May 7 - HP's new $1 billion bet on cloud computing comes just a week after it tied up with Foxconn to make servers for cloud service providers. Fred Katayama reports.
HP is making a big bet on the cloud. Hewlett-Packard is investing more than $1 billion over the next two years to develop and offer cloud computing products and services. HP will expand availability of free open-source cloud software called OpenStack to 20 data centers even though it sells its own cloud software. It's betting that companies will build their own on-site private cloud instead of renting services on public clouds like those of Amazon and Google. This announcement comes just one week after HP teamed up with Foxconn Technology to make servers for cloud service providers. Yesterday, Morningstar analyst Peter Wahlstrom said he doesn't expect profitability of HP's enterprise business to improve. He said, "We believe an increasing portion of HP's enterprise hardware will be sold to cloud service providers, and these customers will generally be more price-sensitive than traditional enterprise customers." Still in the early stages of a turnaround under CEO Meg Whitman, HP's stock, once one of the dogs of the Dow, has extended last year's stellar performance, rising nearly 15 percent this year.