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Ask not for whom the enterprise bellwether tolls ….. so what are the storage vendors going through right now?

March 1, 2016 by ·

One-man-looking-at-anotherin-a-crowd-white-border-190x156Demand for storage is increasing rapidly, yet the big storage businesses seem to be in worse shape than ever. In a previous blog I discussed why (I think) it is happening: a number of concurrent technology transitions; competitive forces from traditionally non-storage market entrants; and an increased rate of change.

So what are the major storage vendors going through right now? Here are just five effects …..

  1. product transitions not going to plan
  2. discounting “surprises”: and not nice ones either
  3. persistent failure to meet financial targets
  4. internal blame game: the competition always seems to be doing better
  5. lots of questions and no-one with any answers

Sound familiar?

Filed Under: Bad Selling, Bellwether, EMC, Enterprise Bellwether, Enterprise Storage Bellwether, Good Selling, High Tech Bellwether, HP Enterprise, HP Storage, Market-Share, Marketing, NetApp, Revenue Growth, Selling, Strategic Objectives ·

Ask not for whom the enterprise bellwether tolls ….. so what is going on with storage?

February 15, 2016 by ·

One-man-looking-at-anotherin-a-crowd-white-border-190x156Demand for storage is increasing rapidly, yet the big storage businesses seem to be in worse shape than ever. Why is that?

Firstly new technology is causing turmoil which the traditional players aren’t managing well. Virtualization, the reduction in cost of SSDs as well the realization that NLSAS may have something to offer – particularly in combination with SSDs – and the development of public cloud (as effectively a new channel), has created a myriad of opportunities for smaller, more nimble players throughout the supply chain.

Secondly, competitive forces. These opportunities for storage start-ups is also rather ironically fueled by those sluggish majors who are prepared to pay well over the odds to acquire the best/most fashionable/sexiest start-ups to bolster their gapped-out portfolios. And then there’s the arrival of Dell as a major player with the acquisition of Compellent to bolster its EqualLogic acquisition and organically developed PowerVault line. This more than anything probably struck fear and panic into the sector as a whole with Dell’s superior supply chain, unique reach into SMB, and probable presumed tolerance of lower margins – and thus lower prices – than the traditional storage majors.

Thirdly, the rate of change in storage has increased dramatically. Instead of their being (like) one major product announcement and one significant price action per year, since 2010 there have been multiple product announcements and price actions per year. I think that this this has been a pre-emptive strike by the majors – getting their retaliation in first – in anticipation of further heat from both Dell and those pesky, attention grabbing start-ups.

Paul Alcorn writes about the whole problem – albeit more at the component rather than the solution level – in Tom’s IT Pro: The Week In Storage: If We Are Running Out Of Storage, Why Can’t They Sell It?

But his punchline is worth pondering: “The changing sales mix from client HDDs to high-capacity enterprise HDDs is hurting the profits of the larger HDD vendors. SSD vendors should be reaping the rewards of the exploding SSD market, but surprisingly in the midst of the data deluge, some of the flash storage vendors apparently could not sell a cup of ice water in the desert.”

I would expand his punchline beyond flash storage vendors, and include the storage majors in that group too.

So what are the major storage vendors going through right now?

 

Filed Under: Bad Selling, Bellwether, EMC, Enterprise Bellwether, Enterprise Storage Bellwether, Good Selling, High Tech Bellwether, HP Enterprise, HP Storage, Market-Share, Marketing, NetApp, Revenue Growth, Selling, Strategic Objectives ·

Ask not for whom the enterprise bellwether tolls …..

