HP Takes the Low Road

Despite its love of enterprise buzzwords, such as adaptive enterprise, virtualization, and grid computing, Hewlett-Packard Co. (NYSE: HPQ) plans a fling with the small- and medium-sized business market.

With the price of disk drives dropping, iSCSI on the horizon, compliance with federal regulations a reality, and the entry of Microsoft Corp. (Nasdaq: MSFT) into the NAS market, storage networks are not just for enterprises any more, HP says. Now the rush is on to capture the smaller fry as well.

HP began by capitalizing on Microsoft's support for NAS last year. It jumped from ninth to fourth in the NAS market, according to calculations from IDC, by building a line of NAS devices built on Windows Storage Server 2003 (see Sands Shift Under NAS Market and Microsoft Raises NAS Roof).

Now HP wants to bring SANs into organizations that have hitherto found them too costly or complicated. It is taking on the SMB market with a low-end SAN system called the Modular Storage Array (MSA) 1000, announced in November (see HP Underprices IBM, EMC on Low End). We’re taking SANs into the volume mainstream market,” says Bob Schultz, HP’s VP of network storage solutions.

The MSA 1000 lets users migrate drivers on HP ProLiant servers from direct-attached storage to a SAN. “We think of it as, ‘My first SAN,' ” Schultz says.HP makes it clear it is competing in this segment primarily on price. When it announced the MSA, it declared intentions to undercut Dell Computer Corp. (Nasdaq: DELL) and IBM Corp. (NYSE: IBM) on EMC/Dell Clariion and IBM FasT low-end SAN gear for the SMB market.

HP's chances of success with SMBs seems good, given its solid position in the Fibre Channel and iSCSI SAN markets, where IDC ranked them the 2003 market leader. In the Heavy Reading Fall 2003 Storage Networking Market Perception Study, HP ranked third in SAN name recognition, behind EMC Corp. (NYSE: EMC) and IBM.

Competition is building, however, and it's not clear how long HP can compete on price alone. A growing number of vendors have targeted the SMB SAN space, including well-backed newcomers like Sanrad, which claims over 100 customers have bought its V-Switch technology for linking servers with a range of storage devices. HP, with its emphasis on its own hardware and those of its partners, may get a run for its money from vendors with wider support.

Still, HP ProLiant servers are prolific -- HP claims to have sold 8 million of them -- and server sales are strongly tied to storage sales from the same vendor. “Every time we go into a business, we find a ProLiant somewhere,” Schultz crows.

HP says $21 billion of its total revenue came from SMBs last year. That includes more PCs and printers than storage systems, but the numbers could shift this year.One thing: HP says small companies want SANs, but they may need to make some personnel adjustments. “[SMBs] have the same core needs as enterprises, but they don’t have IT staff,” says Paul Miller, HP’s VP of marketing for servers.

So now the question is: How many organizations are hearty enough to tackle SANs without IT?

— Dave Raffo, Senior Editor, Byte and Switch