Bob Schultz, VP of Network Storage Solutions, HP

When Hewlett-Packard Co. (NYSE: HPQ) earlier this month announced it would merge its server and storage operations into a single Enterprise Storage and Servers (ESS) group, some skeptics believed it was mainly to achieve cost efficiencies (see HP Fuses Server, Storage Units).

Competitors namely, EMC Corp. (NYSE: EMC) – were hopeful it was a sign HP was downplaying its storage business. Or could it be that HP was simply emulating IBM Corp. (NYSE: IBM), which did the very same thing last year? (See IBM Merges Storage, Server Groups.)

Bob Schultz, newly appointed VP of HP's network storage solutions group, says none of these theories is even close to reflecting the truth. And what is that, then? That customers want a more holistic view of their computing infrastructure – and HP, he says, is better positioned to deliver on those requirements in a more integrated fashion.

"Nothing exists in a vacuum. Storage does not exist in a vacuum, servers don't exist in a vacuum – they connect to each other, they connect to applications, and they have services wrapped all around that. So one of the benefits of this reorganization is really kind of tuning this focusing."

Schultz, 45, takes over for Howard Elias, who is now heading a new group in ESS, Business Management and Operations. Though HP insiders expected Schultz to be tapped for the position, he's moved to the head of the class in fairly short order. In August 2002, Schultz joined HP as VP of marketing for the storage group after spending two years as COO of Adaptec Inc. (Nasdaq: ADPT).The success of his tenure at Adaptec is still unclear. When HP announced his hiring last year, it said that Schultz had "successfully established [Adaptec] as a leader in iSCSI storage networking" after leading its acquisition of Platys Communications to obtain a foothold in TCP offload technology. But so far, iSCSI has been nothing but a miserable dream deferred for Adaptec, which has been forced to recalibrate its expectations as the IP SAN technology keeps getting pushed out (see Adaptec Sees iSCSI Delayed and Adaptec Axes Headcount, Again).

Before joining Adaptec in August 1999, Schultz spent eight years with Compaq in various roles, including VP of the server storage group in Compaq's Storage Products Division. While there, he helped form Compaq's strategy for the emerging SAN market with the launch of its first Fibre Channel storage arrays. Prior to that, Schultz spent 11 years at AT&T Corp. (NYSE: T) in product planning positions. He has an MBA from DeVry's Keller Graduate School of Management and has a master's degree in computer science from the Illinois Institute of Technology.

Schultz spoke recently with US Editor Todd Spangler about the mood of HP's storage group today, why melding with the server group is the right thing to do, its iSCSI strategy, and why he's suddenly so interested in email archiving. (He also manages to use the word "blended" no fewer than five times.)

To read the interview, click on the links below:

— Todd Spangler, US Editor, Byte and SwitchByte and Switch: So you were originally with Compaq, and a lot of the HP storage line now is from Compaq. Is there any feeling from the HP folks that maybe more of the Compaq legacy was brought forward?

Schultz: No, it's very much a 50-50 kind of group. So we've got the XP business, the tape business – LTO and DAT – that came from the HP side, the OpenView SAM [Storage Area Manager] software that came from the HP side. It's very blended in terms of how it's come together.

A great example, back in January, we announced network-based virtualization and our strategy on that, and what we did was blended the StorageApps product that HP had – which if you look at it was about storage applications and how I do replication from any array to any other array – and [Compaq's] VersaStor, which is the technology that helps distribute the data across storage systems. We looked at those two, and we could have had a battle, right? Which one wins? I'm sure that would have been a great story. But when you step back... you need to have the two of those to drive network-based virtualization. So we blended those together and those teams are driving on that. Because the approach, again, is if you drive it by data and facts, it's pretty easy for engineers to understand what you're doing and why you're doing it.

Byte and Switch: What's the mood of the storage group right now?

Schultz: The mood in the storage group is really positive. If you step back and you look at what this team set out to do a year ago – everything that was on the table we said we'd do, we got done. It's a little bit of a reflection period for us as well. A year ago, we came together as a team; now we are looking at the next year forward... The teams, in terms of people, have come together. Their talk now is one HP voice – you don't hear the pre-merger Compaq history or the pre-merger HP history. It's really a blended team... In storage, a year ago we called it Noah's Ark – we had two-by-two, two host bus adapters, two switches, and two arrays. It was kind of interesting. If you look at it today you see one blended group focused on storage.[Ed. note: For those of you keeping score at home, that's the fifth time he's said "blended."]