January 21, 2016 by ·

One-man-looking-at-anotherin-a-crowd-white-border-190x156The WSJ highlighted some gloomy numbers from Intel’s Data Center Group recently “Intel’s Data-Center Revenue Disappoints” 01/14/16 And the WSJ is right, Intel DCG’s results were disappointing relative to analysts’ expectations, but it didn’t really pick up on what the potential implications are for other players in enterprise IT. What’s interesting is when you view Intel DCG as the bellwether for enterprise IT. After all it is at the core of the data center and everything needs compute. And being a quasi-monopoly it is the most unfiltered view that we can get of compute in the enterprise. Well, unfiltered by not having little complications like changes in market-share to distort that view. So if we think of viewing other IT vendors’ enterprise performance through the lens of how they grew their product revenue relative to Intel DCG then everything becomes a little clearer and easier to understand. Here’s what it looks like:

Intel as Enterprise Bellwether 1 960x720So this includes HP ESSN (products only remember), Cisco Products, IBM Total Systems and Dell Enterprise. Well, whenever Dell Enterprise reported its numbers publicly that is. Viewed historically, Intel DCG reported its lowest year-over-rear revenue growth for 11 quarters. What’s also clear is that in most quarters, Intel’s DCG out-grew most other major IT vendors most of the time. In fact in 17 of the 25 quarters shown in the chart, Intel’s DCG had the highest growth-rate. Takeaways are:

  • Intel DCG’s growth tends to be the upper limit of enterprise vendors’ product revenue growth which also means that whenever Intel DCG has a bad time, pretty much everyone has a bad time
  • If a business did out-grow Intel DCG, it was doing exceptionally well
  • Intel reporting cycle is ahead of the others and as such is also an early indicator – and in this case a possible early indicator of poor enterprise results.

Intel as Enterprise Bellwether 2 960x720HP ESSN outgrew Intel DCG for one quarter in 2010, as did IBM’s Data Center Group – the DC5 of IT, yes, they really are glad it’s all over – in 2011. But that was pretty much a swan-song for IBM … and arguably Hewlett-Packard Company.

Intel as Enterprise Bellwether 3 960v720

 

 

Dell Enterprise managed to out-grow Intel DCG for 5 out of 6 quarters from 2012-13. This is noteworthy because no-one else has ever outgrown Intel DCG over such as sustained period in recent history.

Intel as Enterprise Bellwether 4A 960x720

 

 

 

Here you can see the sort of grief that Cisco was going through ….. with growth rates <5% from 2011 to nearly the end of 2014 with Intel DCG out-growing them by more than 1500 bps for 5 straight quarters in 2014-15.

 

 

Intel as Enterprise Bellwether 5 960x720

Reminder: revenue growth is only worthwhile if it contains calories and there a lot of segments with few or no calories. But these are relatively clean, comparable numbers that come straight from companies’ 10-Q’s.

So the big questions are can anyone buck Intel DCG’s downward revenue growth trend? Indeed, can Intel DCG buck Intel DCG’s trend? And no, that’s not a typo.

Filed Under: Bellwether, Enterprise Bellwether, High Tech Bellwether, HP Enterprise, HP ESSN, Market-Share, Marketing, Revenue Growth, The Pricing Factory ·

So why was HP’s X86 Servers’ turnaround ignored in last quarter’s call?

November 23, 2015 by ·

One-man-looking-at-anotherin-a-crowd-white-border-190x156And HP Storage and HP Enterprise Services’s non-existent turnaround emphasized so much?

Maybe it has something to do with some other aspect of the business …….. Just to re-cap, 7 out of the last 8 quarters have shown positive year-over-year growth. Last quarter was a record quarter for 3Q:

HP ISS Y-o-Y Revenue Growth 2015 10 07

So what’s the problem? Let’s look at market-share:

ISS v Dell Market-share 1280 x 720

A decline of 860 bps in global revenue market-share from 38.5% to 29.9% from 4Q10 to 2Q15 (according to IDC) might be the reason. Which is really brought into sharp focus when you look at market-share gap:

ISS v Dell Market-share and Market-share Gap 1280 x 720

Although the gap to Dell has now widened to 800 bps from a low of 560bps (D), this is less than half what it was in 4Q10 (A) – 1,740 bps. And there are no signs of recovery in market-share either: it has been pretty flat since 1Q14.

And to simplify the visual, selecting specific quarters:

ISS v Dell Market-share Gap 3 - selected quarter 1280 x 720

That’s a lot of market-share to lose. And there are no indications that ISS is making any traction in re-gaining any of that lost market-share opportunity. So maybe this is why ISS’s progress in its revenue growth is being over-looked.

Let’s see what Tuesday’s results from HP and next week’s market-share update from IDC brings.

