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ISS Interlock Demand Planning Update

ISS Interlock Demand Planning Update. Foxconn January 2009. Key Messages – Demand Planning. Market Update IDC Forecasts G6 Transition Pricing Scenario Quarterly Volumes History of reductions since NovWk1 T2 Overview Back up: JanWk1 Interlock Volumes. Market Update.

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ISS Interlock Demand Planning Update

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  1. ISS InterlockDemand Planning Update Foxconn January 2009

  2. Key Messages – Demand Planning • Market Update • IDC Forecasts • G6 Transition Pricing Scenario • Quarterly Volumes • History of reductions since NovWk1 • T2 Overview • Back up: JanWk1 Interlock Volumes

  3. Market Update

  4. IDC Total Market Forecast - YoYSep vs Dec PublishCalendar Years In the last Qtr of 2008, IDC significantly reduced their 2008 and 2009 forecast for the server market

  5. IDC Total Market Forecast - QoQSep vs Dec PublishCalendar Qtrs 2008 forecast decline driven by major revisions to Q4

  6. “The severity of this crisis has thrown the world economy into uncharted waters, and as a result it becomes a little more difficult to draw on historical precedent to determine a clear picture of what the future will hold” -IDC Dec 2008 Historical Trends- unit ships/qtr • Huge Instability in market • Where are we in downturn? • Opportunity for market leadership • Market slowdown, with some areas showing accelerated growth • G6 driven uptick? Scenario planning – 2001 QoQ growth pattern would drive a further 10% risk to FY09 plan

  7. In short… • Crisis more severe than many (including IDC) had thought, makes relying on history challenging • If, however, crisis follows trend of 2001 recession, we could see an additional 10% decline • Key question: When will the market turn? • We need to monitor market demand carefully and respond (up or down) appropriately • Work to maintain rational forecasts • Not cutting indiscriminately • HP and Foxconn need to move together to capitalize on market changes

  8. G6 TransitionPricing Scenario

  9. Server Volume Banding G5 Current plan (without aggressive G6 pricing) = High Band Revised plan with aggressive G6 pricing with a further 10% volume reduction due to recession = Low Band G6 Revised plan with aggressive G6 pricing = High Band Current plan (without aggressive G6 pricing) with a further 10% volume reduction due to recession = Low Band In addition to these high band definitions, a further upside potential will be factored for the following SCI targeted products : DL160, DL180. Risks:- Transition to G6 is slower based on customer financial constraints Transition is slower based on cost /resource required by customers to qualify product Transition is quicker based on power and performance advantages on new gen (IDC)

  10. Quarterly Volumes

  11. Volume Changes 2FQ includes G6 launch risk mitigation volume (G5 overstated) • 1FQ: -23% since NovWk1 • 2FQ: -17% since NovWk1 • 2 Date Transition Planning Methodology: • Regions forecast transition (bringing down G5) starting 5/1 which is the high confidence availability date. • GBU fills in G6 demand gap between launch date (3/30) and HC date. This causes 2FQ to appear overstated by ~9k • Protects against the risk of launch slip or delayed availability (sell more G5’s if G6 unavailable) • 3FQ: -8% since NovWk1, to be monitored/reviewed, cuts to be made in AM Cuts to be made in AM, 2FQ/3FQ

  12. Volume Changes – AM Changes since NovWk1: • 1FQ: -21% • 2FQ: -17% • 3FQ: -3% Cuts to be made

  13. Volume Changes – EMEA Changes since NovWk1: • 1FQ: -25% • 2FQ: -16% • 3FQ: -8%

  14. Volume Changes – APJ Cuts need to be considered Changes since NovWk1: • 1FQ: -25% • 2FQ: -15% • 3FQ: -21%

  15. T2 Overview

  16. T2: Product Overview • What is it? • 4 ½ width nodes in 2U Chassis • Per node: 2P Intel Nehalem, 16 DIMM, nodes non-hot pluggable • LFF or SFF hot plug HDD • Optional RPS (if nodes 300w or less) • Multiple PCI riser options, depending on node configuration • MPH Flex sku: 2 EATX (DL160G6 PCA) 1 3 2 4

  17. T2: Demand Implications Market • Targeting Cloud, scale-out environments, a general customer offering but also SCI, WW offering SKU Strategy • Branded SL160 G6 • Expecting 80% CTO due to product complexity, unique configurations requirements • CTO forecasted per node • Chassis forecasted as attach rate, 31% • BTO forecasted per SKU (4 and 2 node configs), including Chassis • Flex sku to be forecasted per deal opportunity (similar to current SCI process) Schedule • Launch: 4/27, Jasmund (recently slipped from 3/30) Demand • Possible deals at launch being explored, SCI and non-SCI • Customers may evaluate DL160G6 vs T2 Summary • T2 a complex product to plan, but allows us to target growing areas of the market

  18. Back-up Jan09Wk1 Interlock Demand Volumes

  19. Foxconn Jan09Wk1 InterlockBy Category

  20. Foxconn Jan09Wk1 Interlock - WWBy Product

  21. Foxconn Jan09Wk1 Interlock - AMBy Product

  22. Foxconn Jan09Wk1 Interlock - EMEABy Product

  23. Foxconn Jan09Wk1 Interlock - APJBy Product

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