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HP Puts on Data Center Hard Hat

James Niccolai | March 4, 2011
Hewlett-Packard wants to manage the construction phase of its clients' data center projects, hoping to expand its revenue from this area and, it says, help customers complete projects more quickly and for as much as 30 percent lower cost.

It faces some challenges, however. It's not clear, for example, that data center construction companies will want to give up their direct relationships with customers. HP might find itself in an awkward relationship with them.

"We're not going to compete with the construction managers per se. We want them to work with us, and for us, under this model," Einhorn said.

He declined to say which companies HP plans to work with. Names in this industry include Holder Construction, StructureTone and Turner Construction.

In addition, some customers may have existing relationships with contractors that they're reluctant to break. And they may be wary of allowing HP to manage the whole process, since it is not an area of expertise for the company historically.

Still, Einhorn said HP's Critical Facilities group has been hiring experts in this area. And he said customers are asking for a model that makes one company accountable for the whole project.

HP's Critical Facilities Services group was formed when it bought EYP Mission Critical Facilities three years ago. It had 350 employees at the time, almost all in the U.S. and the U.K., said Einhorn, who was EYP's president. HP has increased the headcount "significantly," he said, though he wouldn't give a number.

Last summer the group started building pre-fabricated data centers, which can be assembled quickly on site. It also opened a factory devoted to churning out its containerized data centers, known as Performance Optimized Datacenters, or PODs.

After a 40 percent drop in data center capital spending from 2007 to 2010, during the recession, HP, IBM and the other industry players hope to cash in on a market that has started growing again, particularly in developing markets such as China, India and Brazil.

The market in China is "similar to what we saw in the U.S. back in 2004, when you saw greenfield data centers and large retrofits everywhere you turned," Einhorn said.

 

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