Here is an article on CPQ. Read where HDS is selling 500 million/Q storage also. So CPQ and HDS appear to be neck and neck $ wise?
Compaq Q&A: Storage Strong Point Of Otherwise Down Financials
By Joseph F. Kovar, CRN
Houston
9:41 AM EST Wed., Apr. 25, 2001
Compaq's dark first-quarter earnings report on Monday contained one ray of light. While overall revenue was down 3 percent from the year-ago period, Compaq's enterprise storage business was up 26 percent to $428 million.
Mark Lewis, vice president and general manager of Compaq's Enterprise Storage Group, talked to CRN about Compaq's storage business and prospects in a time of declining IT spending.
CRN: Enterprise storage seems to be one of the highlights of Compaq and of the IT industry in general.
Lewis: Sure. Obviously, we're very happy with the growth, especially in light of the overall economic conditions that occurred in Q1. . . . I think that shows that we were basically able in this quarter to take market share in the storage business, as well as [show] the storage business remained reasonable within what is a tough overall market.
CRN: That 26 percent growth in enterprise storage is specifically for external storage?
Lewis: Yeah, that focuses on our three businesses of external storage, enterprise [storage] software, as well as secondary storage. . . . And in each case there, with the overall 26 percent growth, we were seeing growth rates that are ahead of the overall market for storage. So we're very pleased with that.
CRN: Is it safe to say that storage is the fastest-growing part of Compaq's business?
Lewis: Of the segments that reported, yes, absolutely. As far as what we report at the top-line segment level, yes.
CRN: In light of a slow IT spending trend today, to what do you attribute the growth rates for storage today?
Lewis: I think what we're seeing in storage, as I've said in the past, that storage is much like food for the IT industry. You really have to continue to consume some. You may be able to economize in some areas, but you still have to consume storage. And I think that's to a large degree what we're continuing to see. For us, we're seeing a couple of other factors . . . . All of our international regions together year-on-year grew 36 percent, even beyond the 26 percent growth. What we're seeing is still the need for storage. But I think the numbers are coming down slightly. If you look at Q1, I think it overall in the industry is a little bit less than what the industry originally forecast. But it's obviously not the major hit that you're seeing happening in certain other segments of the business.
CRN: What are your expectations for the rest of the year in terms of storage?
Lewis: You know, right now we're not really setting any expectations yet. So, we're going to take a look at that. We've always said that visibility is low right now. . . . We will expect to try to set expectations over the course of the next few weeks.
CRN: Who are your main competitors in storage?
Lewis: Compaq's principal competitor in storage, very simply, is EMC. What really has differentiated Compaq is that we . . . have an independent storage business that has been very focused on enterprise storage, storage utilities and storage across the overall IT infrastructure environment. So we believe that separates Compaq from literally every other server supplier. While we do supply servers and solutions, and try to leverage our full product line wherever we can, we have built an incredible external, independent storage business as well. So obviously, EMC becomes our principal competitor.
And we've been very pleased in the growth. . . . The most recent Dataquest numbers has us again as the fastest-growing storage software company for the second year in a row. We moved from 13th place to seventh place in the past year in ranking. Now, EMC is still a very big No. 1, but we are moving very rapidly and consistently gaining market share in all of our major markets with respect to storage.
CRN: One of Compaq's main server competitors, IBM, also happens to be a Compaq storage partner. Can you talk a little bit about where Compaq's partnership with IBM is in terms of Compaq reselling IBM's Shark and IBM reselling Compaq's MSS arrays?
Lewis: Sure. Overall, Joe, the important thing to note is that the main purpose of the IBM partnership around storage was to really bring together the interoperability elements necessary to build and deliver what we call an open SAN environment. And that's an environment where you can simply have any kind of storage connecting into a storage area network. It also has heterogeneous storage elements within it. There were OEM agreements as a part of those deals that we elected to do to round out our portfolios. I will not speak for how IBM wishes to position the product. . . . For us, bringing the IBM ESS [Shark] product into our portfolio strengthened our ability to deliver compete storage solutions across all operating systems environments, including now the AS/400 and Systems 390 environments. So we had many customers that considered it an important part of their storage was having a very complete offering, and being able to offer a complete solution across the storage platform. And this OEM offering allows us to maintain our engineering focus in the open systems environment while still providing a very credible and very interoperable and supportive way to integrate System 390 and AS/400 environments into our already heterogeneous SAN environment.
CRN: When you look at the shakeout in the dot-com industry, has Compaq storage been affected at all by that?
Lewis: Obviously, everyone's affected by any major IT trend that goes on. We had done some investing. But I think as you look at the top line, we had a very diversified portfolio. We had been focusing on many other growth areas like the media and entertainment business, which is a phenomenal growth area for us right now, and finance, and telecommunications. So, yes, we were invested there, and yes, we obviously had a number of customers there, being as large as we were. But we also had a very diversified portfolio.
CRN: How much of that $482 million in storage went through the channel?
Lewis: Well, the channel still accounts for upward of three-quarters of everything we ship [in storage], and it's a very critical piece of that, in the sense that the channel can be integration for delivery, it can be providing value-added integration, consolidation, other forms of support, and even other services, right down to be service provisioning. The channel for storage still remains a very key element because there is a lot of integration efforts. And storage, while we're making it more and more cost effective, in many ways it's becoming more complex to install. As folks install a storage utility or a storage area network, we fully believe it will deliver a lower total cost of ownership. But the installation itself, and the base setup, can be more complex than many simple forms of storage. So the channel is still playing a very valuable role there. And again, we are allowing our customers the flexibility to choose, basically with no cost impact, whether or not they would like to use the channel.
CRN: Where do the storage service providers, the SSPs, fit into that equation?
Lewis: Storage service providers in many ways are becoming a channel for product themselves, as they are buying the product and running it often like a utility. But there are certain storage service providers that are really just providing the service as well, and leasing the equipment to the end-user customer. So in many cases, the storage service provider business is becoming much akin to the channel business we have today. We see that has a good logical extension, that there will be service providers that specialize with certain types of businesses, with certain types of infrastructure, certain types of need. So it's very important that we work with service providers of all categories and we try to partner with them as much as possible to extend, again, the complete solution offerings that we can offer to a wide variety of customers with respect to storage.
TalkBack
Subject Replies Thread Author Date of
latest post
Strong Storage #s 0 Larry 4/26/01 11:47:22 AM
Notice that Compaq lists EMC as its key competitor. If EMC doesn't pan out, maybe we could go after Compaq? At least part of the account currently resides with H & K.
Strong Storage #s 0 Nicole 4/26/01 11:46:56 AM
Notice that Compaq lists EMC as its key competitor. If EMC doesn't pan out, maybe we could go after Compaq? At least part of the account currently resides with H & K.
Strong Storage #s 0 Michele 4/26/01 11:46:39 AM
Notice that Compaq lists EMC as its key competitor. If EMC doesn't pan out, maybe we could go after Compaq? At least part of the account currently resides with H & K.
Strong Storage #s 0 Randy 4/26/01 11:46:02 AM
Notice that Compaq lists EMC as its key competitor. If EMC doesn't pan out, maybe we could go after Compaq? At least part of the account currently resides with H & K. |
