Feeds

HP sends Overland overboard

OEM love affair has bitter end

  • alert
  • submit to reddit

Boost IT visibility and business value

HP has thumped Overland Storage with the reality stick, saying it will buy midrange tape products from another supplier.

Overland made this admission Wednesday, revealing that its largest OEM customer will look elsewhere. HP should start buying gear from a new supplier - perhaps StorageTek or Quantum - starting in 2006. Overland expects HP to sell a mix of its gear and the new gear for some time but eventually to be phased completely out of HP's lineup. The loss of a customer the size of HP forced Overland to address some difficult financial repercussions.

"In light of this anticipated loss in future revenue, the company intends to focus heavily on the delivery of new higher-margin products through its branded channel during fiscal 2006," Overland said in a statement.

Then CEO Christopher Calisi tried to step in and put a positive spin on Overland's future.

"We remain excited about the many opportunities that lie ahead for Overland," Calisi said. "We have a strong balance sheet and cash position, and intend to use this strength to fill out our tiered storage strategy consisting of protected primary disk storage, secondary disk-based backup and tertiary tape automation devices."

Overland's OEM business has been shrinking over the past year - a trend that HP will accelerate. Branded box sales, however, have jumped 20 per cent the last two years and now count for $100m per year of Overland's business.

A three-year contract between HP and Overland expires in July of 2006. The deal does not require HP to buy set amounts of gear from the storage maker in the meantime.

HP picked Overland over StorageTek, following the acquisition of Compaq. Now, however, it looks like new CEO Mark Hurd has given Overland the boot as part of an effort to reduce costs in HP's server and storage divisions.

"HP is not announcing a new supplier at this time," the company told us. "HP is taking action for its business to have world class cost structures and the decision regarding Overland is part of that. The current HP StorageWorks MSL6000, MSL5026 and MSL5052 Tape Libraries will continue to be sold for an indefinite period of time or as long as customer demand exists." ®

Related stories

Overland bags Okapi
Quantum buys Benchmark
StorageTek Gives Up on HP
Compaq wears the pants in HP's brave new storage world

Boost IT visibility and business value

More from The Register

next story
Pay to play: The hidden cost of software defined everything
Enter credit card details if you want that system you bought to actually be useful
HP busts out new ProLiant Gen9 servers
Think those are cool? Wait till you get a load of our racks
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
Community chest: Storage firms need to pay open-source debts
Samba implementation? Time to get some devs on the job
Like condoms, data now comes in big and HUGE sizes
Linux Foundation lights a fire under storage devs with new conference
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
prev story

Whitepapers

Gartner critical capabilities for enterprise endpoint backup
Learn why inSync received the highest overall rating from Druva and is the top choice for the mobile workforce.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.