"We have amended our quoting terms with the right to reprice existing orders for commodity cost increases between quoting and shipment. DRAM and NAND now make up over half of the bill of material cost of a traditional server, and this share will continue to rise as component costs increase."
"We have expanded our long-term multi-year agreements with our key silicon and memory partners to secure the capacity needed to meet customer demand. We are proactively communicating with customers and channel partners, providing lead time and cost visibility, along with alternative configuration recommendations to shape demand."
"All of them said, okay, I understand the price increases. What we can do to shape the demand, maybe a different configuration, some may take a lower-end configuration to get the product. But it was all about speed to get the product, not the price."
HPE announced changes to its terms and conditions allowing the company to reprice existing orders for commodity cost increases between quoting and shipment. CEO Antonio Neri attributed this shift to volatile DRAM and NAND prices, which now comprise over half of traditional server bill of material costs. HPE has expanded long-term agreements with silicon and memory partners to secure capacity and is communicating proactively with customers about lead times and alternative configurations. The company adopted an agile pricing posture with shorter quote commitment cycles to protect margins. Despite price increases, Neri reported that European customers prioritize product speed over cost and are willing to adjust configurations rather than defer purchases. HPE's networking business, including former Juniper Networks, showed strong performance with 150 percent year-over-year revenue growth.
#hpe-pricing-strategy #hardware-cost-volatility #dram-and-nand-prices #supply-chain-management #server-configuration
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