Why the HP-Tsinghua Partnership Is a Major Step
How the H3C Sale Will Give HP an Edge in China's IT Market
HP and Tsinghua partnership is a significant step for China’s ICT space
As we have seen in the earlier part of the series, HP’s (HPQ) partnership with China-based (FXI) Tsinghua Holdings has created a lot of stir in the market. Tsinghua acquired a 51% stake in HP’s H3C in May 2015.
The International Data Corporation (or IDC) stated that HP stood in the number three and number four positions in the servers space and the storage space in China, respectively. The company held 15% and 7.4% of the market share in the server and storage spaces, respectively. According to IDC, HP was one of the first foreign companies to enter these two spaces in China.
According to Kitty Fok of IDC China, “Unis acquisition of H3C and HP Enterprise Business is profoundly significant for China’s IT market. The developing model of cooperation between MNC and local vendors will lead to greater competition in the future. If the new HP/Unis/H3C group effectively manages the transition to leverage the strengths of each company, they will be poised to become a new giant to challenge the leading local vendors such as Lenovo and Huawei.”
The x86 server market grew by a year-over-year rate of 11.6% in 3Q14 to reach $10.7 billion, while the non-x86 server market declined by 21% to $2.0 billion, as the chart above shows.
HP leads the x86 and blade server markets
HP (HPQ) led the x86 market with a revenue share of 29%, while Dell came in second in this market with a share of 21% as of 3Q14. IBM (IBM) led the non-x86 server market with a revenue share of 61%. Oracle (ORCL) doesn’t rank among the top players in either the x86 or non-x86 server markets, although it had the opportunity to grow its x86 server business after it acquired Sun Microsystems in 2010.
If you’re bullish about HP, you might consider investing in the Technology Select Sector SPDR (XLK) that invests about 1.25% of its holdings in HP.
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