TRUTH STRANGER THAN FICTION

Just when I thought we'd get May ended 'safely' this story gets posted:

May 31, 2013, 1:09pm PDT

In HP-Autonomy lawsuit, auditors Deloitte, KPMG out of gunsights

Enlarge

Reuters

Auditors KPMG and Deloitte have been quietly dropped from the legal fight over the acquisition of Autonomy, which puts more onus on the board and Meg Whitman to explain how they missed the alleged fraud that led to an $8.8 billion writedown.

Preeti Upadhyaya

Technology Reporter-Silicon Valley Business Journal

When Hewlett-Packard Co. shareholders in November sued the company and its directors over the disastrous acquisition of Autonomy Corp., the company’s auditors,Deloitte and KPMG, found themselves dragged into the mess as defendants.

What has largely escaped notice is that a May 3 consolidated complaint in the shareholders derivative case droppedKPMG LLP and Deloitte Touche Tohmatsu Limited as defendants, refocusing the case on the company’s management and board.

That’s interesting, given that CEO Meg Whitman in a Nov. 20 earnings call with analysts made a point of placing attention on the role of the auditors in the purchase of the British software firm, which led to an $8.8 billion writedown for HP. Whitman served on the board when it approved the purchase.

“What I will say is the board relied on audited financials, audited by Deloitte, not brand X accounting firm but Deloitte,” Whitman said in the call. “And by the way, during our very extensive due diligence process, we hired KPMG to audit Deloitte, and neither of them saw what we now see after someone came forward to point us in the right direction.”

She didn’t indicate the identity of that “someone” in analyst call.

With the auditors out of the case, Whitman and the board are left to explain their own actions in the Autonomy derivative suit. It also removes a cloud over the auditors. Auditing firms in past corporate disasters have taken the fall when they have been involved in massive mistakes or misdeeds, for example Arthur Andersen’s demise after Enron’s 2001 unraveling.

“To the extent that the light is no longer shining on KPMG, this puts greater pressure on HP’s board and management to take responsibility for this train wreck,” said Stephen Diamond, associate professor of law at Santa Clara University. “When you go to buy a company, you have an obligation as a director to make sure that the purchase is worth how much you pay for them.”

While Whitman has more than doubled HP’s stock price since the writedown, shareholder ire over the Autonomy messhas already shaken HP. Longtime HP Chairman Ray Lane stepped down in April, followed by the exit of John Hammergrenand G. Kennedy Thompson from the board.

Mark Molumphy, a lawyer representing shareholders in the suit, confirmed in a phone call that KPMG and Deloitte are no longer defendants. He didn’t respond to follow up calls seeking comment as to why the auditors are no longer in the crosshairs. HP declined to comment. A spokesperson from KPMG confirmed that the firm was no longer involved in the case. Deloitte didn’t return multiple calls seeking comment.

The shareholder suit claims that HP’s board failed to adequately review Autonomy’s finances before buying the British software maker. The purchase closed while Palo Alto-based HP, the world’s biggest maker of personal computers, was run by former CEO Leo Apotheker.

In a May 7 story that appeared in the U.K. publication The Guardian, HP commented on the case: "As we have continually said, HP relied on the audited financial statements and the representations of Autonomy's management and its auditors regarding Autonomy's business and revenue."

A solid PRODUCTS assessment

Unanswered question after earnings: Will HP's bets pay off?
  
Jon Xavier, w Silicon Valley Business Journal has done some very nice assessments of HP recently.  Here's his take after the 2Q report:   (my comments in red)

Hewlett-Packard Co.'s earnings yesterday weren't great, but the stock price closed up more than 17 percent at $24.86 today. (this is one of the biggest upward moves in a long time!)

A deeper dive into the financials reveals the reason why: While revenue is slipping in basically every category besides printers, HP has slashed its expenditures, increased its cash flow, paid down debt, and has generally gotten its house in order. It's all part of CEO Meg Whitman's attempt to pull out of the nosedive HP has been in for the past few years.

