HP Improves Its Cloud Offering With SAP-HANA SaaS

Grazed from SeekingAlpha. Author: Editorial Staff.

Technology giant, Hewlett-Packard (HPQ), has been restructuring its business to boost profitability and focus on new verticals that offer better growth opportunity. As part of this strategy, the company is continuously expanding its portfolio of cloud services. In a recent move, the company has struck a partnership with German enterprise software developer, SAP AG (SAP), to deploy SAP’s in-memory database platform HANA as a Software-as-a-Service (SaaS) model.

We believe that this offering was a logical extension to an earlier deal according to which HP is the primary infrastructure provider for SAP-HANA deployment that will be carried out by Accenture. [2] In this article, we will explore why cloud services are important for HP, and how it can generate more revenue for the company in the future. Furthermore, we will briefly explain the new cloud product offered by HP…

Why Are Cloud Services Important for HP?

HP generates nearly 75% of its revenues from hardware sales or hardware related activities. However, this business has low margins primarily due to intense competition from other manufacturers such as Dell, IBM (IBM), Lexmark (LXK), etc. While the hardware business is HP’s cash cow, it is constantly diversifying its business by expanding its services division, especially the cloud business to infuse growth and improve profitability. HP’s services division contributes nearly 31% to its estimated stock value. Within this division, the three verticals i.e. technology services, infrastructure outsourcing and application and business services provide cloud related services. This division and its three sub division are expected to drive revenue growth for HP going forward, primarily due to adoption of cloud services by its clients…

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