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HPE storage sales slipped sharply in late 2016

Storage is among the casualties of Hewlett Packard Enterprise’s struggles following the break-up of Hewlett-Packard.

The vendor reported HPE storage revenue declined 12% year-over-year to $730 million in the fourth quarter of 2016. The poor storage sales came across the board, with only 3PAR all-flash systems showing an increase — but even that increase was less than expected.

“We’re not happy with the storage performance this quarter,” HPE CEO Meg Whitman said. “I’m quite happy with the all-flash situation, but there are other things that we’re going to buck up.”

Whitman said “other parts of the business were weaker than they probably should have been.” She blamed these HPE storage weaknesses on execution, softness in the overall storage market and a shortage in NAND flash supply.

HPE’s all-flash sales were less than they could have been. The vendor reported 3PAR all-flash arrays increased 28%year-over-year, but all-flash revenue has risen in triple digits at HPE and other vendors in recent quarters. NetApp reported a 185% spike in all-flash sales last quarter, and HPE’s fourth-quarter all-flash revenue rose close to 100% year-over year.

Whitman said HPE’s flash sales would have been “considerably higher” if not for the NAND shortage. But other large storage vendors say the NAND shortage has not had a great negative effect on sales.

HPE storage not the vendor’s only problem area

Storage was far from the only sore spot for HPE as it struggles to find its footing after the HP split. Server sales fell 12%, networking dropped 33%, enterprise services declined 11% and software slipped 8%. HPE’s overall revenue of $11.4 billion dropped 10% from last year and missed Wall Street analysts’ consensus forecast by $700 million.

Whitman tried to paint a rosy view of the future of HPE storage. She said she expected the NAND shortage to lift soon, which will help flash sales. She also pointed to last week’s addition of streamlined licensing and the addition of compression to 3PAR to fill what had been “actually a competitive hole in our product.”

HPE closed its $650 million acquisition of hyper-converged startup SimpliVity last week. Whitman put the hyper-converged market at approximately $2.4 billion and growing approximately 25% annually. She said SimpliVity will deliver to HPE “a whole new group of storage sellers where we can have broader market coverage” and pledged to become a hyper-converged leader.

“We see this as a significant opportunity,” she said.

HPE will have to take advantage of any opportunity it finds because it has a lot more challenges than opportunities these days.

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