It looks like Whitman and her team have done everything investors expect them to do, so if you believe in the turnaround narrative, yesterday's crappy-but-less-crappy-than-expected earnings report might give you hope that HP's salvation isn't a fiction.

But when will that salvation come? Even Whitman doesn't think the company will see a significant turnaround until 2014 at the earliest. Meanwhile, HP's revenue in traditional mainstays like PCs, servers and IT services continue to slide. Some analysts are saying that as much as 60 percent of HP's revenue might be in the middle of a secular decline.

If HP really wants to recover, it's going to need to at least stem the bleeding in down segments and create growth in new products and product categories. HP has several initiatives it's working on that could provide a way forward for the company. Here's what to watch if you want to know what will happen to HP:

Moonshot

HP talked a lot about Moonshot on its earnings call Wednesday, and with good reason. Moonshot represents the biggest innovation HP's server division has delivered in some time. It's a new server architecture which uses lots of small processors to deliver the same computing power with drastically reduced energy consumption. Given that electricity consumption is one of the biggest issues for most data centers, HP is hoping Moonshot will allow it to grab market share from its less energy efficient competitors.

Of course, Moonshot isn't quite as unprecedented as HP would have you think. If the idea behind it sounds familiar, that's because it's similar to the servers originally produced by a company called SeaMicro, which was subsequently purchased by AMD and which became AMD's server business. Facebook is also working on similar designs with its Open Compute Project. HP has a scale advantage, good channel partners, and it's moving into the space relatively early, but it's not going to be completely uncontested as it tries to take over the market for low-power servers.

The speed at which Moonshot is adopted could be a very important indicator for HP's future health and should be watched closely.  I concur fully

Software-defined networking

Software defined networking, the practice of using software and virtualization technologies to replace specialized networking hardware, is one of the fastest growing segments of the networking space these days. HP actually has some very strong offerings in this area, all of which are very complementary to Moonshot.  (it ts the combination of these two that is hardly the kind of thing AMD or Facebook would be expected to do; the question is IBM or Cisco or Oracle, not AMD, Intel, Facebook, or Sally's sodashop).

Android tablets

PC sales are dying. That's not even an HP problem, it's a PC market problem, as mobile devices like tablets eat significant market share. HP clearly needs to have some sort of product in this market if it wants its personal systems division to stay relevant, and until very recently, it didn't. But after messing about for far too long (famously cancelling its WebOS-based TouchPad after only a month). This may have been Leo's biggest mistake, far bigger than Autonomy, since HP squandered two years and precious mind-share time.  The product, priced wrongly and in the wrong channel, actually had the best user ratings of any tablet at the time and for months thereafter in the enterprise space, viz. user-tracking data from Argus Insights).  As these things happen though, it will never be reported that way unless we do another book.  HP has finally thrown in with a mobile OS — Android. It's Slate 7 looks to be very competitive with other Android tablets on the market, and at $169, it's priced to move. Watch sales figures on this very carefully.

Smart TVs

HP hasn't entirely jettisoned WebOS, either. It's sold many of the key assets to the electronics giant LG, which plans to use it to develop next-generation smart TVs. This is a coup for HP, as it's keeping the assets that would drive a WebOS app store, which could potentially be as profitable for the company as it is for Apple if those devices take off. There aren't any WebOS powered TVs on the market yet, but their success when they do get released might be an important indicator for HP.  Again, AH YES, what might have happened if Jon Rubinstein had been given full autonomy to run his Palm division with Phil McKinney and team?  HP'd have WebOS still running, linked to all the imaging products, as well as PCG, almost three years of building industrial-grade enterprise-wide communications networks, and some accumulated street knowledge.  After all, the cookie guy at IBM took several years to get the enterprise services group functioning.  What this Smart TV line item doesn't suggest is that HP will be the producer of next-gen smart TVs, just potentially a channel.  This is akin to owning the keys to the Apple stores, but not making the Apple products.  True, an App Store could have a run, but HP's experience base in this arena is modest indeed.  Again, recall it took Apple four tries and five years to get the iPod right with iTunes.