 

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Storage, Marketing, X86 server market-share ·

So What Should a Turnaround at HP Enterprises Look Like?

October 9, 2015 by ·

One man looking at another in a crowd © w white border 190x156A turnaround is going to be gradual. a progression, an evolution. Perhaps it would look like this …

  1. most recent quarter posted shows Y-o-Y growth
  2. four most recent consecutive quarters posted show Y-o-Y growth
  3. most recent posted quarter is a record quarter
  4. four most recently posted quarters are records

Well looking at HP ISS …. and this format might be strangely familiar to some of you: dark green highlighting indicates +ve Y-o-Y growth; red, negative.

Green good, red bad. Still with me? Yes?

Green with yellow bolded font shows record quarters; light green indicates weak +ve growth between 0-2% … the reason for this will be clear when we look at HP Storage.

HP ISS Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – YES
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – YES
  4. four most recently posted quarters are records – NO

So in the past 8 quarters there has been quite a lot of dark green: 7 of the past 8 quarters have shown growth which came after 8 consecutive quarters of red. So ISS clearly is showing signs of a turnaround, whereas looking at HP Storage:

HP Storage Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – NO.
    – The trouble with storage is that the only quarters that they’ve shown growth have been <2% of which there have been no less than four. Excluding those, HP Storage hasn’t shown significant (i.e. >2% Y-o-Y growth – dark green) since 4Q 2011.
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO.
    – 5 of the past 6 are red; 10 of the past 13 are red.
  3. most recent posted quarter is a record quarter – NO
    – most recent record quarter for a quarter was back in 1Q 2011, and for 2Q through 4Q, back in 2008.
  4. four most recently posted quarters are records – NO

So that’s pretty clear. No turnaround there. But what about Technology Services, HP Enterprises’s “crown jewel” according to Meg Whitman:

HP Technical Services Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted shows Y-o-Y growth – NO
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO
  4. four most recently posted quarters are records – NO

Just lots of red. Well, that seems pretty straightforward. It’s just not a “great business”. And since we have mentioned them, just to complete the picture, let’s add HP Networking:

HP Networking Y-o-Y Revenue Growth 2015 10 07

  1. most recent quarter posted quarter shows Y-o-Y growth – NO**
  2. four most recent consecutive quarters posted show Y-o-Y growth – NO
  3. most recent posted quarter is a record quarter – NO**
  4. four most recently posted quarters are records – NO
    – Although while it should be noted that in 2014 all four quarters were record, they were only marginally higher than the previous three years. Indeed 1Q & 2Q of 2015 were the worst quarters for HP Networking since 2010.

**I’ve excluded 3Q 2105 because of (a) non-organic growth was only cited with currency impact excluded (and so isn’t consistent with everything else above) (b) the impact of acquisitions – and not just because there is non-organic growth that has been rather expensively paid for, but think about it: also the core business is now highly incented to perform, particularly if “adopt -and-go” is the integration approach for overlapping product segments, i.e. they had better grow or they are out ….

So why was HP Storage and HP Enterprise Services’s non-existent turnaround highlighted so much in the quarterly call?

Filed Under: HP Enterprise, HP Enterprise Services, HP ISS, HP Networking, HP Storage, Marketing, Technology Services ·

Lack of Growth at HP Enterprises is the Issue …. according to the WSJ

September 23, 2015 by ·

Depositphotos_12287433_s 150x116Well my previous two blogs highlighted the lack of growth at HP Storage and HP Enterprise Services despite assertions to the contrary from HP’s senior management. So it’s not surprising that this weekend WSJ was writing about: “Hewlett-Packard’s Split: Sizing Up the Challenge: Even if H-P’s pending split simplifies its businesses, it doesn’t address growth issues.” Sept. 20, 2015 1:49 p.m. ET in WSJ by Dan Gallagher

So at least the X86 server group is growing again which good for HP since it has the potential to become a growth engine for HP Enterprises ….

More in the next blog. Why even positive Y-o-Y growth sometimes isn’t all that it seems ….

 

Filed Under: HP Enterprise, HP Storage, Marketing, Technology Services, The Pricing Factory ·
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