Dear [Private]:We write in response to your letter dated September 28, 2004 regarding what you allege as ?misstatements of fact? concerning HP/UX.
Claim 1: "HP's problems spawn from the death of... their operating system, HP/UX. Like IBM, they've elected to ask their customers and ISV's to move to Red Hat Linux or Microsoft Windows on x86 systems."
Jonathan Schwartz, Sun's President and COO, has confirmed that he does in fact believe that HP's problems spawn from the death of its operating system. The editorial comments found in his personal blog provide an accurate and good faith account of his opinion of HP/UX.
As you know, Section 43(a) of the Lanham Act requires that the allegedly false statement be one of fact, not opinion, and representations of opinion are not actionable under a theory of trade libel. Nevertheless, and in the alternative, assuming HP's problems are in fact verifiable statements, Mr. Schwartz's claims have a surplus of substantiation.
Sun's claim that HP/UX is dead is based on the following:
A. HP/UX is currently the operating system for HP's family of HP 9000 servers, which are built on PA-RISC processors.
B. HP has announced that it will EOL the HP 9000 series and move away from the PA-RISC architecture. HP recommends migration to HP Integrity servers, which are built on Itanium processors. HP has stated publicly that HP/UX will only be available on Itanium and that it will not port HP/UX to x86.
With regard to HP-UX, one of the biggest indictment against its survival is the fact that it is dependent on Itanium and customers moving to that platform. Three facts further support this claim. First, market pick-up has been very slow for Itanium with HP selling in excess of 90% of the product in this market, and no other vendor selling any significant volume. Second, much of the Itanium market to date, approximately 80%, has been in the 1-4 way space and the new Intel Xeon 64 and AMD Opteron are showing much stronger acceptance in this space verses Itanium. Third, migration to Itanium, whether it be from Tru64/Alpha or HP-UX/PA-RISC, requires a disruptive migration, and according to a survey done at the most recent HP World show (August 2004) 50% of the respondents said they would never undertake such a migration.
Further support for our claim of Itanium's failing performance in the market is the fact that quarter over quarter sales this year are declining, as well as HP's own public withdrawal from the chip for its workstations.
C. Given the cost and complexity of porting applications built for PA-RISC platforms, Sun believes that many independent software vendors (ISVs) currently offering applications for the HP 9000 (PA-RISC) architecture will choose not to port those applications to the new Itanium architecture.
D. For similar reasons, detailed more fully below, HP/UX on Itanium is not a meaningful choice for a second group of current HP customers -- customers of HP's Alpha servers which are built on HP's Alpha processors, and which run the Tru64 UNIX operating system.
The evidence in Sun's files clearly supports the fact in Claim 1 that HP has asked and continues to ask its customers to use Red Hat Linux or Microsoft Windows on x86 systems and is actively marketing these platforms. See HP's own web sites http://h10018.www1.hp.com/wwsolutions/linux/index.html and http://h10018.www1.hp.com/wwsolutions/linux/customers.html. HP recently claimed to be the marketshare leader in this area, see IDC Worldwide Quarterly Server Tracker Q2 2004, August 26, 2004 Release, based on its sales of Red Hat Linux or Microsoft Windows on x86 systems.
Claim 2: "HP/UX won't even run on HP's own industry standard servers."
Anne Livermore, Executive Vice President and head of HP's Technology Solutions Group, has stated that HP will not port HP/UX onto its industry standard x86 servers. See article ?Q&A: HP's Livermore Sees No Need for HP/UX on x86,? August 17, 2004, http://www.computerworld.com/hardwaretopics/hardware/story/0,10801,95312,00.html. The data verifies that HP/UX does not run on industry standard servers. Industry standard servers, which is a de facto standard, are defined by and across the computer industry as x86 based servers. Based on HP's data, the HP Industry Standard Server Product Family is the ProLiant server family, not the Integrity family, see http://h18004.www1.hp.com/products/servers/platforms/transition.html.
HP's own web site lists the Industry Standard Server Operating Systems as Microsoft, Novell and Linux. HP/UX is not listed here, see http://h18004.www1.hp.com/products/servers/software/index.html, nor it is included or even referenced in HP's Industry Standard Server Product Family. Accordingly, the evidence clearly supports the fact that HP Integrity servers (which run HP/UX) are not industry standard servers. See also, HP's earnings slides for Q3FY04, where HP breaks out their x86 business separately and calls it ?Industry Standard Servers.? By contrast, in the transcript of its Q3 FY2004 earnings call, HP clearly states that UNIX (which HP uses to reference HP/UX and Tru64 UNIX offerings) resides in its Business Critical Systems division.
Claim 3: "Is HP running from you and its HP/UX and Tru64 Commitment?"
This question is not provably false and is not actionable under Section 43(a) or any theory of trade libel. Your letter interprets this question as an implication by Sun that HP is not committed to HP/UX and Tru64 UNIX customers. Even if this question were a provable statement, Sun's evidence confirms a clear lack of commitment by HP to both its HP/UX and Tru64 UNIX customers. HP's public statements and road map for HP/UX plainly show that HP plans to stop developing HP 9000 beyond the PA8900 server (due in 2005). See HP Server Strategy presentation by Ken Surplice, HP Product Manager, EMEA, May 2003. This abdication by HP and its decision not to continue with this line of products is an abandonment of those customers who want and who use those products. We understand your statement that HP is committed to its HP/UX customers provided they move to Itanium. Based on this evidence, however, HP offers no path for those HP/UX customers who do not move to Itanium. Moreover, Sun believes that Itanium is not a meaningful choice for all of the reasons we state in this letter.
