Hewlett-Packard Enterprise (HPE) has quietly announced plans to shutter its cloud server business, essentially halting sales of low-end servers to its cloud customers such as Microsoft and Google.
As pointed out by Fortune this week, HPE’s Tier 1 sales of customised cloud servers are counted in their thousands, but shifting such volumes means HPE incentivises customers with big discounts. These discounts eventually ensured HPE’s profits were slim at best.
It fell to HPE president Antonio Neri to announce the move at a financial analyst presentation in San Francisco (you can view the slide over at The Register). However, Neri said HPE will continue to sell higher tier, higher margin servers.
In an email to Silicon, an HPE spokesperson said, “In FY18, HPE will cease selling custom-designed, commodity servers to Tier 1 Service Providers, which we define as Amazon, Google, Microsoft, Facebook, Apple, TenCent, Alibaba and Baidu. We will continue selling our higher margin products like storage, networking and higher value servers to these companies.”
Either way, the forecast doesn’t look great. The news comes as reports emerged last month that HPE is preparing to cull ten percent of its global workforce—some 5,000 employees—by the end of 2017.
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