2Q earnings reaction

Overnight, some of the stories filed had a more somber tone than the upbeat report of the last post.

The Associated Press headline reads:

"Hewlett-Packard's slump continues as revenue drops 10%

The company posts earnings of $1.1 billion in its fiscal second quarter, down 32% from a year earlier. But its stock rises on its guidance for the current quarter."

The story, using almost precisely the same words,was more tepid than the market reaction:

"Hewlett-Packard Co.'s slump continues. Its quarterly earnings marked the seventh consecutive decline in revenue compared with the same period the previous year.

And HP's 10% decrease in revenue during the three months that ended in April was the largest drop so far during the slump.

But HP predicted that its earnings for the current quarter ending in July would be slightly better than analysts have been anticipating. Excluding certain items, the Palo Alto company forecast earnings of 84 cents to 87 cents a share. Analysts on average had projected 83 cents a share, according to FactSet.

Investors seemed to interpret the guidance as a sign that HP's cost-cutting measures imposed by Chief Executive Meg Whitman are starting to pay off, even as the company's sales droop.

HP's stock surged $2.70, or nearly 13%, to $23.93 in extended trading after the release of the results Wednesday.

Most of the erosion in the company's sales occurred under the leadership of Whitman, a former CEO at EBay Inc. and defeated California gubernatorial candidate, who was hired to run HP in September 2011.

Whitman has repeatedly warned that HP's revenue might not start growing at an acceptable rate for another year or two as she cuts costs, overhauls the company's product line and pushes into more profitable niches in business software, data analysis and storage and technology consulting. In a Wednesday statement, she reiterated that the company remains on a "multi-year journey."

The San Francisco Chronicle posted a 3 inch 'column' reporting the bare facts with no particular bias, other than the typical "this didn't happen near here, so it doesn't matter" attitude.

By contrast, the San Jose Mercury-News headlined it on page 1 business section -- "HP PROFIT EXCEEDS FORECASTS", showing three graphs and Meg's picture, with 40 column inches of coverage in Steve Johnson's bylined story.  
Johnson quoted a number of analysts, including Brean Capital which said "our industry checks are starting to see pockets of change in culture at HP -- which we believe can serve the company well going forward."

Brian Marshall at Int'l Strategy Group was less sanguine, and Tony Socconaghi of Bernstein Research (he's been down on HP and on Meg for some time now) offered these pearls of wisdom: "either Meg Whitman improves company performance over the next 12-18 months or the board (or activists) will break up the company."

And Deutsche Bank analysts (lessee now, weren't they the ones who switched their vote -- probably illegally -- the morning of the ballot for the Compaq deal?) cautioned: "all of HP's major business lines continue to face structural decline", adding ominously (in Johnson's words) "we do not see a quick fix for any of these issues."

Otherwise, Johnson's story was plain vanilla, resurfacing the issues for the failed TouchPad, failed phone, dropping PC sales, slumping ink and printer sales, several bad acquisitions (naming again, with the $$$ of write-offs for Attensity, EDS, and Palm acquisitions -- $8.8B, 8.0B, and 1.0B in the past 3 years).  He also reminded readers of the board vote against Hammergren and Thompson and Ray Lane.  These stories, kinda like Sergio Garcia's, take on a life of their own, and they'll haunt for years.

HP 2Q EARNINGS REPORT

As I said in the last post, a topsy-turvy world in the stock market.  Here's how veteran Chris O'Brien (one of my favorite reporters, who has moved from the San Jose Merc-News to the LA Times) said it:

Hot off the wire : Hewlett-Packard Co. reported earnings for its fiscal first-quarter Thursday that sailed past analyst estimates despite shrinking revenue.

