HP Contracts Foxconn To Build Affordable, Cloud-Optimised Servers

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The world’s largest server vendor announces a joint venture with the world’s largest electronics manufacturer

Hewlett-Packard has announced a joint venture with Foxconn which will see the Taiwanese electronics giant manufacture affordable servers for cloud applications.

The new products will be aimed at major service providers, who need cheap hardware to handle more traffic and store ever-increasing amounts of data.

“With the relentless demands for compute capabilities, customers and partners are rapidly moving to a New Style of IT that requires focused, scalable and high-volume system designs,” said Meg Whitman, president and CEO of HP.

“This partnership reflects business model innovation in our server business, where the high-volume design and manufacturing expertise of Foxconn, combined with the compute and service leadership of HP, will enable us to deliver a game-changing offering in infrastructure economics.”

HP serversHP will continue making its own servers, and the company says the new product line will complement its existing ProLiant portfolio, including Moonshot micro servers.

Economies of scale

Foxconn, founded in 1974, is the parent company for Hon Hai Precision Industry, the world’s largest electronics contract manufacturer. It employs around 1.2 million people in China and builds products for Apple, Dell and Sony, among others.

Meanwhile HP is the world’s largest server vendor – according to IDC, its market share stood at 28 percent in the fourth quarter of 2013. This dominance is now being threatened by Asian competitors such as Quanta and Lenovo, which recently purchased IBM’s low-end x86 server business.

In order to beat its rivals, HP has adopted some of their tactics – it is planning to sell more affordable servers thanks to volume manufacturing, but offer them with HP’s traditionally high level of customer service.

“In partnership with HP’s server leadership, we are embracing this new opportunity to change the industry, capture growth in this emerging market, and deliver end-to-end value as we expand our global leadership in design and manufacturing,” commented Terry Gou, founder and chairman of Foxconn.

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