Note: This post got so long it needed to be posted in 2 parts. Part 1 is here. And while I promised this 2nd part “tomorrow” the editing took much longer than expected. End note.

HP has made the most dramatic bet with their 3PAR-based converged storage line. While the rapid growth of the new products is overwhelmed by the even quicker decline of older products like EVA, they’re off to a good start, claiming over 1200 new customeres.

The challenge for former EMC’er Dave Donatelli and 3PAR’s David Scott isn’t technology but sales. Do you have field storage sales specialists and, if so, how do you compensate everyone so account managers are comfortable bringing them into large deals? Or do you flog marketing to make selling converged storage so simple and remunerative that server guys do it themselves?

Ideally both, but the HP go-to marketing strategy is mind-numbing detail and then tossing it over the wall for sales to figure out. That’s not a winning strategy these days.

Bottom line: HP’s lead in physical servers makes them a threat for many add-on storage sales. But EMC’s storage-focused sales force keeps winning deals.

IBM‘s storage business is at risk. While they have great technology, none of their hardware products are even a strong #2. Two thirds of IBM’s Systems and Technology group business is servers, and it is clear that IBM management isn’t happy with how some product lines are performing.

IBM top management is not sentimental. Given the disposal of once-core assets, such as disk drives, and IBM’s shrinking storage market share, it is clear that IBM will likely sell off or shutter some hardware product lines to focus on higher-margin storage. The Texas Memory Systems solid state arrays, storage software and mainframe storage are likely safe.

But at some point – and that point will come sooner rather than later due to the cloud’s competitive pressure – IBM’s management will decide that the overhead and investment required to support 3rd place and worse products isn’t worth it. That’s likely behind the **BILLION DOLLAR ALL FLASH** data center initiative: a desperate attempt to stay relevant in a rapidly changing storage world.

Expect to see less-than-competitive hardware lines put on life-support with cheap-to-implement HW upgrades – new, bigger disks! now with SSD added! – and new OS quals, until most of the base has migrated or the profits are gone. It is a sad comedown for the company that created and dominated the storage business for decades and then lost it to an upstart named EMC.

Who is the final dwarf?
Well, that’s 6 companies. Who’s the final dwarf? Fujitsu? NEC? Cisco? Huawei? Yes, Huawei is in the storage business.

I like Fujitsu and their Eternus system for the final spot, although NEC’s HYDRAstor has some great scale-out technology. But is NEC getting traction? If they are it’s a well-kept secret.

Eternus is probably doing best in Japan, a large enough market to keep them going for years. But don’t expect any game-changers.

The StorageMojo take
The most important impact of cloud infrastructure is that it gives CFOs a yardstick to beat their CIO with measure their internal IT against. And they aren’t happy with what they’re seeing.

For decades IT has been the wayward child in the corporate family. Cost overruns, service delays, unfathomable mumbo-jumbo, security lapses – IT is a never ending string of expensive problems – as the short life of CIOs attests.

But the need for IT infrastructure is only growing. It’s the means that are changing. That’s where the aggressive, new architecture storage companies like Fusion-io/NexGen, Tegile, Nimble, Avere, Kaminario, DDN, Tintri, Nutanix and now Exablox come in.

Since the advent of RAID systems in the early 90s we haven’t seen much turnover in the major players. That’s about to change.

While it will be wrenching for those involved, it will be good for the industry and for the myriad organizations that need reliable, cost-effective storage. People will buy large arrays for decades to come – just as they still buy mainframes – but they’ll have many more options for non-transactional storage.

Courteous comments welcome, of course. Texas Memory Systems was a long-time advertiser on StorageMojo until recently. HP flew me to their corporate trade show in Europe last year to get the converged storage story direct from David Scott and others. I’ve done work for some of the other firms mentioned.