HP May Dump McData, Sources Say

Industry sources say the tepid relationship between Hewlett-Packard and McData is about to go ice cold, although McData claims it will heat up with a new deal between the storage vendor and the switch maker.

At least two financial analysts say HP will quit selling McData switches, mainly because HP gets better results selling gear from McData rivals Brocade and Cisco.

Brocade has traditionally had a strong relationship with HP, while HP has never been a strong McData customer. Cisco has put pressure on McData's market share in the director space since getting into the SAN switch space in 2003.

"Having never really established a significant revenue presence, sources indicate HP is discontinuing the sale of its McData sourced switching products," RBC Capital Markets analyst Tom Curlin wrote to clients last week. "Across our checks, sources have pointed to stronger presence from both Brocade and Cisco at the expense of McData. Brocade in particular appears to have reengaged the channel in an effort to build out its branded business and emerging market offerings."

Another Wall Street analyst also says HP has decided to pull the plug on McData. "My checks are indicating that for all practical purposes, McData is out of HP," says the analyst, who asked not to be named. "HP doesn't sell a lot of directors anyway -- most of what HP sells is switches. And HP sold very few McData directors."Not so, says McData chief operating officer Todd Oseth. He claims McData has extended its OEM deal with HP.

"We're putting another OEM agreement in place," Oseth told Byte and Switch. "HP has had a long-term relationship with Brocade and has done well with them. But they have to go with guys who know the enterprise, too."

HP SAN marketing director Kyle Fitze would not confirm or deny that HP will quit selling McData switches, but he says there will be an ongoing relationship between HP and McData.

HP doesn’t comment on the status of partner relationships, past, existing or future," Fitze wrote in an email to Byte and Switch , although Brocade did announce last week that HP will sell three more of its switches. (See HP Adds Brocade Switches.) "What I can tell you is that we are currently selling McData switches and continue to work with them on future product development plans that include their switch technology.”

But which switch technology? The SAN Infrastructure page on HP's Website indicates little life in its relationship with McData. HP lists enterprise, midrange, and entry-level switches from Brocade (B-series) and Cisco (C-series), but only entry-level switches -- a 12-port edge switch and 10-port blade server switch -- from McData (M-series). Neither McData's flagship i10K or any other McData director appears on the site. (See Anybody Want a High-Speed Director?)Brocade counts HP, EMC, and IBM as "over 10 percent" customers, with the trio accounting for 70 percent of Brocade's revenue last quarter. McData says IBM drove 32 percent of its revenue and EMC 26 percent last quarter. The rest was divided among HP, Dell, Hitachi Data Systems, and VARs.

But even if McData doesn't get a big chunk of its revenue from HP, it certainly doesn't want to lose a major storage vendor as an OEM partner while in fierce competition with Brocade and Cisco. (See Brocade Touts Leadership, FC SAN Revenue Up, and McData Trails Switch Rivals.)

— Dave Raffo, News Editor, Byte and Switch

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