HP at storage crossroads

Cathie Lesjak said HP favours low-end storage: "The linkage in storage basically had a more storage demand in the higher tiers of storage, which also plays very well to our hand, where it’s more industry standard, lower cost that really, again, like I said, plays to our hand." (At least I think that's what she said.)

Hurd expanded on this:

If you look at our segments, you got multiple segments. You got the high-end of storage, you got the mid range and then I hate to call up the low-end, but it’s the lower tiers and more industry standard part of storage. And what you have for us is really strong growth in the industry standard part of storage. Very mediocre performance in the mid-range that we think we can improve and then not a lot of growth in the high-end. And we think that reflects market trends as well that you got to get, we got to get more of our offering into that industry standard part of the market and have more coverage in relationship to that part of the market.

Note the castigation of EVA performance as "very mediocre", which echoes EVA performance in 2005 when Hurd arrived.

Cathie Lesjak said: "The areas where we are building out coverage is in the storage space. And that is one of the pieces of execution that we’re working on." So HP is going to focus more on low-end, industry-standard storage products and expand its sales coverage there - good news for the channel.

HP says there will be server and storage convergence with less need for external storage. Is it beginning a walk away from external storage? It doesn't sound as if it is fired up with revenue growth opportunities in the mid-range EVA market area.

If HP is scaling back its high-end and mid-range external storage efforts in favour of direct-attach and the P2000/P4000 products then this will be much appreciated by Dell, EMC, NetApp and other external storage suppliers. They might ask if HP's refocussing on direct-attach is a consequence of a perceived market shift or a consequence of consistent and strong server sales and weak mid-range external storage sales.

Hurd added this: "The good news for us is it’s a big opportunity. The good news is we’ve got a supply chain leveraging industry standards that are extremely scaled. We believe we now have a better line up than we have had before and we believe we have a team that’s capable of helping us build the answer, so we look at it as an opportunity, because we think the markets move it our way and we want to take advantage of it."

Hmm. Five years on from Mark Hurd joining HP and storage is still a disappointing under-performer. It's possible that David Donatelli has a bigger job on his hands than everybody realised. ®