Three successive quarters of high-end XP array sales decline have stopped at HP. Did HP bite NetApp's leg?
In its latest financial quarter, the third of 2007 (Q3 07) HP has reported substantially better storage results than in the previous three quarters.
"Storage revenue grew 6 percent, with revenue growth of 7 in external disk storage, including 14 percent in the midrange EVA line, and partially offset by a decline in the tape business."
"Storage revenue grew 1 percent, with revenue growth of 10 percent in the midrange EVA line offset by declines in the high-end array and tape businesses."
"Storage revenue grew 3 percent, with revenue growth of 18 percent in the midrange EVA line offset by declines in the high-end array and tape businesses."
"Networked storage revenue grew 1 percent, with revenue growth of 11 percent in the midrange EVA line offset by declines in the high-end array and tape businesses."
"Networked storage revenue grew 5 percent, led by continued strength in external arrays, where high-end XP revenue grew 19 percent and revenue in the mid-range EVA line increased 17 percent."
HP has a new storage boss, David Roberson, ex Hitachi Data Systems CEO. But he joined quite recently, three months ago in May, and the actions put in place to reverse the declining XP sales revenues were likely initiated before he joined. So he can share in the good news but not take the credit.
The strong sales performance may well have come at the expense of NetApp which recently reported a much weaker quarter, due to a shortfall in spending by its enterprise accounts, than it had expected, and one with no obvious looming product transitions to delay sales. It appears NetApp customers just didn't buy as much NetApp kit as expected and no-one knows why.
NetApp CEO Dan Warmenhoven said in the results call: "The high-end FAS6000 storage units were down more than 30 percent sequentially, another indicator that reflects the slowdown in purchasing from our largest accounts." Answering questions in the call Warmenhoven and his colleagues said their information from these accounts was that the spending slowdown wasn't NetApp-specific. They said that the NetApp gear would have been for non-front line storage applications such as archiving which is not particularly urgent for customers.
The implication here is that HP's growth was not at NetApp's expense. Nevertheless the timing of the opposing results and the common factor of high end array sales: HP's XP; and NetApp's FAS6000, is strongly suggestive of something linked here.