The results were some much-needed good news for a company that has drawn criticism on Wall Street because of its recent performance. During the previous two quarters, HP announced losses totaling $15.3 billion as the company suffered write-downs on a few ill-fated acquisitions.

Digging deeper, Meg said that:

"We did better than we expected on the bottom line.  We still see declining sales, which is something we want to fix. We're on it. We've got a plan."

HP posted a profit of $1.2 billion, or 63 cents a share, for the last three months of 2012. That was a 16% drop from the year-ago period when the company reported a profit of 73 cents a share.  Stripping out some accounting items, the company would have earned 82 cents a share -- easily surpassing Wall Street projections of 71 cents a share.

Sales declined 6% to $28.36 billion during the quarter, which was still slightly above analysts' expectations.

Highlighting the magnitude of the challenges, all but one segment of HP's business saw revenue decline in the first quarter from the same period a year ago: personal systems group revenue fell 8%; printing fell 5%; enterprise group fell 4%; enterprise servcies fell 7% and software fell 2%. Only financial services saw an increase, of 1%.  Left unstated in this release, but noted elsewhere -- PC sales were down an alarming 20% quarter-over-quarter, following the release of the underwhelming Windows 8 from Microsoft.

Still, the earnings report cheered investors, who drove the stock up $1.25, or 7.3%, to $18.35 in after-hours trading.

Whitman shared that optimism about the progress being made in her long-term turnaround plan. She has said in the past the the company probably wouldn't start to see revenue growth until 2014.

"I actually think part of what we've being doing is starting to pay dividends," she said. "I think we've got the best product lineup we've had across the business units in a decade."  (Now, you could be catty and say, "wow, she actually THINKS that PART of WHAT THEY're DOING is STARTING to help?"  What about all the rest?  Does she actually think the rest isn't helping?)

In the wake of rival Dell's buyout announcement and its recent weak earnings, Whitman remained confident that HP's Personal Systems Group, which includes PC sales, has a strong future.  Whitman said Dell appeared to be pursuing a strategy of commoditization, making the lowest cost machines possible. By contrast, she said HP is attempting to rethink features and design, to make distinctive gadgets that could deliver higher margins and revenues.

Whitman said the company continues to broaden its definition of PSG to include all computing platforms, including tablets and eventually smartphones. HP has recently announced plans to move beyond Microsoft's Windows to make devices based on Google's Chrome operating system. As of now, the company had no further updates regarding when it might return to making smartphones.  (Thank Gawd)

AN UPSIDE DOWN WORLD

I've always marveled at the stock market method of handling news.  Today was no exception.

"back in the day" we'd have terrific earnings, and within minutes the stock would get tossed.  Someone else, say DEC, would announce layoffs and the market was thrilled that they'd be reducing costs, never mind that their stuff didn't sell.

You've seen this time after time -- bad news gets stock to rise, and vice versa so often it doesn't surprise

So here's the story today

Shares of HP closed 0.7 percent higher at $21.25, and the stock was trading 10 percent higher in immediate after hours.  Why?  Because HP reported second quarter earnings today, showing earnings per share of $0.55 or $1.1 billion, a 31 percent decline in earnings from a year ago.

Here's the good news: Adjusted earnings came in at $0.87 a share or $1.7 billion, exceeding analyst expectations of $0.81 a share.  So the company did terrible, but the analysts thought it'd be worse.  Voila, stock goes up.

Net revenue fell 10 percent to $27.6 billion, but cash flow came in at $3.6 billion, a 44 percent jump from the year prior (makes you wonder about HP's use of those creative tax haven strategies).

"We beat the upper end of our non-GAAP diluted EPS outlook for the quarter by $0.05 a share, driven by better than expected performance in Enterprise Services and Printing, coupled with the accelerated capture of restructuring savings and improvement in our operations," said Meg Whitman, CEO and president in a prepared statement.

Meg was simultaneously listed as one of Forbes' TOP 100 women.  Sheryl Sandberg, chief operating officer of Facebook Inc., took the No. 6 spot on the annual list.  Sandberg, 43, was No. 10 on the list last year. 

