IDC says HP is selling 17% less storage last quarter than a year ago. Was that because the high-end EVA and XP businesses were contracting faster than the new 3PAR converged storage business was growing?

IDC definitions
IDC defines a disk storage system broadly, including anything with a controller, cables and 3 or more drives as external storage. That covers a lot of ground. They also have another segment, called open networked disk storage (NAS Combined with non-mainframe SAN) that kicks out direct-attach storage.

In either case IDC counts OEM revenue for the branding company, not the supplier. So their numbers overstate, say, IBM’s storage presence – which includes the NetApp FAS arrays branded as IBM’s N-series – while understating NetApp’s actual shipments. Hitachi, who also OEMs to HP and Sun, also suffers in the IDC rankings.

The HP answer
At HP Discover I asked David Scott, formerly 3PAR’s CEO and now head of HP storage, reporting to Dave Donatelli, formerly of EMC, about this. He answered that the high-end HP storage business was growing and that the contraction was in the low-end MSA and JBOD business.

According to Mr. Scott, due to HP’s current troubles, the server group has been moving away from low-margin business, as well as building servers that have up to 62 drives internally (HP ProLiant SL4540 Gen8 Server). Double whammy: server sales are down, and with them, the easy add-on sales of low-end storage; and the servers they do sell have more storage internally and don’t count as external storage sales.

As the largest seller of servers and disk drives, it doesn’t take much margin growth for both to drop off. It’s an intensely competitive market with lots of low-margin business that can juice the top line while eviscerating the bottom line.

The StorageMojo take
The high-end storage market is consolidating. EMC is winning big, and if traditional storage arrays are what you want, they should.

HP is the only major player with a tightly integrated next-gen product strategy that is a stark contrast to EMC’s product stovepipes. Any enterprise storage product/architecture eval needs to include HP.

Now that they’ve added the HP 3PAR StoreServ 7450 flash array HP has covered most of the waterfront in enterprise storage. Despite the inevitable headwinds during the largest product transition of any storage vendor, HP is well-positioned for the future.

Market dynamics are just that – dynamic – and quarterly numbers are only a snapshot. So while I’m having trouble making sense of the numbers, I know that big transitions are rarely smooth. All should become clear in the fullness of time.

HP storage has great technology. Their real challenge is getting the HP sales force revved up to compete better against EMC and NetApp. HP’s tech culture doesn’t appreciate what salesmen need to win, so I’d expect that’s where Scott and Donatelli are spending a lot of their time.

Courteous comments welcome, of course. HP is putting me up here in Las Vegas – a favorite drive of mine from NoAZ – but they aren’t paying for my attendance. Bummer.