HP’s off-the-charts $2.35B buy of 3Par is why Dave Donatelli gets the big bucks and you don’t. Mr. Donatelli, late of EMC, has big plans. But what are they?
We can tease out part of Donatelli’s worldview from the size of the bet.
- 3Par fills a big hole in HP’s lineup. EVA is aging. HDS is good, but it is unseemly for a major storage vendor to be reselling them – something that doesn’t bother IBM’s Global Services group.
- HP can’t compete with EMC unless it also offers a competitive full line of its own storage. EMC may have retreated a bit from the suffocating account control model of the 90’s, but they remain the kudzu of storage: give ’em an inch and they’ll take a mile.
- HP can ramp its moribund storage sales and marketing to compete with EMC. Otherwise that $2B is for naught.
Door #3 is Donatelli’s big challenge. No one else has been able to make HP’s massive sales force competitive with EMC, so the $2B question is: can Donatelli?
HP vs EMC
History: in a boneheaded move, HP signed an OEM deal in 1995 that gave EMC access to every one of HP’s top accounts. EMC wasted no time convincing HP customers that EMC was the storage expert, not HP.
An HP marketing guy justified the deal by pointing to all the margin dollars HP got for very little investment. Not to mention all the lost margin dollars ever since!
HP vs HP
In a big company with a direct salesforce the key to product success is not customer mindshare. It’s salesforce mindshare.
The salesforce and the sales engineers are in the trenches with the customers. They see the opportunities. They have the customer’s ear.
Donatelli’s problem is motivating HP’s salesforce to sell way more HP storage against tough competition from EMC, IBM, Oracle, NetApp and Dell. Coming from EMC, with its dedicated storage sales force, Donatelli lacks experience with a multi-line salesforce.
Which points to a problem with hiring EMC execs: they come from a unique culture. How?
- Dedicated storage salesforce: the different product lines have to compete for sales mindshare, but they are all talking storage. They aren’t shifting gears from middleware to blade servers while dealing with blowups in storage and services.
- Aggressive sales culture. Unlike most tech companies, EMC’s culture was formed in the low-tech, intensely competitive add-on memory business.
- Business-value – CIO/CFO – focused marketing and sales.
That isn’t HP.
The StorageMojo take
Many theories of the 3Par acquisition have surfaced. I take the acquisition at face value: HP (Donatelli) wanted 3Par for what it would do for HP – and against EMC – not because of what it would do to Dell.
Dell has a lot of work to do before it can sell big iron storage. They would have wasted most of 3Par’s assets.
Today’s question: how much of 3Par will HP waste? HP hasn’t done a good job of integrating prior acquisitions. Where are Lefthand and IBRIX?
Solving the sales problem is more critical than HP’s suffocating engineering processes. The engineers will eventually slog through the code reviews and release bureaucracy.
Convincing the sales force to spend time and bandwidth promoting storage is the hard part. Successful sales people are adept at making their numbers with the least possible effort and risk.
Right now, that’s blade servers, pizza-box servers, PCs and services. Not storage.
Sure, HP can adjust budgets and comp plans, but those are nudges, not orders. AFAIK no one has published on the diffusion of new product sales in large companies, but the process as I’ve studied it is arcane. Each sales office has to get comfortable selling and supporting the product, a process that takes time and a realistic battle plan.
Does Donatelli have the chops and the troops for the job? If he doesn’t, HP will fall even further behind EMC.
Courteous comments welcome, of course.
Interesting article. This will be an interesting story to watch unfold. Its an interesting point you raise around other products that have purchased and “where are they now?”. I think HP have an issue with branding and things seem to get lost in their own re-name. iBrix is alive and kicking, but just neatly hidden – and from what they have done with the product – looks OK. The same is true of lefthand – i guess it comes down to where your mainstream interest is – Mine is in the enterprise space, so i would be tracking some tools and tech that maybe the SME market would not be interested…. The marketing machine just doesn’t know how to bring lefthand and iBrix to bear – lets hope the same is not true for 3PAR.
One thing I will say – the acquisition got a lot of publicity – more than most sums of money will buy (maybe other than $2.4b) – and maybe that can be used to advantage here.
I think HP have brought a decent technology – they just now need to ensure that can market it, sell it – and more importantly show the shareholders that they are gonna get there well earned cash back!
Cheers,
@stuiesav
Lefthand is being heavily promoted, I was at a big VMware user group meeting in June and that’s almost all HP talked about(was hoping to hear about other things too). It’s under the P4000 model# I believe.
Ibrix is also available in the HP scale out NAS offering (X9000 I believe), scale out NAS is a fairly niche product in general so can understand that it’s not making a lot of headlines. Polyserve I believe is embedded in the X5000 NAS head units(though not 100% sure).
In my own talks with 3PAR reps among the biggest issues they have come across in the past was the size of their company. Already several new opportunities have opened up for them for no other reason than they have the backing of HP (or originally Dell). The “never got fired for buying X” mantra at work.
I don’t know how effective HP will be at selling 3PAR my biggest concern I guess is how territorial the existing EVA sales people are or whoever sells EVA. The 3PAR sales team(I know folks on both coasts) are very good in my experience. Will HP reps come in and take over where the 3PAR teams could get in and be much more effective? I don’t know …
Well, there are a lot of acquisitions EMC has made you could point to and ask “Where are they now?”. Not all of them have turned out to be a VMware like story. But even with VMware, you could have made the same arguments against EMC. It wasn’t their core market, their sales staff weren’t trained for or interested in server virtualization, etc.
It didn’t turn out too badly for them. 😉
Dave D. is a very smart guy. He will undoubtedly be able to attract a lot of talented and experienced storage sales leaders from all of the major companies. HP will be able to establish Storage Overlay teams. Rank and File sales will be given reasons to support the new sales structure.
But there is one thing you can say about sales critters, and that is they love to make money, and if they see a way to do it with Storage, they will make it happen. Blades and printers be darned.
Maybe I’m just too optimistic.
Monday September 27th is the Hitachi / HDS announcement D-Day for the new Virtual Storage Platform VSP known under the code name Victoria. We will see an complete new modular storage system with fantastic scale-up und scale-out capability. The marketing campaign describes the new disk array as three-dimensional. I think this means scale-up in the same rack, scale-up with an additional rack and scale-out by connecting VSP sites together. At first you can connect two V1 systems to form a V2 system. But I anticipate that for future storage federation more than two sites will be supported.
I heard that HP will announce the new VSP disk array at the same day. Scale-up means scale-down capability too, you can scale down the VSP to midrange level covering the EVA models. So I see no real need for HP to acquire 3PAR. Perhaps Mr. Donatelli is so ambitious to sell an “own” disk array in future. But the new Hitachi apples are much better than the 3PAR pears. This can be a major point of confusion for the HP salesforce.
I am not a storage guy by any means. But the winner of this deep pockets auction is the person who figures out that the business problem is data life cycle management and the solution is software and process not hardware at all.
I agree with Greg, above. HP needs to do what EMC has been doing – create overlay, specialist groups that are focused on only that product. If there is conflict with the EVA line sales team, then make them adapt or move them out. EMC has successfully done this with DD, Avamar, RSA, Documentum, etc etc etc where EMC’s core team had no prior knowledge of selling these solutions. The case could be made that EMC is no longer a storage company…just based on financials alone!