Five other Bay Area business executives made the top 100 list this year.

• Meg Whitman, CEO, Hewlett-Packard Co. (NYSE: HPQ), No. 15
• Safra Catz, CFO, Oracle Corp. (NASDAQ: ORCL), No. 23
• Susan Wojcicki, SVP, Google Inc.(NASDAQ: GOOG), No. 30
• Marissa Mayer, CEO, Yahoo Inc. (NASDAQ: YHOO), No. 32

Just found a Tom Wolfe piece

Tom Wolfe wrote a great Esquire magazine article about Bob Noyce and Intel in 1983, that Jim Eaton just sent to me, saying "this captures the HP of 'our era', don't you think?"

I thought it good enough to reproduce a few lines here, for the nostalgia buffs, but also to observe that I was just on the East Coast for a Milken Foundation / U of Penn three-day entrepreneurship conference, and the contrast with "the Valley ways" was still stark.

The article was in Esquire Magazine,, December 1983, pp. 346-374, titled "The Tinkerings of Robert Noyce: How the Sun rose on Silicon Valley".  It can only be copied for academic use, which this is.


*******   

One day John Carter (at 36, Fairchild's youngest CEO ever) came to Mountain Vlew for a close look at Noyce's semiconductor operation. (this was Fairchild, after the Shockley exodus).  Carter's office in Syosset, Long Island, arranged for a limousine and chauffeur to be at his disposal while he was in California. So Carter arrived at the tilt-up concrete building in Mountain Vlew in the back of a black Cadillac limousine with a driver in the front wearing the complete chauffeur's uniform: the black suit, the white shirt, the black necktie, and the black visored cap. That in itself was enough to turn heads at Fairchild Semiconductor. Nobody had ever seen a limousine and a chauffeur out there before. 

But that wasn't what fixed the day in everybody's memory. It was the fact that the driver stayed out there for almost eight hours, doing nothing. He stayed out there in his uniform, with his visored hat on, in the front seat of the limousine, all day, doing nothing but waiting for a man who was somewhere inside. John Carter was inside having a terrific chief executive officer's time for himself. He took a tour of the plant, he held conferences, he looked at figures, he nodded with satisfaction, he beamed his urbane Fifty-seventh Street Biggie CEO charm. And the driver sat out there all day engaged in the task of supporting a visored cap with his head. People started leaving their workbenches and going to the front windows just to take a look at this phenomenon. It seemed that bizarre. 

Here was a serf who did nothing all day but wait outside a door in order to be at the service of the haunches of his master instantly, whenever those haunches and the paunch and the jowls might decide to reappear. It wasn't merely that this little peek at the New York-style corporate high life was unusual out here in the brown hills of the Santa Clara Valley. It was that it seemed terribly wrong.

A certain instinct Noyce had about this new industry and the people who worked in it began to take on the outlines of a concept. Corporations in the East adopted a feudal approach to organization, without even being aware of it. There were kings and lords, and there were vassals, soldiers, yeomen, and serfs, with layers of protocol and perquisites, such as the car and driver, to symbolize superiority and establish the boundary lines. Back east the CEOs had offices with carved paneling, fake fireplaces, escritoires, bergeres, leather-bound books, and dressing rooms, like a suite in a baronial manor house. 

Fairchild Semiconductor needed a strict operating structure, particularly in this period of rapid growth, but it did not need a social structure. In fact, nothing could be worse. Noyce realized how much he detested the eastern corporate system of class and status with its endless gradations, topped off by the CEOs and vice-presidents who conducted their daily lives as if they were a corporate court and aristocracy. He rejected the idea of a social hierarchy at Fairchild.

Not only would there be no limousines and chauffeurs, there would not even be any reserved parking places. Work began at eight A.M. for one and all, and it would be first come, first served, in the parking lot, for Noyce, Gordon Moore, Jean Hoerni, and everybody else. "If you come late," Noyce liked to say, "you just have to park in the back forty." And there would be no baronial office suites. 

