Hewlett-Packards Merced Division Case Study
1. In summer 1998, what is the position of the Enterprise Server Group (ESG) in its industry? How has it evolved? Why?
The ESG should be the core part in the industry in summer 1998. In 1997, HP put attention on enterprise computing through the formation of the Enterprise systems Group(ESG). ESG’s products were built based on proprietary RISC microprocessors and proprietary UNIX operating systems. However, as the Merced chip was developed, independent software vendors were afraid that they would cost more on the future programs on the HP-UX machines in order to run smoothly on the Merced chip. The time when HP focused on IA-64 architecture, Sun claimed to be the vendor for UNIX-based systems and became a major vendor to HP’s ESG later on.
2. Why did HP get involved in developing the IA-64 architecture? Analyze the strategy.
There are several reasons leading to the development of the IA-64 architecture:
➢ The powerful “WINTEL” system, which was developed in the mid-1990s was faced with strong competition from various vendors, so that profit margins got less.
➢ RISC chips was developed to provide machines with high-performance at low price. However, the increasing cost made RISC chips develop more and more slowly.
3. Who will benefit the most from the introduction of the Merced chip in the markets served by ESG? Who will benefit the least? Why?
Intel will benefit most from the introduction of the Merced chip in the markets served by ESG. To Intel, it is HP, not Intel, that put more attention on the Merced chip, so Intel will not need to take such a lot responsibility on the new invention. Besides, HP is highly dependent on Intel since the IA-64 architecture was based on an Intel-branded microprocessor.
Independent software vendors benefit the least. They need to spend more money to adapt their software programs to the new chip. However, on the other hand, they are afraid whether there will be changes to the IA-64, if there
The ESG should be the core part in the industry in summer 1998. In 1997, HP put attention on enterprise computing through the formation of the Enterprise systems Group(ESG). ESG’s products were built based on proprietary RISC microprocessors and proprietary UNIX operating systems. However, as the Merced chip was developed, independent software vendors were afraid that they would cost more on the future programs on the HP-UX machines in order to run smoothly on the Merced chip. The time when HP focused on IA-64 architecture, Sun claimed to be the vendor for UNIX-based systems and became a major vendor to HP’s ESG later on.
2. Why did HP get involved in developing the IA-64 architecture? Analyze the strategy.
There are several reasons leading to the development of the IA-64 architecture:
➢ The powerful “WINTEL” system, which was developed in the mid-1990s was faced with strong competition from various vendors, so that profit margins got less.
➢ RISC chips was developed to provide machines with high-performance at low price. However, the increasing cost made RISC chips develop more and more slowly.
3. Who will benefit the most from the introduction of the Merced chip in the markets served by ESG? Who will benefit the least? Why?
Intel will benefit most from the introduction of the Merced chip in the markets served by ESG. To Intel, it is HP, not Intel, that put more attention on the Merced chip, so Intel will not need to take such a lot responsibility on the new invention. Besides, HP is highly dependent on Intel since the IA-64 architecture was based on an Intel-branded microprocessor.
Independent software vendors benefit the least. They need to spend more money to adapt their software programs to the new chip. However, on the other hand, they are afraid whether there will be changes to the IA-64, if there