HP is laying off storage staff, despite being the first to ship over 100,000 disk arrays for SAN use, and record fourth quarter revenues.

The enterprise storage and servers (ESS) business, from where the staff cuts will be made, saw revenues increase seven percent to $4.1 billion in the last quarter. But within that arm, networked storage systems (NSS) saw a nine percent fall in revenue year-on-year. NSS accounts for a fifth of ESS' revenues.

NSS' results were significantly below expectations and contributed to an overall ESS operating loss of $208 million. The layoffs comes as a result. The cuts will occur in the first half of next year and cost around $200 million. The overall HP headcount is not expected to fall, the companies chief financial officer Bob Wayman said, during presentations on the latest figures.

HP has led the SAN storage market for the past seven quarters, according to IDC. It is investing heavily in developing its Enterprise Virtual Arrays for the mid-range storage market. They will feature virtualisation, better storage management, more capacity and better replication. They will also include HP's FATA drives.