The glorified warehouse on Charleston Road was divided into work bays and a couple of rows of cramped office cubicles. The cubicles were never improved. The decor remained Glorified Warehouse, and the doors were always open. Half the time Noyce, the chief administrator, was out in the laboratory anyway, wearing his white lab coat. Noyce came to work in a coat and tie. but soon the jacket and the tie were off. and that was fine for any other man in the place too. There were no rules of dress at all, except for some unwritten ones. Dress should be modest, modest in the social as well as the moral sense. At Fairchild there were no hard-worsted double-breasted pinstripe suits and shepherd's-check neckties. Sharp, elegant, fashionable, or alluring dress was a social blunder. Shabbiness was not a sin. Ostentation was.

During the start-up phase at Fairchild Semiconductor there had been no sense of bosses and employees. There had been only a common sense of struggle out on a frontier. Everyone had internalized the goals of the venture. They didn't need exhortations from superiors. Besides, everyone had been so young! Noyce, the administrator or chief coordinator or whatever he should be called, had been just about the oldest person on the premises, and he had been barely thirty. And now, in the early 1960s, thanks to his athletic build and his dark brown hair with the Campus Kid hairline, he still looked very young. 

As Fairchild expanded, Noyce didn't even bother trying to find "experienced management personnel." Out here in California, in the semiconductor industry, they didn't exist. Instead, he recruited engineers right out of the colleges and graduate schools and gave them major responsibilities right off the bat. There was no "staff," no "top management" other than the eight partners themselves. Major decisions were not bucked up a chain of command. Noyce held weekly meetings of people from all parts of the operation, and whatever had to be worked out was worked out right there in the room. Noyce wanted them all to keep internalizing the company's goals and to provide their own motivations, just as they had during the start-up phase. If they did that, they had the capacity to make their own decisions.

The young engineers who came to work for Fairchild could scarcely believe how much responsibility was suddenly thrust upon them. Some twenty-four-year-old just out of graduate school would find himself in charge of a major project with no one looking over his shoulder. A problem would come up, and he couldn't stand it, and he would go to Noyce and hyperventilate and ask him what to do. And Noyce would lower his head, turn on his 100 ampere eyes, listen, and say: "Look, here are your guidelines. You've got to consider A, you've got to consider B. and you've got to consider C. " Then he would turn on the Gary Cooper smile: "But if you think I'm going to make your decision for you, you're mistaken. Hey... it's your ass."

*********  
Sounds just like the HP under Packard or Hewlettt.  Gawd, THOSE were the days...

Project Kraken

Forwarding from a Facebook post:

HP preps Project Kraken for monster HANA in-memory jobs

Sixteen Ivy Bridge-EX sockets and 12TB in a single image

By Timothy Prickett Morgan

Posted in Servers , 16th May 2013 16:24 GMT

Free whitepaper – Hands on with Hyper-V 3.0 and virtual machine movement

http://whitepapers.theregister.co.uk/paper/view/2750/

HP has revealed a little more about its "Project Kraken" in-memory system that it is cooking up in conjunction with the engineers at SAP. It's talking about a future in which there are lots of scale-out servers like its Project Moonshot systems and big-memory systems like Kraken on the other end of the spectrum – with not as much plain-vanilla, general-purpose iron in between.

While server makers are building clusters to support the HANA in-memory database, which has been able to back-end SAP's Business Suite application software since the beginning of the year, Paul Miller, vice president of converged systems at HP, tells El Reg that some customers are going to need larger single-system images to run their in-memory applications, much larger than can be built today with two-socket or four-socket Xeon or Opteron servers.

And thus, one of the first fruits of HP's "Project Odyssey" server development effort to take technologies from the Itanium-based Integrity and Superdome lines and recast them with Xeon-based iron, will be the Project Kraken system that was previewed at SAP's Sapphire Now user and partner event in Orlando, Florida on Thursday.

