Helion public cloud: HP knows when to hold, when to fold

You’ve got to know when to hold ’em and know when to fold ’em. Know when to walk away. Know when to run.

HP did the right thing telling customers it will “sunset” its Helion public cloud service in January[1].

Global scale public cloud is a high stakes poker game. Two companies, AWS and Microsoft, hold all the best cards and they have enough cash in the pot to tough it out.

There may be room for one or two more second tier global players, not the dozen or so still snapping at the leaders’ heels.

Brutal economics

Cloud requires huge upfront capital investment and accepting that margins will be squeezed to the bone. There is no room for misteps[2].

The only likely candidate to join AWS and Microsoft at the top table is Google, and that is by no means certain. IBM spent US$5 billion buying its way into the cloud. It is still a distant runner-up.

This was always going to be the year of the public cloud shakedown. Spending on public cloud infrastructure is up 32 percent from last year to US$16.5 billion (Garter numbers). The nature of the market means a few public cloud vendors earn rivers of gold, the rest barely break even.

Winner takes all

Microsoft reports 135 percent growth in its Azure cloud sales. It bundles other services into its overall cloud revenue which now sits at more than US$8 billion a year. AWS reported annual growth of 78 percent.

Instead of banging its head against a brick wall, HP will switch its efforts to helping customers build their own private clouds. This mainly means selling hardware, HP Enterprise will be happy with that[3].

HP also aims to help customers run their software on services such as AWS and Microsoft Azure.

Still opportunity in enterprise cloud services

In other words it will become a broker, integrator and a cloud services provider.

The Helion Network, a group of HP partners who host client systems on HP Helion hardware will live on.

This is smart thinking. Cloud margins are tiny and require large investment — that’s the last thing the new HP Enterprise organisation needs as it reboots. It can play to the company’s strengths which lie in selling hardware and managed IT.


  1. Presumably “sunset” means close.  ↩
  2. HP Helion ran into technical trouble. It was based on the open source OpenStack software which, in hindsight, may not have been the best choice.  ↩
  3. Although happy isn’t a word one associates with selling enterprise hardware anymore..  ↩

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  1. Pingback: NZ Tech Podcast 255: Apple Car, Hyperloop, Owlet baby wearable, HP kills public cloud | Bill Bennett

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