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Ask not for whom the enterprise bellwether tolls ….. so what are the storage vendors going through right now?

March 1, 2016 by ·


Demand for storage is increasing rapidly, yet the big storage businesses seem to be in worse shape than ever. In a previous blog I discussed why (I think) it is happening: a number of concurrent technology transitions; competitive forces from traditionally non-storage market entrants; and an increased rate of change.

So what are the major storage vendors going through right now? Here are just five effects …..

  1. product transitions not going to plan
  2. discounting “surprises”: and not nice ones either
  3. persistent failure to meet financial targets
  4. internal blame game: the competition always seems to be doing better
  5. lots of questions and no-one with any answers

Sound familiar?

Filed Under: Bad Selling, Bellwether, EMC, Enterprise Bellwether, Enterprise Storage Bellwether, Good Selling, High Tech Bellwether, HP Enterprise, HP Storage, Market-Share, Marketing, NetApp, Revenue Growth, Selling, Strategic Objectives ·

Ask not for whom the enterprise bellwether tolls ….. so what is going on with storage?

February 15, 2016 by ·


Demand for storage is increasing rapidly, yet the big storage businesses seem to be in worse shape than ever. Why is that?

Firstly new technology is causing turmoil which the traditional players aren’t managing well. Virtualization, the reduction in cost of SSDs as well the realization that NLSAS may have something to offer – particularly in combination with SSDs – and the development of public cloud (as effectively a new channel), has created a myriad of opportunities for smaller, more nimble players throughout the supply chain.

Secondly, competitive forces. These opportunities for storage start-ups is also rather ironically fueled by those sluggish majors who are prepared to pay well over the odds to acquire the best/most fashionable/sexiest start-ups to bolster their gapped-out portfolios. And then there’s the arrival of Dell as a major player with the acquisition of Compellent to bolster its EqualLogic acquisition and organically developed PowerVault line. This more than anything probably struck fear and panic into the sector as a whole with Dell’s superior supply chain, unique reach into SMB, and probable presumed tolerance of lower margins – and thus lower prices – than the traditional storage majors.

Thirdly, the rate of change in storage has increased dramatically. Instead of their being (like) one major product announcement and one significant price action per year, since 2010 there have been multiple product announcements and price actions per year. I think that this this has been a pre-emptive strike by the majors - getting their retaliation in first – in anticipation of further heat from both Dell and those pesky, attention grabbing start-ups.

Paul Alcorn writes about the whole problem – albeit more at the component rather than the solution level – in Tom’s IT Pro: The Week In Storage: If We Are Running Out Of Storage, Why Can’t They Sell It?

But his punchline is worth pondering: “The changing sales mix from client HDDs to high-capacity enterprise HDDs is hurting the profits of the larger HDD vendors. SSD vendors should be reaping the rewards of the exploding SSD market, but surprisingly in the midst of the data deluge, some of the flash storage vendors apparently could not sell a cup of ice water in the desert.”

I would expand his punchline beyond flash storage vendors, and include the storage majors in that group too.

So what are the major storage vendors going through right now?

 

Filed Under: Bad Selling, Bellwether, EMC, Enterprise Bellwether, Enterprise Storage Bellwether, Good Selling, High Tech Bellwether, HP Enterprise, HP Storage, Market-Share, Marketing, NetApp, Revenue Growth, Selling, Strategic Objectives ·

Ask not for whom the enterprise bellwether tolls ….. it tolls loudest for large storage businesses

January 29, 2016 by ·


 

Intel Data Center Group’s Year-over-year revenue growth also works as a good benchmark for large, enterprise storage companies. I’ve used this chart before:

 

 

 

Even though compute isn’t storage, compute does produce the data that storage needs to store.

 

 

 

 

So as we overlay Intel DCG on top of this picture, you can start to see the more extreme gyrations that storage has been going through, at least compared to Enterprise as a whole. In the early part of this decade, EMC Storage and NetApp product both outgrew Intel DCG over a sustained period. However that all went to hell in a basket very quickly during 2012. Not coincidentally this was when Dell was integrating Compellent (acquired in 2011) and dissolving its reseller arrangement with EMC leaving it with a rather nice portfolio of PowerVault, EqualLogic & Compellent to name but a few …..

Since then, all the enterprise storage players have performed very poorly, not only in absolute terms, but even more so relative to Intel DCG. And the key one to watch for is the gap between Intel DCG’s growth and that of EMC since mid-2014:

 

 

From mid-2014, Intel DCG outperformed EMC by a consistent 1500bps for 6 consecutive quarters. No wonder EMC agreed to be put out of its misery by Dell ……..

Filed Under: Bellwether, EMC, Enterprise Bellwether, Enterprise Storage Bellwether, High Tech Bellwether, HP Storage, Marketing, NetApp ·

So why was HP’s X86 Servers’ turnaround ignored in last quarter’s call?