HP is being a little sketchy on the details about the Kraken server, named after the mythical beasts from the depths of the sea in the North Atlantic, but Miller gave El Reg a few details to whet the appetite.

The server will span up to sixteen processor sockets and will be based on Intel's future "Ivy Bridge-EX" Xeon E7 processors. The Xeon E7s are currently stuck at the "Westmere-EX" level, and machines using the E7-4800 and E7-8800 processors are the only ones that SAP has certified to run its HANA in-memory database. (Actually, if you want to be super-precise, only the 2.4GHz versions of those two families of chips are supported. SAP wants to make sure all HANA appliance makers use the exact same motors.)

Intel did not launch a "Sandy Bridge-EX" variant of the Xeon E7s, but is expected to get the Ivy Bridge-EX variants of the chip out the door in the fourth quarter.

Miller also told El Reg that the Kraken machine would have up to 12TB of main memory, addressable by all of the sockets. This is a much larger memory footprint than most relational databases have today, says Miller, adding that it is difficult to find a single database with 6TB, 9TB, or 12TB of data.

The HANA database has compression features that crunch the data down by a 2:1 ratio, so a 12TB memory footprint of the Kraken machine will be able to house a production database that would otherwise take up 24TB of memory and disk space on a machine that was not running the database in memory. At the moment, HP and SAP engineers are prototyping a system that scales up to 6TB of main memory in a single image.

Currently, HANA appliance makers are tending to build their machines based on a four-socket Xeon E7 v1 machine with 512GB per node, as prescribed by the very stringent rules SAP has created for HANA appliances. (All appliances run SUSE Linux Enterprise Server 11, too, which simplifies tuning and support for SAP.)

To scale up processing capacity, you lash nodes together and scale up as high as 8TB across a cluster of machines. But the HANA database on that cluster is not a single image. Each node has a copy of HANA and it runs multiple database tables that sit behind applications, just as happens in Business Suite production environments today on relational databases. Companies have hundreds of thousands of databases, not just one.

The Kraken server is aimed at supporting very large databases in memory, and this is something that HP is betting will be a big deal in the years ahead – as big of a deal as having dozens of microservers sporting x86 and ARM processors in a single chassis for supporting infrastructure and application workloads.

"We believe that a big portion of the market is either going to go to these hyperscale systems that scale out, but then also another big portion of the market is going to go to in-memory computing," explains Miller.

"When you can start to put your databases and applications in memory and not have to translate them from system to system," he said, "the programming model becomes simpler, the scalability becomes massive. If you look three to five years out, we believe that a lot of work will be based on Moonshot and a lot will be based on in-memory, and the kind of general purpose server is going to be less of a factor in the marketplace. That is why we are betting high on the bookends. We just see such an economic advantage on both ends."

HP is not saying when it expects to get the Kraken server tailored for HANA databases to market, but it probably stands to reason that Chipzilla is trying to launch the Ivy Bridge-EX sometime around Intel Developer Forum in San Francisco this September 10 through 13. Depending on how the Xeon E7 v3 (as it will presumably be called to keep in synch with other Ivy Bridge chips) ramps up, that could mean HP can get Kraken systems in the field in late 2013 or early 2014.

HP has not divulged how it will forge the sixteen-socket Odyssey box that will be the basis of the Kraken in-memory server, but it stands to reason that it will take its homegrown sx3000 chipset and Superdome 2 crossbar fabric and adapt it to the Xeon E7 v3 chips.

It would have been nice if Intel would have put the Xeon E7 chips and the "Poulson" Itanium 9500 and future "Kittson" Itanium chips into the same socket, as has been the on-again, off-again plan for years. But Intel killed off the Itanium-Xeon E7 convergence plan this February.

In addition to the Kraken preview, HP said that its AppSystem HANA appliances, which come with 1TB, 2TB, and 4TB memory configurations across clusters of ProLiant DL980 four-socket Xeon E7 v1 servers and which have been supporting HANA databases since they were available, have now been grandfathered in to run Business Suite apps on top of HANA. Miller says HP has hundreds of customers using HANA on the AppSystem appliances, by the way.

