HPE in Industrial IoT – Moving Away from a Catch-All Platform to Collaborative Solutions

J. Marcus

Summary Bullets:

• HPE has discontinued marketing and development of its IoT platform.

• HPE is instead moving forward in supporting IoT deployments with infrastructure and consulting, working directly with customers as well as third-party SIs and platform providers.

HPE was in Berlin this week as a primary sponsor at Industry of Things World 2019, a hands-on conference focused on industrial IoT and digital transformation for enterprises.

Despite the clear importance of IoT to HPE’s strategy, HPE Universal IoT Platform, which the company had been promoting aggressively for a few years since its launch in 2016, has been discontinued (although it is maintained in a few deployments where it is still being used). HPE found market requirements to be so diverse that attempting to provide a horizontal solution across all sectors and use cases won’t resonate with enough customers to make it worth it. Key industrial verticals – for example automotive manufacturing, which represents a large market opportunity for IIoT – expect a vertical template, and HPE never had much traction with its platform in manufacturing. With its origins in telco OSS/BSS systems, HPE’s solutions have worked well with large scale smart city deployments, although it found adding connectivity to devices challenging.

HPE sees industrial IoT users moving away from horizontal platforms and, in fact, going instead to vendor-independent platforms designed specifically for their use case. Instead, customers can get there with the help of a major cloud platform (indeed, AWS was cited as one exception to horizontal platform vendors finding traction in IIoT) and a vendor/integrator assisting with the customization. Key IoT platform players like SAP, AWS, and Microsoft are succeeding to some extent in manufacturing environments due to their transactional capabilities — being able to connect ERP systems with manufacturing systems adds value. To compete, HPE has partnered with SIs like Accenture and Deloitte on proof of concept (PoC) solutions that integrate IoT platforms with older manufacturing systems (some of which are a decade or two old), but its own offer in this vertical is generally limited to hardware and consulting.

Because of the significant revenue and profitability of HPE’s telco business unit (Communication and Media Solutions or CMS), the company does see a broader role as an IoT enabling vendor, something illustrated recently by AT&T’s choice of HPE (along with IBM and Dell EMC) as a partner in building out its 5G/edge/IoT infrastructure. This goes well beyond simply edge gateways, which HPE doesn’t necessarily see as a big product segment opportunity in 5G, to include a hybrid solution approach comprising the edge, connectivity, and data center. In addition to supplying components of AT&T’s service infrastructure, HPE also has its eye on AT&T as a channel for selling its GreenLake IT as a Service portfolio. HPE clearly sees GreenLake as a differentiator when it comes to IBM and Dell EMC.

In the telco space, HPE should be able to replicate this approach outside of the U.S., potentially with global operators like Vodafone with which it has already partnered. In industrial sectors, the hardware plus consulting approach can work with large manufacturing clients which have highly defined requirements, significant in-house IT/OT capabilities, and a willingness to co-develop large-scale, long-term solutions with the sort of stable and global vendor partnership that HPE can bring to the table. That it’s no longer trying to wedge in its general-purpose IoT platform shouldn’t disqualify it. On the contrary, its ability to help customize and provide a range of infrastructure and deployment/integration skills regardless of which kit is handling application enablement and/or the customer portal will keep it competitive in it this lucrative market segment.

Whether HPE’s perspective on the future of horizontal platforms spells doom for the hundreds of vendors competing for opportunities remains to be seen. Differentiation is already an existential challenge in such a crowded market, yet HPE’s prescription for dealing with the problem may not be needed as urgently outside of the manufacturing sector. Given its stature as a Tier 1 global vendor, however, and the length of time it spent in this market, the decision should give other rivals pause to consider their own prospects.

 

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