HP Hits Storage Comeback Trail

After a widely publicized slipup in storage sales last year, Hewlett-Packard has been on the path to recovery. Bob Schultz, senior vice president and general manager for the HP StorageWorks division, sheds light on HP's progress on the storage front and why he thinks channel-driven SMB storage sales will fuel even more growth in an interview with Editor In Chief Michael Vizard.

CRN: How is HP doing in the storage market today?

SCHULTZ: It's really competitive today. There's no doubt about that. But when we reported our most recent results, the storage business was up 3 percent in revenue sequentially. We expect to hold or gain market share across the various categories. I think is was fairly well-chronicled that we had some issues in Q3, but if you look since then you'd see that the business grew in Q4 and grew again in Q1.

CRN: In terms of market share, where is HP these days?

SCHULTZ: For total storage, we're No. 1, tied for No. 1 in open storage area networks, No. 3 in network attached storage but growing at 4 times the rest of the market in that space.

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CRN: How much of HP's storage business is flowing through the channel?

SCHULTZ: Fifty-five percent to 60 percent of our business flows through the channel. The growth segment of the business is really a channel fight.

CRN: Where is the growth coming from?

SCHULTZ: We see a lot of growth in the small- and medium-business market.

CRN: Given that, do you think this is the year that iSCSI will catch on in that market segment?

SCHULTZ: This looks like the year for iSCSI, as we've been talking about it for several years. We see iSCSI in SMB with the merging of storage for file services and block services so that small businesses can put one platform in place. That's where the uptake has been.

CRN: We're also starting to see SANs enter the SMB space. What's driving that?

SCHULTZ: Part of what's happening is that the cost of SANs has come down, and we've been improving the simplicity of operating SANs. So there's real value in terms of consolidating your storage. Today, it makes cost sense if you have three servers to move your storage into a SAN. Not only does it provide performance strength, but also it's easier to manage and reduces cost.

CRN: As IBM and EMC begin to target the SMB space more aggressively, do you think competition in that segment will heat up even further?

SCHULTZ: It's been competitive pricing for the last three years, so I don't see that changing in the future. I would say it's really a continuation of the way it has been for a while now. But I don't see it getting crazy. I think it's been intense for the last three years. I think it's going to stay at that level. But the question underneath that is, how does the channel make money if that's happening? When you look at the products we're bringing out, there are ways to help the channel make money. For SMB, the product we have there is called the MSA array. We introduced an SMB version of that, which was about simplifying the setup so somebody could install it and set it up with a handful of mouse clicks, as opposed to several hours. For our NAS platform, we introduced some software called Application Storage Manager. With that, we've taken six different interfaces and 29 processes and taken them down to four simple questions and one interface. So you set it up in minutes, literally, vs. what could have been a day.

The other thing we're doing is improving the ability of the channel to sell services. We're making it possible for them to do the warranty and support and delivery of Care Packs for full-service programs. There are a number of things I think that you can point to that are going to help the channel.

CRN: What else are you doing to make it easier for solution providers to bridge the divide between storage and servers?

SCHULTZ: We've brought together our server management tools and our storage management tools and unified them. This allows one way of doing management. So you can learn it once, do it once, view it once and you don't have to go back and forth through a variety of tools for managing the basic infrastructure. That's actually a revolutionary step. Nobody else has integrated those functions. And when you're managing the smaller environments, it's usually the same person that's managing servers and storage. So that really simplifies things.

Even when you adopt it to larger enterprises, there's real value in having fewer host agents that have to run to manage the environment. Systems Inside Manager is the tool that has historically shipped with the server platforms. Now it ships free, can be downloaded over the Web and now ships standard with storage. It's changing the model. Our competitors charge for the whole stack. If you want management, you pay for it. We're now giving that away as standard.

CRN: Will systems, storage and network management eventually converge?

SCHULTZ: It is one experience actually, because as you move up the products are all designed to work together. Inside Manager comes standard, and then you can add the value-added modules. And then that flows into OpenView. So it all plugs in together. People can really work at whatever management layer they want and do that in a seamless way.

CRN: There's always a lot talk these days about storage virtualization. What is HP's strategy in that space?

SCHULTZ: I think you're going to find some virtualizations that exist at many different levels. There will be many different reasons for virtualization. It's an interesting technology in that you really have to think about how you use it and what you use it for. With virtualization in the storage space, for example, we're using it in the storage router so we can bridge SANs together. People might have had islands of SANs, and they can now have one common view across the SANs. And with the SAN virtualization, it doesn't matter whether it's our SAN or somebody else's SAN. The consolidation of heterogeneous storage is about whether it's HP storage or IBM or EMC storage. The virtualization is really internal to the box. CRN: What's your take on the pending merger of Symantec and Veritas Software, as it relates to HP?

SCHULTZ: The answer right now is Veritas and Symantec are both friends with HP. Symantec works with the [HP] Personal Systems Group, and Veritas has relationships across the [HP] Enterprise Group. Those relationships continue, and we'll have to work with them as they kind of start realizing other visions and how we partner on that.

CRN: How big of a challenge is Dell in the storage space?

SCHULTZ: You see Dell from a storage perspective, and you see Dell when they're selling servers. They sell servers and storage. We don't see them in accounts when somebody's looking for a consolidation discussion, a continuity discussions or heterogeneous SANs. They really focus on connecting to their own. When we have a deal that involves servers and storage, that's when we see them. And then that is a really a good opportunity for us to talk about the things that we can do that make it easier to run servers. When we see Dell, there are a lot of advantages we have in terms of the conversations we have with customers.

CRN: Such as what?

SCHULTZ: The storage system that we've built for archiving is the only one which does indexing and searching in the storage system. And it's built on a grid architecture, so you can scale out. The discussion we have with people is that we can find your information whether you've got a million or a billion e-mails. We can find it in three to five seconds, and that's an advantage. Then we talk about integrating it with printers, so we can say, 'Look, I can capture your print stream from SAP or whatever's being copied on your printer, capture it and archive it or retain it and really reduce your risks.'

CRN: So if you had to list your top three priorities for 2005, what would they be?

SCHULTZ: Continue the trajectory and the recovery of the [storage] business, grow in the SMB space and then in the enterprise space look at our attach rates to make sure that any time that we're selling servers, we're selling a whole portfolio.

CRN: And the killer pitch for HP in this space is what exactly?

SCHULTZ: The killer pitch usually is simplicity of running the HP system. Running our stuff is straight-up easier in terms of the cost of ownership. That's the message that really resonates when you're sitting across from somebody--I can make your life easier in terms of doing this. Simplicity is the key message. And that comes out of having a systems understanding of how it all comes together and designing it together.