And because moving a database is a big deal for most customers, HP's Enterprise Services division has fired up tools to help move relational databases into HANA, and is also reminding everyone that it has hosted versions of Business Suite, with or without HANA underneath it, available as well. ®

IEEE History of Silicon Valley evening

Paul Wesling gave a great talk at Michael's Restaurant at Shoreline last evening for IEEE Life Fellows titled: "The History of Silicon Valley: Why and How It Happened Here"  Wesling, a long-time Valley vet, focused on 1906-1955, or until Shockley 'came to town'.   Thus it was the Tube Guys -- the Varian borthers, Eitel, McCullough, Charlie Litton, and of course Fred Terman, Dave Parckard, Bill Hewlett.

It was very well done, covering how radio really emerged here prior to television which originated here also (factoids that the East Coast still struggles with).  He did cover the rise of RCA, but not the way in which GE and the Navy conspired to put the Bay Area company Federal Telegraph out of business.  He did cover, nicely, the way in which EiMac tubes and the companies were able to defeat GE and RCA on patents for high-frequency vacuum tubes for FM radio -- a beautiful story!

Wesling noted that HP got its microwave instrument line from Varian in 1949 for $20,000, a pittance, and a number I didn't have in my book.  Packard said this was a 'dime on the dollar', but I never found the amount in our research.

Wesling emphasized that the techniques that enabled all of the tube manufacture, including the all-important microwave tubes, were in situ for the needs of the nascent silicon manufacturing that would build a new capability in semiconductors.  That was the basis of his statement that Silicon leadership HAD to happen here.  Almost pre-ordained.

He also singled out Bud Eldon for his contributions to IEEE locally and globally; nice to see Bud get praised, even if it was posthumous.

At the end, he cited several sources, putting up a picture first of Lecuyer's fine book, then The Tube Guys by Norman Pond (I did not know of this one), and then The HP Phenomenon.  WOW!  He really touted it, although he did say "it's a heavy book".  True.

I'll try to get a copy of his slides for posting or at least a pointer.

you cannot make this stuff up

Get a load of this, from James MacDermott's blog:

May 13, 2013, 11:52am PDT UPDATED: May 13, 2013, 12:35pm PDT

Irony alert: Hewlett-Packard tried to unload Autonomy on SAP

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SAP's Bill McDermott said that Hewlett-Packard let them know Autonomy was available. SAP wasn't interested.

Jon Xavier

Web Producer-Silicon Valley Business Journal

Fresh off the announcement that it was taking a $8 billion write-down on its purchase of Autonomy Corp., Hewlett-Packard Corp. reportedly tried to sell the troubled software business to SAP.

That's according to SAP co-CEO Bill McDermott, who told The Times that HP representatives told them Autonomy was on the market sometime last month. This despite HP CEO Meg Whitman saying publicly that HP was keeping Autonomy, even if most of the value of the deal never materialized.

SAP wasn't interested.

What's funny about this whole situation is that HP probably never would have bought Autonomy in the first place if it wasn't for SAP. The deal was masterminded by Leo Apotheker, as a part of his bid to take HP more deeply into the enterprise software and services space and go head-to-head with the German tech giant. Autonomy was supposed to be the first salvo in the bombardment Apotheker was to launch at SAP.

Instead, a little more than a year later, Apotheker was out, as was his strategy, and HP was left trying to sell the division to the company it was supposed to target.

Update: HP issued a response to Business Insider saying, essentially, the report is backwards. "During the past year, we’ve received inquiries from SAP about purchasing HP software assets, and time and again we’ve said 'no,'" the statement said. So there's two versions of this story, and they can't both be true. Either way, it looks like Autonomy will be staying put for the time being.

Jon Xavier is Web Producer at the Business Journal. His phone number is 408.299.1826.