-com boom failed, to 2004,” said van der Zweep, who noted
that he has seen an alternating cycle in IT where companies opt to
decentralize infrastructure operations and consolidate those operations
every three years.

Vendors and customers aren’t the only entities enthusiastic about what
utility computing can bring to the table. Analysts have been, by and large,
bullish on its progress. One in particular found the HP/Philips pairing, the
latest in a long relationship between the companies, quite positive.

Vernon Turner, group vice president, global enterprise server solutions,
IDC, said more major customers like Philips will come to the UDC table as
HP’s Adaptive Enterprise strategy matures.

However, some analysts caution there is an appropriate time and place to
deploy such technology — and the right amount of money for it.

In a recent report, Yankee Group Analysts Andy Efstathiou and Jamie Gruener
determined that utility computing does not make sense if it only addresses
the challenges of the existing IT market. Their logic is that although it
lowers the investment hurdles for a business to try new things, it requires
a huge investment in restructuring the application, management, and
virtualization layers needed to run such an environment.

“Utility computing has the opportunity to address many of the key challenges
IT managers face and lower the cost of individual computing transactions.
[But]… vendors must make a massive investment in enabling technology over
a 10-year period.” said Efstathiou, who also noted that vendors are taking a
wait and see approach to the approach.

Still, the lucrative potential for vendors to infiltrate the data centers of
many customers has not been lost. HP, IBM Veritas, Sun and CA have all been
quick to point out weaknesses in each other’s approach or design. But until
more customer wins emerge it will difficult to shake out who is doing what
right, analysts said.