Taylor's Take on Sun Storage

Big news - HP and EDS to merge

So I have been heads down on finalizing a Sun Open Storage white paper we just wrote which I'll post here - but the HP-EDS announcement is big news so I'll pop my head up for a bit to offer some thoughts on the subject... 

This will be a big job for HP
First of all, a $13.9B merger is a monumental task with considerable risk - especially when 140,000 employees are involved.  HP and EDS will have a lot of challenges integrating - this move will more than double the size of HP's services business.  The HP-Compaq merger was another large acquisition, and gave HP significant challenges in the storage market. 

This will bump HP to #2 - above EMC, still below IBM
In storage market share, this merger will move HP from #3 in total storage (disk, tape, software, services) to #2 behind IBM.  EMC has been in second place, and this move would put HP ahead of EMC and just behind IBM.   Sun will remain #4 in overall storage (which is why we are aiming to change the game btw - to answer Marc's question) and Dell will remain at #5.   (This is based on IDC data btw)

HP is buying managed and enterprise services
This deal shows that HP is investing more in outsourced IT infrastructure and professional services (and perhaps less in consumer printers/scanners/computers?) - moving closer to IBM's core focus.  While HP has been historically strong in the SMB space, it has not had as strong a portfolio of services and offerings in enterprise disk and tape storage segments - especially when compared to Sun and IBM.  HP has also been trying to move into the managed services space to compete more effectively against IBM.  IBM and EMC have been investing heavily in managed storage, data protection and disaster-recovery services through acquisitions and internal investment - EDS will put HP in their backyard and help HP fill in some of these gaps (assuming the integration goes well.) 

A new HP storage channel? 
From a storage products perspective, an HP-EDS merger could have a similar impact on HP's products as IBM Global Services (IGS) has on IBM Storage products (or so HP desperately hopes).   IGS is essentially IBM's largest channel to move its storage products through.  IBM focuses on attaching services to all of its products, but when it leads with services it pulls through as many products in its portfolio as it can.  HP is no doubt betting that EDS's account control in larger environments can open the way for HP storage in the enterprise. 

Any HP/EDS changes will be gradual
A large part of EDS's business is dependent upon the innovation and features that come from Sun products and other vendors.  EDS is a profitable company, posting revenues above $22B prior to this acquisition.   To suddenly start recommending HP products in lieu of recently recommending Sun or other storage products could alienate EDS customers - protecting EDS's revenue stream and partnerships is in EDS' and HP's best interest.  So any preference for HP products in EDS' services offerings will be slow and gradual - and existing business and business partners will continue as planned no doubt - I'll go so far as to say that HP will ensure it. 

Sun and EDS are strong business partners
And we will continue to be.   I can't count how many EDS projects we have been involved with.  We are an EDS Agility Alliance partner and value EDS very highly.  As a result, Sun is baked into a lot of what EDS does - from Solaris, our servers, our Sparc and CMT processors to our storage.  

If anything, Sun (and other storage players) will just have to be all the more diligent in communicating how our products can better meet the needs of EDS and EDS customer's storage services goals - which isn't a bad proposition for customers btw.  Sun is definitely an innovator at the infrastructure level - and a more robust, reliable, cost-effective and eco-friendly infrastructure is an excellent backbone for any managed service offering...      

Posted at 12:22PM May 14, 2008 by Taylor Allis in Storage Intelligence  |  Comments[3]