HP has built for the Dutch chipmaker what it terms a Utility Data Center (UDC), a collection of hardware and software designed to let a company aggregate all its storage, server and software capacity and then quickly shift those resources based on changing business conditions. Neither company would say how much Philips spent on the deal.
The UDC concept is a key part of HP'sstrategy, which aims to persuade large companies to buy technology gear that is capable of being rapidly changed to meet business needs, with the idea that companies may want to eventually buy their computing power based on usage, rather than as an upfront purchase. IBM and Sun Microsystems, among others, are pushing their own takes on the same theme of utility computing.
Unlike other announced customers for UDC, Philips is not signing onto the idea as part of a broad outsourcing pact, as was the case withand Ericsson, two recently announced customers for UDC. Although HP uses the UDC model inside its own company, Philips is one of the first publicly disclosed customers to have such a data center up and running.
"We have not finished, but we have already reached a very good situation," said Mathieu Clerkx, who serves as both Philips' chief information officer as well as head of its supply chain operations. The company's first UDC went operational three weeks ago in the Dutch city of Nijmegen. Clerkx said he wanted to wait to make sure everything was working before touting the center publicly.
Philips was able to use existing equipment for about 85 percent of the new data center, said Nick van der Zweep, HP's director of utility computing. Most of the new purchases were for storage gear, he said.
HP said it has been working with Philips on plans for its data center for the past three years.
"It wasn't...a data center from scratch," said Nora Denzel, the HP software executiveof the Adaptive Enterprise effort. "They had a lot of existing equipment that we used."
The company consolidated four or five data centers there into one. "We have gone aggressively after significant cost savings that were contractually committed to us" by HP, Clerkx said.
However, in order to reuse Philips' technology, HP had to bring in some temporary gear to run operations while the UDC was under construction. HP said it did so at no charge and would do the same for any other customer.
Thanks to its use of UDC as well as other changes that Philips Semiconductors has made to move toward common software and hardware, the company expects next year's technology spending to be less than 60 percent of what it spent in 2001, Clerkx said.
The decision to go with UDC is part of an effort by the chipmaker to unify its once disparate operations. Philips Semiconductors has facilities across the globe, including the Silicon Valley offices that once housed VLSI Semiconductor, which Philips acquired in a hostile takeover three years ago.
"We have learned when you do an integration of companies, you have to make a choice of what platform (to stick with) and not go with dual platforms," Clerkx said.