As discussed in item B, above, Sun's support for its claims against HP/UX's survival is the fact that it is dependent on Itanium and customers moving to that platform. Again, as further support: (1) market pick-up has been very slow for Itanium, (2) much of the Itanium market to date has been in the 1-4 way space and the new Intel Xeon 64 and AMD Opteron are showing much stronger acceptance in this space verses Itanium, (3) migration to Itanium, whether it be from Tru64/Alpha or HP-UX/PA-RISC, requires a disruptive migration, and according to a survey done at the most recent HP World show (August 2004) 50% of the respondents said they would never undertake such a migration. Moreover, Itanium has exhibited a failing performance in the market with quarter over quarter sales this year declining, and HP has publicly withdrawal from the chip for its workstations.
Things look equally bleak for Tru64 UNIX customers. HP announced its plans to EOL the Alpha processor and server family (and consequently the Tru64) approximately two years ago. Customers using the Tru64 operating system are on the last version of the Alpha server, the EV7z. Like HP/UX customers, Tru64 UNIX customers have to migrate to the HP/UX Itanium platform if they want an enterprise class UNIX platform from HP. Moreover, these Tru64/Alpha customers will have no viable option for migrating from HP to another HP system until at least 2006. According to HP's current roadmap, Version 3 of the HP/UX11i operating system, the first version with some key enterprise -level features, will not be available until 2006 at the earliest.
It is our belief that HP's actions constitute an abandonment of both of these customer bases.
Claim 4: "Less than two years after abandoning its inherited Tru64 UNIX customers, HP seems on the same path once again to abandon another one of its very loyal customer bases. This time it is its HP/UX UNIX customer base, which is now beginning to see signs that HP may not be committed to the HP/UX UNIX business for the long haul." (See http://www.sun.com/executives/realitycheck/reality-091004.html)
Again, the above are subjective statements and reflect Sun's opinion of why Sun detects a lack of commitment to both Tru64 UNIX and HP/UX customers. Alternatively, Sun has evidence to show that HP is offering no viable choices to either its HP/UX or Tru64 customers. Accordingly, it is reasonable to believe or even to conclude that once a product has been EOLed, like Alpha has been, the ISVs will withdraw their support.
Claim 5: "More importantly, for both the Tru64 and HP/UX customers, HP/UX 11i v3 was going to be the same version for both the HP 9000 family and the HP integrity family. . . . and it was promised for late 2004. ... The slippage of HP/UX 11i v 3 by up to 18 months is major concerns for existing HP customers. . . . ."
You letter claims that Sun is referring to an out of date HP/UX roadmap. Our statements were based on the then current data, which is still current today, that show Version 3 will not be available until 2005 and may slip back to 2006. Your letter also states that ?in fact, many of the features previously scheduled to be included in HP/UX 11iv3 were included in HP/UX11i v2." However, there is no contrary evidence in your letter or from our research that contradicts our claim that the key Tru64 UNIX features like clustering and advanced file system will be included in Version 3. As such, we believe that HP/UX 11i v2 is little or no help to many Tru64 UNIX customers, who would appear to still have to migrate to Itanium or wait for Version 3 in 2006.
All of the above statements of fact are truthful and correct and have adequate substantiation. Our substantiation is based on well established evidence. According to HP's HP/UX roadmap, HP/UX11i v3 is planned to be the same version for both the HP 9000 family and the HP Integrity family running on Tru64 and HP/UX systems. HP claims that it can thereby present customers with the features and functionality of both HP/UX and Tru64. However, the data shows that HP has not delivered some of the key features and functionality with HP/UX 11iv2.
Although there is the same version for both PA-RISC and Itanium, it still does not include the functionality from Tru64. Therefore, while we do not dispute that HP has delivered a common HP/UX release for both PA-RISC and Itanium, many Tru64 customers are still left out in the cold without the functionality they need to make sound architectural decisions. Accordingly, only HP/UX customers can purport to benefit from HP/UX 11iv2, not Tru64 customers, and then we believe only mildly.
Claim 6: "HP is abandoning HP/UX."
Once again, in certain of the places this is a statement of opinion by Jonathan Schwartz. His opinion is based on his good faith assessment of the current climate of HP. Alternatively, however, Sun will also stand behind this as a statement of fact that is true and accurate based on the above substantiation. As detailed by the above facts, we have seen signs that HP is abandoning HP/UX.
Jonathan Schwartz's opinions and even his vigorous debate on this subject as well as Sun's product comparisons and dialog on these commercial matters are inherent in Sun's competition with HP and are part of the free market system in which our companies operate. For our statements of fact, Sun has valid, objective and verifiable evidence. Accordingly, and based on the above, Sun affirmatively stands by its claims regarding HP/UX and will not agree to cease making such truthful and/or subjective claims.
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