Hewlett Packards Merced

Decision
- Case Analysis

Q1. In summer 1998, what is the position of the

Enterprise Systems Group (ESG) in its industry?
How has it evolved? Why?
1938 HP developed an audio oscillator Walt Disney was first major customer to buy 8 audio
oscillator for its Film Fantasia. formed the foundation of their company
1960s
1966 HPs first computer HP 2116A
1968 Launched first desktop scientific calculator HP 9100A
1969 marketed its first time-share OS on a mini computer
1970s
1972 first scientific hand held calculator HP 35
1972 - Launch of 300 minicomputer
1973 Small general computer- industrys first commercial distributed
data processing system
1980s- Expansion of HP in computer industry
1980- first personal computer.
1982 HP 800- 32 bit superchip technology
1986 New family of computer system based on innovation in RISC architecture
1989 Acquired Apollo computer

 1990s
1991 - Launched HP 951.X- Palmtop PC
1994 - Joined with Intel in development of a new 64-bit microprocessor
1997 Formed Enterprise System Group (ESG)

Based on proprietary RISC microprocessors and UNIX operating systems

Backbone of corporate information networks, network servers and mainframes

Customers depended on it to run their businesses & Web-enable their IT

infrastructures

ESG installed more than 1.3 million UNIX systems

1998- Downfall in the revenues and profits

Continue with the proprietary UNIX based Performance Architecture (PA) based on RISC
microprocessor or shift resources to develop workstations and servers based on new chip,
code named Merced and IA-64 architecture

Strategy relative to ARM like new generation simple and inexpensive microprocessors

Microprocessor evolution

Comparison of the processors

CISC-Windows based systems

RISC-UNIX based systems

CISC-Windows (Intel-Microsoft)
partnership products were standardized
products sold to manufacturers and
owners/users of computers

RISC-UNIX chips design can be done by

the computer makers. Sun
microsystems, silicon graphics and HP
used these customized designs

CISC-Windows (Wintel) processors were

sold to personal computers and lowerend enterprise systems

RISC-UNIX processors were sold to very

big organizations as workstations and
servers

Much cheaper than RISC-UNIX leading

to faster capture of market share

RISC-UNIX performed better than CISCWindows

CISC-Windows because of its modularity

concept led to very low entry barriers
which drove down the margin (40%)

Margins for RISC-UNIX processors were

around 50-60%

Q2: Why did HP get involved in developing the IA-64

architecture?

Q3: Who will benefit the most from the introduction

of the Merced chip in the markets served by ESG?
Who will benefit the least? Why?

Q3. Who will benefit the most from the introduction of the Merced
chip in the markets served by ESG? Who will benefit the least? Why?

Q4 . What should Jim Davis

recommend?