HP's Itanium secrets cost us $95 million, Oracle says

Hewlett-Packard would have lost Itanium sales if it had told users it was phasing out the platform, Oracle's expert witness said

Hewlett-Packard misled IT buyers about plans to phase out its Itanium server platform and in the process stole potential sales from Oracle and other rivals, costing Oracle about US$95 million in profits, the company plans to testify in a jury trial starting next month.

The two companies presented their intended expert witnesses in Santa Clara County Superior Court on Monday, giving a preview of their testimony before Judge James Kleinberg, who could disallow those witnesses before the trial goes before a jury on April 8. Earlier in the day, HP's expert estimated the company's damage claim against Oracle at between $4 billion and $4.2 billion.

HP sued Oracle in June 2011 for allegedly breaching a contract when it stopped porting much of its software to the Itanium platform. That decision, announced in March 2011, hurt HP's Itanium sales immediately and permanently, the company said. After hearing arguments without a jury last year, Judge Kleinberg ordered Oracle to resume porting, a ruling the company said it would comply with but is appealing.

Oracle filed a counterclaim against HP, saying that company and its Itanium chip partner Intel had decided to gradually phase out the platform but hid that fact from Oracle, a major supplier of software for the high-end enterprise server platform.

On Monday, economist Ramsey Shehadeh of National Economic Research Associates presented testimony that estimated the impact of HP's alleged "false and misleading statements" about the future of Itanium. Saying HP started to mislead customers in 2008, he estimated the number of sales the company would have made if it had told users what Oracle said is the truth about Itanium, that it is nearing the end of its life. The gap between those numbers and HP's real Itanium sales represents sales that could have gone to competitors' high-end server platforms, Shehadeh said.

With its Sparc servers, which it acquired from Sun Microsystems, Oracle could have won some of those deals that HP would have lost, Shehadeh said. In addition, some service and support sales would have come along with the servers, he estimated. Boiling that down to the profit Oracle could have realized from the sales, Shehadeh came up with the figure of $94.57 million.

Both sides attacked the other's expert testimony on Monday, hoping to get it thrown out before the case goes before a jury. Oracle attorney Daniel Wall argued that HP's witness ignored other factors that could have affected the company's Itanium sales. Robert Frank, HP's lawyer, said Shehadeh had no basis for testifying that HP hid information about the Itanium's future starting in 2008.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Stephen Lawson

IDG News Service
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