Here I go, another blog post starting with question. Yet another post sparking speculation on my part due to an article by our friends at The Register who were kind enough to do some number crunching of HP’s latest quarterly numbers were storage revenues were down about 5%.
Apparently a big chunk of the downward slide for revenues was declines in EVA and tape, offset to some degree by 3PAR and StoreOnce de-dupe products.
I suppose this thought could apply to both scenarios, but I’ll focus on the disk end, since I have no background on StoreOnce.
Before HP acquired 3PAR, obviously EVA was a juicy target to go after to replace EVAs with 3PARs. The pitch was certainly you can get a hell of a lot more done on less 3PAR than you can with more EVA. So you’ll end up saving money. I’ve never used EVA before myself, heard some good aspects of it and some really bad aspects of it, I don’t think I’d ever want to use EVA regardless.
I am sure that 3PAR reps (those that haven’t left anyways – I’ve heard from numerous sources they outclass their HP counterparts by leagues and leagues), who are now responsible for pitching HP’s entire portfolio obvious have a strong existing bias towards 3PAR and away from the other HP products. They try to keep a balanced viewpoint but I’m sure that’s hard to do, especially after they’ve been spending so much time telling the world how much these other products are bad and why the customer should use 3PAR instead. Can’t blame them, its a tough switch to make.
So, assuming you can get a hell of a lot more done on a smaller/fewer 3PAR system(s) than EVAÂ – which I think is totally true, (with some caveat as to what sort of discounts some may be able to score on EVA, 3PAR has traditionally had some strict margin rules where they have no problem walking away from a deal if the margin is too low), add to that the general bias of at least part of the sales force, as well as HP’s general promotion that 3PAR is the future, and you can quite possibly get lower overall revenue while the customers are saving money by having to buy fewer array resources to accomplish the same (or more) tasks.
3PAR revenue was up more than 60% apparently, on top of the previous gains made since the acquisition.
It would be very interesting to me to see how much consolidation some of these deals end up being – traditionally NetApp I think has been the easiest target for 3PAR, I’ve seen some absolutely massive consolidation done in the past with those products, it was almost comical in some cases. I bet EVA is similar.
Now the downside to the lower revenues, and I’ve seen this at both Dell and HP – both companies are feeling tremendous pressure to try to outperform, they haven’t been able to do it on the revenue side, so they’ve been squeezing on internal costs, which really can degrade services. Overall quality of the sales forces at the likes of HP and Dell have traditionally been terrible, compared to the smaller company counterparts (at least in storage). Add to that the internal politics and region limitations that the companies place on their sales forces further complicates and frustrates the quality people internally as well as customers externally. Myself I was unable to get anything out of a local HP/3PAR account team for months in the Bay Area, so I reached out to my friends in Seattle and they turned some stuff around for me in a matter of hours no questions asked, and they didn’t get any credit (from HP) for it either. Really sad situation for both sides.
I don’t have much hope that HP will be willing or able to retain the top quality 3PAR folks at least on the sales side over the medium term, they, like Dell seem focused on driving down costs rather than keeping quality high, which is a double edged sword. The back end folks will probably stick around for longer, given that 3PAR is one of the crown jewels in HP’s enterprise portfolio.
For some reason I’m immediately reminded of this quote from Office Space:
[..] "that is not right, Michael. For five years now, you've worked your ass off at Initech, hoping for a promotion or some kind of profit sharing or something. Five years of your mid-20s now, gone. And you're gonna go in tomorrow and they're gonna throw you out into the street. You know why? So Bill Lumbergh's stock will go up a quarter of a point."
One of 3PAR’s weak points has been at the low end of the market, say sub $100k deals, is a space 3PAR has never tried to compete in. Apparently according to The Register the HP P4000/Lefthand side of things is not doing so hot, and also seemed to be HP’s go-to product for this price range. This product range is what HP used to be excited about, before 3PAR, I attended a storage briefing at a VMware User group meeting just before HP bought 3PAR, expecting some sort of broad storage overview, but it was entirely Lefthand focused. While Lefthand has some interesting tech (the network RAID is pretty neat), for the most part I’d rather pay more and use 3PAR obviously.
I wonder what will happen to Lefthand in the future, will the best of it’s tech get rolled up into 3PAR? or vise versa? Or maybe it will just stay where it’s at, the one good thing Lefthand has is the VSA, it’s not as complete as I’d like to see it, but it’s one of the very few VSAs out there.
Dell has been busy trying to integrate their various storage acquisitions whether it’s Compellent, Ocarnia, Exanet, and I think there was one or two more that I don’t remember. Storage revenues there down as well. I’m not sure how much of the decline has to do with Dell terminating the EMC reselling stuff at this point, but it seems like a likely contributor to the declines in their case.