So people feel real positive... There's the feeling, but then there's black-and-white numbers. The scorecard says we held market share in total storage; we grew market share and became No. 1 in open SANs for the first time; we grew share in network-attached storage from No. 9 to No. 4, and we grew share and revenue in storage management software, we're No. 4 in that space [see IDC: HP Still Top Dog]... The team is executing, so then the question becomes, where are we going?

Byte and Switch: [Ed. note: OK, we'll bite.] So where are you going?

Schultz: The recognition is, the first year we came together and focused on vertical integration, if you will: How do we really bring the storage businesses together? Now we see opportunities for collaborating across the product portfolios. There's a number of things where we see opportunities: The growth in blade servers – that's happening in the Intel Corp. [Nasdaq: INTC] space... As we look out in the future and see what's next for us, we see what we call LCDM, lifecycle data management, coming into the market space. If you step back, underneath that is email archiving, and that's being driven by regulatory requirements in the financial space and healthcare space, initially. There are technologies and storage opportunities, and the most effective way to approach those is with services and storage products together.

So the plan we're creating is a joint plan across HP Services and the storage business, and how do we leverage all of our strengths in this space? Because, by the way, we have the leading [Microsoft] Exchange practice. We have more seats under management than anybody else. We have a great insight in this market and a way to reach customers. We have partners in the financial space, and the healthcare space that we can go work with.Byte and Switch: So email archiving is a new area you'll be expanding into?

Schultz: I'm not going to make an announcement today... We've talked to people about lifecycle data management... Over the next 60 days you'll really see us flesh that out even further.

NEXT: 'Storage Doesn't Exist in a Vacuum'

Byte and Switch: In a nutshell, why was it the right thing for HP to merge the server and storage groups?

Schultz: One, look at the customer base and what our customers are asking for from HP. They're saying, "Talk to us about the full infrastructure – how do we drive our complete enterprise?" Nothing exists in a vacuum. Storage does not exist in a vacuum, servers don't exist in a vacuum – they connect to each other, they connect to applications, and they have services wrapped all around that. So one of the benefits of this reorganization is really kind of tuning this focusing. We have excellence in each of those categories. Now, how do we have horizontal collaboration and leverage across the groups to really present that whole portfolio? So how do we unify the message, bringing the products to the customer set?Byte and Switch: But doesn't this change deemphasize storage? So EMC Corp. [NYSE: EMC] looks at this and says, HP is retreating from competing in non-HP accounts.

Schultz: I'm sure they say that. I think a year ago, they said they were going to take all sorts of share from us – and that hasn't happened, either. First of all, none of the focus has been taken off the storage business. Storage is not folded back into a server business; let's be clear about that... I have a P&L for the storage business, and there are sales goals for the storage business and profitability goals for the storage business. None of that changed. What's changed is there's more incentive now to make a tradeoff between making an investment in my business because it will help drive servers or services... Our market share goals, all those targets are unabated. We're really excited about some of the opportunities we see about going after the market in some segments together.

Byte and Switch: So you're still going to compete aggressively in, say, EMC shops?

Schultz: Oh, yeah. We're going to be competing in IBM shops, and EMC shops, and Sun shops... The reality is that when we sell storage systems, people have other servers that they want to connect, even if we'd consider it an "HP environment." Storage area networks are a great way to approach customers in terms of how do they consolidate elements in their data center and improve efficiencies, and you're seeing the growth rates in SANs continue... No, we're not going to back off.

Byte and Switch: Some people have suggested that, unlike the IBM decision to merge its server and storage groups, HP's move appears to be all about reducing cost structure. Is that a fair interpretation?Schultz: Um, no. No. You know, in terms of the ESS [Enterprise Storage and Servers] group and bringing servers and storage together – no. The way to interpret it is: How do we accelerate growth and have a holistic view of the system environment?

