Alleged $17.5m fraudster accused of duping HPE out of 42,000 servers

There are export regulations, HPE are allowed to sell to companies who resell, but according to the law they also need to know which countries are involved etc. etc.

It's basically a garbage US law that makes life miserable for everyone and probably only hurts smaller players to keep the big corporations happy. Without the law, I agree with your point though.

I was thinking the same thing. A big order and a bulk discount is beneficial to both sides.

Hence you have so many flash-in-the-pan dodgy energy companies that are basically pen pushing paper shuffling parasitic middle men. (but its still legal and apparently laudable)

They never produced any energy

They never stored any energy

They never delivered any energy

They just bought Wholesale , ie they guaranteed the real energy companies a certain amount of volume at a certain price.

Sampler

Ok Sampler, I happen to be one of the investors you single out as greedy and an asshole.

I would like to thank you for your heartfelt sympathy and advice, but I'm afraid to say you're the asshole here.

You see only real assholes go making sweeping statements like you without checking your facts first and thinking about what harm your words might cause.

At the time of investing, the banks weren't paying interest, my pension plan had just taken a battering due to a fund managers decision not mine, house prices were falling, Lehman's and other major financial institutions were collapsing etc etc etc

I also tried to spread the risk only to have 2 other "safer investments" go under, so think before you open your mouth next time.

This whole sorry affair made me so ill I ended up in hospital in a coma after feeling so stupid I tried to take my own life.

You are a coward and an idiot for saying what you did and I'm sure if you take a look at yourself some time, I'm sure you've made bad decisions too.

Bit more complicated than that .......................

Whilst its easy to just assume HPE are trying to rip off customers, the detail is actually important. You will find its not just HPE who have these policies, all other vendors will as well.

As someone else has said, its mostly export regulations (not just US ones, every country has them) that are a big part of this! With technology IP it is the technology company who has responsibility for where their products actually end up, NOT the reseller or even distributer. HPE could, and companies do get fined if their product is exported to a blacklisted country.

This is why his defence was a load of baloney, whilst he may own the physical asset so can do what he wants within his own company, he doesn't own any of the IP in that asset and so cannot pass that on with out approval.

They are a by-product of the cold war where the Soviets where trying to use shell companies to get hold of Western technology both to use and reverse engineer, North Korea and other sanctioned countries still try it today. 42k servers would make a nice HPC rig for some nuclear testing .........

The second part is actually more to do with support and end user experience.

To give you a real example, when I worked there we had one customer who had bought 100 servers "on a deal" from a dodgy reseller but was experiencing failures when they booted them up and understandably were very not happy.

On investigating it was found the servers were originally supposed to be part of a shipment into another customer (they bought and paid for their consignment but the reseller ordered 100 more than needed from the distributor) but where siphoned off by the reseller in their integration centre. They put them in a leaky shipping container in a field for 6 months whilst they waited for a buyer, when one came along they stripped the packaging (because it got wet) shipped them to the customer as new (even though the warranty was 6 months in) and then just blamed HP when wet circuity exploded on power up! Cue one p*ssed off customer, a 100 servers that needed scrapping and the reseller walks off with the money ...........

You must be blind if you are not seeing this as a problem. The only reason they sell at that price is because of the agreement that the item is being sold for use and should not be sold to resellers.

I don't know how big the HP discounts are but for Cisco kits they are sometimes over 60% compared to retail prices. In all of these transactions you are forced to sign documents indicating that you will not sell the equipment to resellers and that the equipment is for your own use. If this was legal we would all be making a fortune setting up sham business buying the equipment in bulk and then reselling them. This would undermine the OEM retail market and the OEM would just respond by restricting or withdrawing the discounts

Most of the larger resellers we sell to actually have us sign documents to verify if we don't have any of these discount arrangements with OEM because a few have been gotten into trouble by purchasing gear acquired with these arrangements. This is why I find this guys defence to be lacking. Even the resellers get sued in these cases, I guess this is the reason the resellers closed shop.

What it really comes down to is that the bulk end of the market can't be sustained so the vendors skim from the smaller purchasers (who expect lower "economies of scale") to fund it. That only works if you can prevent the bulk market redistributing.

As for the argument that you own the asset but not the IP in the asset, that's morally rot. If I buy a DVD, I can sell it on. If I start selling copies, that's a different issue. The fact that the US (and EU) government colludes to outlaw the grey market through IP law is irrelevant. Its indicative of a society in economic and moral decline. As for not selling stuff to "bad" regimes... really? That that fuss over Cuba while the US messes around in Vietnam, Central and South America, Libya, Iraq, Afghanistan? Do you really thing the Iranian government can't get its hands on plenty of compute power? Is this about, stopping them doing bad stuff or retarding their economic development? Maybe half the country dislikes their president - perhaps the government should be toppled and one more friendly to foreign powers installed...

"Intended for Internal use"

Consider this:

"Court documents obtained by The Register reveal that HPE sold Sage's Space Energy venture a total of 42,611 "units of storage and server networking products"

Let's round that up to 43,000 units, and assume each was a 1U device. That's 1000 racks of hardware. That's a pretty big datacentre, over 15x bigger than the one I currently work in, twice that of a bank I did a contract at not so long ago (and they had two mirrored datacentres). Maybe a 'storage unit' was an individual disk? I hope so, and that my 1U estimate is grossly large (although countered by devices larger than 1U), because if it isn't, HPE should have noticed the volume, and tried really hard to sell datacentre design, Infrastructure support, etc, as that's a massive setup with lots of extra potential earnings, and should have got HPE interested in a site visit and a good old schmooze. Why a company that deals in solar panels would need a datacentre with a footprint the size of a solar farm escapes me. The size of it shouldn't have escaped the HPE sales reps though, Should have stuck out like a sore thumb.