We know HP storage isn't firing on all cylinders. There were some clues as to what HP is going to do about that at a security analysts meeting held on December 12th. This was a meeting about HP in general and not just about storage. Nevertheless storage figured quite prominently and a number of interesting points were made.
Mark Hurd set the general scene and then handed over to various staffers to discuss their parts of HP's business. Among them was Ann Livermore, executive VP of the Technology Solutions Group (TSG). This group includes enterprise storage and servers in its remit which represent 19 percent of HP's revenues.
She said that the total storage market opportunity was $34 billion in 2006, growing to $41 billion in 2009, a CAGR of 6 percent.
TSG has less than 10 percent share of the IT purchases in HP's global accounts so there is lots of opportunity for growth. In a storage sense it has not been a stellar performance and she outlined the main responses to that:-
- In general customers want to lower storage costs whilst having more delivered to their businesses from their storage infrastructure.
- There will be hundreds of new sales people to improve sales in high-end accounts. This would help address the poor customer purchases of HP's high-end arrays. It implies that there's nothing technically wrong with the arrays. The problem is that they are not being sold well enough.
- A renewed focus on the channel to better shift mid-market storage products.
There was a mention of the adaptive infrastructure, HP's existing marketing mantra, and a statement that customers are moving from high-cost IT islands to lower-cost, pooled IT assets with automated, 24 X 7, lights-out, data centres.
Keywords for HP's storage products include virtualisation, security, energy-efficiency, scalability and dynamic re-deployment.
The new overall buzzword phrase is business technology optimisation (BTO), keying in to the general HP approach following the Mercury acquisition. I think when HP people talk about agility and adaptive infrastructures from now on it will be as part of the way business technology gets optimised.
As an aside I think that what we are seeing is Mark Hurd optimising HP. It didn't have an adaptive infrastructure before he arrived on the scene and certainly wasn't agile in its response to changing customer needs and pre-occupations. Carly Fiorina built a company and product set he could work with, much as an army commander tunes and fine tunes his resources.
Livermore talked about Information Management solutions and one of her slides could have come straight from a Softek marketing or sales presentation. It featured an information management cycle approach with four keywords: Capture; Manage; Retain; and Discover.
She talked about addressable opportunities in storage market segments:-
- The nearline segment had a negative CAGR, declining from around $5.75 billion in 2005 to about $4.9 billion in 2008.
- NAS was healthy with around $1.8 billion in 2005 growing with a 12 percent CAGR to approximately $2.2 billion in 2008.
- Storage software had a 10 percent CAGR with roughly $8.8 billion in 2005 and around $11.9 billion in 2008.
- SAN was healthy too with about $8.5 billion in 2005 and $11.8 billion in 2008, a CAGR of 11 percent.
There was also mention of better selling storage and other HP products by capturing more of a customer's overall infrastructure services spend. The Knightsbridge acquisition fits in with this strategy.
That was her pitch.
She didn't mention RISS, FATA or Storage Essentials. It wasn't a product pitch or a technology one. A sub-text was that better products weren't the focus; better sales execution using existing products was the focus of the next year or so while, of course, so we assume, product development went on in the background
HP chief technology office Shane Robison didn't talk about storage product or storage technology either. He mentioned the next-generation data centre and included server and storage blades in that context. Admittedly there wasn't much room for storage in his pitch since it covered personal and mobility products and imaging and printing too. He discussed HP's data centre cooling improvement technology assessment service saying 25-50 percent reduction in data centre cooling costs were achievable.
For me it was notable that he didn't discuss RISS, FATA or Storage Essentials either, nor data deduplication, nor MAID technology, nor any other storage technology. He talked about virtualisation and automation software, modular service-oriented architectures, and comprehensive management software. Perhaps he didn't want to frighten the analysts. In Hurd's HP gee-whiz technology has a distinctly low-key role.
Mark Hurd summarised at the end of the event, saying he wants HP to be the world's leading IT infrastructure company. To help achieve that he is going to continue taking cost out of the company, aka headcount reductions and maybe facilities retrenchment, and enable the company and its channels to better sell the products it has.
I sense a change in direction for HP product development. Yes, HP wants, as Ann Livermore said, highly-differentiated products, but it wants products it can sell and things like RISS and FATA don't, it appears, come into that category. Not that HP will admit it got it wrong with FATA drives - but enjoy the experience of HP trying to position FATA drives alongside Fibre Channel, serial-attached SCSI (SAS) and serial ATA (SATA) drives to see what a complicated scheme results. Equally RISS remains as blue sky as you like. It still represents near-cutting edge thinking but the cutting edge moves into the future as we do and RISS is looking a little less shiny than it did before.
An area left un-discussed is high-performance networked file computing, the importance of which has recently been under-scored by HDS' investment in and OEM deal with BlueArc.
Mark Hurd did signal that focused acquisitions may be on the cards, ruling out larger-scale corporate buys such as Symantec. That may indicate that HP could move into the high-end network-attached storage (NAS) space. It also seems to need a data protection management reporting capability of its own, one that integrates well and deeply into its existing storage and IT infrastructure management products. There's no sign that Storage Essentials is developing into this space.
Lastly it needs, I think, a better marketed data de-duplication offering and Sepaton's DeltaStor is probably it. There is a bigger problem here and that is how HP manages the transition over to a much-increased use of disk-to-disk backup and the continuing slide of the tape market downhill. It has a strong reliance on tape revenues, not broken out in Ann Livermore's presentation, and the prospect of customers transferring spend from HP tape-based products to competitors' disk-based data protection offerings will not be a pleasing one to HP. It needs to read the market runes well and be agile, really, in positioning its product and selling capabilities to ride the two data protection waves, tape and disk, as one falls away (as it seems likely to do) and the other gathers strength.
On the other hand this is a business optimisation problem and Mark Hurd is showing that he has a very deft hand dealing with that.