NEXT: Bad Bets?

Byte and Switch: Tell us about your time at Adaptec, and how you came to HP.

Schultz: At Adaptec, I was chief operating officer... That was a great experience, with a very good company, in terms of rounding out my experience set. When I was at Compaq in 95, that's when we formed the storage division, and I helped to write that business plan and helped to found that division. So when the opportunity came up to bring HP and Compaq storage business together, it was an opportunity where I saw tremendous potential in the group.

Byte and Switch: Some people have said that at Adaptec, you put too much emphasis on InfiniBand, and when that didn't play out it was really a disappointment for the company.Schultz: Hmmm... Well, I think there are investments that Adaptec made in a variety of things. If you really look at where the driving investments are at Adaptec, they're around iSCSI. InfiniBand was an investment we made along with many other people in the industry. It was really kind of, hey, this is the next step where the industry is going, and you have to keep pace with that. So I don't think it's a matter of being disappointed or not – that was where the systems vendors were going, and Intel was going, and part of what you do. I think what's more exciting for Adaptec is they really helped to create iSCSI – the company that created SCSI now has iSCSI, and that's where their real investments are for the future.

Byte and Switch: But iSCSI has been an extremely disappointing technology for Adaptec, right? It hasn't paid off yet.

Schultz: You'd have to talk to Adaptec to get their comments – I've been gone for a year now. But iSCSI – for example, HP is shipping an iSCSI product that's used to bridge "stranded servers" into the SAN [see HP Kisses NAS, Nods to iSCSI]. Network Appliance Inc. [Nasdaq: NTAP] has announced iSCSI support on their platforms. But is it taking a little bit longer? Yes, and part of that is due to the economy, and people are saying, "I'm buying what I already have in place," versus really putting new technologies in place. There's certainly been a lot of that over the last 18 months. But if you look at iSCSI's potential, it's still there for the workgroup market as it goes forward, to bring SANs to a whole new level in the marketplace. So, we just have to see how it all plays out.

NEXT: Waiting for iSCSI

Byte and Switch: So where is HP on the iSCSI curve, in terms of introducing a native iSCSI array? That's what everyone is waiting for.Schultz: Right, they're waiting for the target side. As I said, we're shipping iSCSI today to bridge servers into the SAN and to bridge SANs together. And iSCSI, as we've said, you'll see it from HP in about 12 months from now.

Byte and Switch: So mid-2004, basically?

Schultz: Yeah, in the next 12 months.

Byte and Switch: So that's even later than many people were thinking. Are you just being cautious here?

Schultz: Cautious? Well, I think we're focused on a number of opportunities that HP has in front of us. We just introduced, in the middle of April, our EVA 3000 line [see HP, IBM Muscle Up Midrange]. If you're familiar with our offerings we have the MSA 1000 at the entry level; we have the EVA 5000, which is our modular, scaleable storage systems; and we have the XP [a rebranded version of the Hitachi Data Systems (HDS) Lightning], which is our business-critical data center system. So the EVA 3000 fits underneath the EVA 5000 in terms of its price point and its capacity levels, kind of expanding the market opportunity for HP. And so that was a tremendous opportunity for us to fill that segment of our product offering. It was a decision we made a year ago, and we delivered that. We're working through a roadmap that says: How do we prioritize where the opportunities are, and make sure that we're capturing them?Byte and Switch: But in terms of native iSCSI, why does that fit into the roadmap a little later? What's holding that up? Are you worried that it will cannibalize your sales?

Schultz: No, it's not a worry. It's, again, for anything you start with the No. 1 priority and say, "What should we do first?" And the first step, we connect EVA storage systems, which were on the Compaq side, to HP-UX, and let's get that integration going and make progress on that. Here's a segment of the market, the EVA 3000, tremendous opportunity for HP, certainly part of the EVA roadmap for a long time, let's complete that and get that product into the market. So we're just being driven by the business: Let's make sure we've got these bases covered. And we'll continue striking those down.

Byte and Switch: Well, you guys are surely not losing business on the iSCSI front, right?

Schultz: That's right. [Laughs] That's what it comes down to.

— Todd Spangler, US Editor, Byte and Switch