Must-know: Why does HP keep failing to grow its business? (Part 8 of 9)
HP’s storage business continues to decline
In the previous part of this series, we discussed how the Enterprise Group segment of HP (HPQ) is an important segment and contributes 25% of the company’s overall revenues and 40% of the company’s operating earnings. Storage is one of the business lines in this segment. Some of HP’s storage products include traditional storage products such as tape, storage networking and legacy external disk products, and converged storage solutions such as the flagship product 3PAR. In the latest quarter ending, April 30, HP earned about $808 million in revenues from its Storage business line, which was a decline of about 6% from the previous year. Converged storage products, including 3PAR, showed better performance and declined 3% year-over-year.
EMC leads the disk storage systems market
According to IDC and as the chart above shows, EMC (EMC) leads the worldwide total disk storage systems market, and its share increased from about 24% in Q4 2012 to 26% in Q4 2013. HP (HPQ) gained some share, while IBM (IBM) lost some. Dell (DELL) and NetApp (NTAP) are the fourth- and fifth-placed players, with market shares in the single digits. According to the same report, the overall disk storage market increased from $8.71 billion in Q4 2012 to $8.82 billion—an increase of 1.3%.
HP has high hopes for its 3PAR storage product
HP acquired 3PAR for a valuation of $2.35 billion in 2010. Dell and HP both intended to buy 3PAR, and both outbid each other before HP finally acquired 3PAR. Although revenue from the company’s storage business line declined in the quarter ending April 2014, HP still has high hopes from this product. During HP’s conference call to announce earnings, HP’s management commented, “And the good news is we are completely perfectly positioned for where this market is going. And 3PAR is the exact right product, the flash product is exactly the right product. And we are, I think we’re really well positioned for where the market is going.”
Browse this series on Market Realist:
- Part 1 - Must-know: Why does HP keep failing to grow its business?
- Part 2 - Weak toner sales are driving a decline in HP’s Printing segment
- Part 3 - HP needs to be aggressive to leverage fast-growing 3D printing