November 23, 2015 by ·


And HP Storage and HP Enterprise Services’s non-existent turnaround emphasized so much?

Maybe it has something to do with some other aspect of the business …….. Just to re-cap, 7 out of the last 8 quarters have shown positive year-over-year growth. Last quarter was a record quarter for 3Q:

So what’s the problem? Let’s look at market-share:

A decline of 860 bps in global revenue market-share from 38.5% to 29.9% from 4Q10 to 2Q15 (according to IDC) might be the reason. Which is really brought into sharp focus when you look at market-share gap:

Although the gap to Dell has now widened to 800 bps from a low of 560bps (D), this is less than half what it was in 4Q10 (A) – 1,740 bps. And there are no signs of recovery in market-share either: it has been pretty flat since 1Q14.

And to simplify the visual, selecting specific quarters:

That’s a lot of market-share to lose. And there are no indications that ISS is making any traction in re-gaining any of that lost market-share opportunity. So maybe this is why ISS’s progress in its revenue growth is being over-looked.

Let’s see what Tuesday’s results from HP and next week’s market-share update from IDC brings.

 

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Storage, Marketing, X86 server market-share ·

So What Should a Turnaround at HP Enterprises Look Like?

October 9, 2015 by ·


A turnaround is going to be gradual. a progression, an evolution. Perhaps it would look like this …

  1. most recent quarter posted shows Y-o-Y growth
  2. four most recent consecutive quarters posted show Y-o-Y growth
  3. most recent posted quarter is a record quarter
  4. four most recently posted quarters are records

Well looking at HP ISS …. and this format might be strangely familiar to some of you: dark green highlighting indicates +ve Y-o-Y growth; red, negative.

Green good, red bad. Still with me? Yes?

Green with yellow bolded font shows record quarters; light green indicates weak +ve growth between 0-2% … the reason for this will be clear when we look at HP Storage.

  1. most recent quarter posted shows Y-o-Y growth – YES
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – YES
  4. four most recently posted quarters are records – NO

So in the past 8 quarters there has been quite a lot of dark green: 7 of the past 8 quarters have shown growth which came after 8 consecutive quarters of red. So ISS clearly is showing signs of a turnaround, whereas looking at HP Storage:

  1. most recent quarter posted shows Y-o-Y growth – NO.
    – The trouble with storage is that the only quarters that they’ve shown growth have been <2% of which there have been no less than four. Excluding those, HP Storage hasn’t shown significant (i.e. >2% Y-o-Y growth – dark green) since 4Q 2011.
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO.
    – 5 of the past 6 are red; 10 of the past 13 are red.
  3. most recent posted quarter is a record quarter – NO
    – most recent record quarter for a quarter was back in 1Q 2011, and for 2Q through 4Q, back in 2008.
  4. four most recently posted quarters are records – NO

So that’s pretty clear. No turnaround there. But what about Technology Services, HP Enterprises’s “crown jewel” according to Meg Whitman:

  1. most recent quarter posted shows Y-o-Y growth – NO
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO
  4. four most recently posted quarters are records – NO

Just lots of red. Well, that seems pretty straightforward. It’s just not a “great business”. And since we have mentioned them, just to complete the picture, let’s add HP Networking:

  1. most recent quarter posted quarter shows Y-o-Y growth – NO**
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO**
  4. four most recently posted quarters are records – NO
    – Although while it should be noted that in 2014 all four quarters were record, they were only marginally higher than the previous three years. Indeed 1Q & 2Q of 2015 were the worst quarters for HP Networking since 2010.

**I’ve excluded 3Q 2105 because of (a) non-organic growth was only cited with currency impact excluded (and so isn’t consistent with everything else above) (b) the impact of acquisitions – and not just because there is non-organic growth that has been rather expensively paid for, but think about it: also the core business is now highly incented to perform, particularly if “adopt -and-go” is the integration approach for overlapping product segments, i.e. they had better grow or they are out ….

So why was HP Storage and HP Enterprise Services’s non-existent turnaround highlighted so much in the quarterly call?

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Networking, HP Storage, Marketing, Technology Services ·

Lack of Growth at HP Enterprises is the Issue …. according to the WSJ

September 23, 2015 by ·


Well my previous two blogs highlighted the lack of growth at HP Storage and HP Enterprise Services despite assertions to the contrary from HP’s senior management. So it’s not surprising that this weekend WSJ was writing about: “Hewlett-Packard’s Split: Sizing Up the Challenge: Even if H-P’s pending split simplifies its businesses, it doesn’t address growth issues.” Sept. 20, 2015 1:49 p.m. ET in WSJ by Dan Gallagher

So at least the X86 server group is growing again which good for HP since it has the potential to become a growth engine for HP Enterprises ….

More in the next blog. Why even positive Y-o-Y growth sometimes isn’t all that it seems ….

 

Filed Under: HP Enterprise, HP Storage, Marketing, Technology Services, The Pricing Factory ·
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