HP's Still Trying to Solve Yesterday's Problems

Most companies might define a "moonshot" as something huge and transformative. Google (NASDAQ: GOOGL  ) , for example, aims for improving something 10 times over its current capabilities. The search giant's moonshot programs include things like self-driving cars, augmented reality, a connected house, a space elevator... you know, really big ideas. It's exciting to see private enterprise try to take a leading role again in the pursuit of next-generation technology, but not everyone has Googley ambitions.

Hewlett-Packard (NYSE: HPQ  ) , for example, will be unveiling its "Project Moonshot" platform at an April 8 webcast. What is Project Moonshot? Is it a new PC that can fly? A personal robot assistant? An actual moonshot, like Elon Musk's SpaceX?

No, HP's "moonshot" is a scalable server. Way to set a low bar for yourselves, guys.

Wrong direction
The Project Moonshot server, according to Computerworld, is "the culmination of close to one-and-a-half years of HP's experimentation in low-power server designs for hyperscale environments," with hyperscale being industry terminology for a setup that can rapidly scale from a few servers to a few thousand with relatively few issues.

Why does that sound familiar? Maybe because Amazon.com (NASDAQ: AMZN  ) has essentially defined the maximally scalable server with its Elastic Compute Cloud (EC2), a fully virtual server infrastructure that can be rented out by the hour and scaled across a vast network of Amazon machines, all without the user ever needing to operate servers of their own. Hyperscale also happens to be a pretty good term for Google's distributed-computing setup, which was originally known as MapReduce before the search giant moved on to even better solutions for solving big problems across lots of smallish, cheapish servers.

HP is building machines for companies that have never heard of cloud computing.

Maybe there are some benefits...
Let's not be too hasty, though. Computerworld goes on to say that:

With the low-power servers, HP is placing preference on faster delivery of information rather than processing power. [CEO Meg] Whitman last month said that the Project Moonshot platform would use 89% less energy, 94% less space and cost 63% less than a traditional x86 server environment. Traditional x86 server environments use the more power-hungry Intel (NASDAQ: INTC  ) Xeon or Advanced Micro Devices Opteron processors, which have more processing power and are seen as being more suitable for data-intensive workloads such as databases.

HP, in a case study, said a Moonshot server installation occupying one-half a rack, priced at $1.2 million and drawing 9.9 kilowatts, could replace an installation of 1,600 servers priced at $3.3 million and drawing 91 kilowatts per hour.

That's not too bad, and it could give Intel investors pause -- the chip maker's fourth-quarter results had little in the way of good news beyond the growth of its data center segment, which develops those Xeons and other server products. It's not likely to be particularly dangerous, though. In addition to the initial ARM Holdings design, HP also has an Intel Atom-based Moonshot server in the works. Given the dominant role of Intel-based servers at the moment and the need to reprogram for a new chip, I wouldn't expect too much quaking in Intel's boots.

Here's the thing, though: Whose servers is HP comparing its Moonshots to? Google builds its own servers from the ground up -- by some measures, it's the fifth-largest server manufacturer in the world, and it doesn't sell a single one. Likewise, Facebook, which had at least 180,000 servers as of eight months ago, designs its own servers from the ground up and freely shares those designs with interested parties to advance development. Both buy chips directly from Intel. Amazon's EC2 had an estimated 454,000 Linux servers a year ago. Not much is known about the hardware behind EC2, but older reports (from 2008) indicate that Amazon treats servers as commodities, placing huge orders with companies like Rackable, which became Silicon Graphics a few years ago.

This little list doesn't cover many of the larger cloud companies, but you can get a better idea of just how widespread the move toward cloud hosting is with a series I wrote last year called "Investing in Cloud Computing for Dummies." Cloud computing isn't going away, and even with much greater efficiency, it's debatable whether HP can crack a market increasingly moving toward purpose-built machines with similar characteristics as HP's Moonshots.

You're going to have to do better, HP. A low-power server isn't the future when the present is already dominated by companies building their own servers and renting out capacity to smaller operations.

The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP's rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool's technology analyst details exactly what investors need to know about HP in our new premium research report. Just click here now to get your copy today.


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