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Donatelli dumped as head of HP Enterprise Group, goes on special assignment

Dave Donatelli, the man who set Hewlett-Packard’s storage strategy, is no longer in charge of HP’s storage, server and networking group.

HP CEO Meg Whitman Wednesday said COO Big Veghte will take over Donatelli’s post as executive vice president and general manager of the Enterprise Group. Donatelli remains with HP, and was given a special assignment to scout out possible acquisition targets.

Donatelli came to HP from EMC in 2009 and ran the enterprise group that includes storage, servers and networking. Donatelli spent $2.7 billion of HP money on networking company 3COM and another $2.35 billion on storage vendor 3PAR, whose systems have become the highlight of HP storage sales.

Apparently, Whitman is happy with these acquisitions. According to HP’s press release announcing the changes, Donatelli’s new role includes “identifying early-stage technologies as he did successfully with 3PAR and 3Com.”

I don’t know what HP’s definition of early stage is, but 3COM was 31-years-old and 3PAR was an 11-year-old public company when HP bought them in 2010.

Donatelli was reassigned because of poor sales in his group. “This is less about technology than it is about a number of other areas,” Whitman said during HP’s earnings conference call Wednesday. “I think we have the right technology. We have got to work on go-to-market.”

Those areas, she explained, include having “the right products targeted to the market segments that we choose to go after with the right cost structures” and simplifying HP’s “selling motion.”

3PAR storage systems – now called HP 3PAR StorServ – have sold well but HP’s older disk storage and tape portfolios have continually declined. HP storage revenue declined 10% year-over-year last quarter to $833 million. 3PAR arrays increased more than 10%, “but the decline in tape and other areas, we can do better than that,” CFO Cathy Lesjak said on the call.

Overall, the enterprise group’s revenue declined nine percent year-over-year, so HP’s enterprise problems go beyond storage. The storage strategy probably won’t change much, at least not immediately. Former 3PAR CEO David Scott continues in his role as senior VP and GM of Storage. Lesjak said the StoreOnce deduplication products that re-launched under Donatelli are also doing well. It’s the traditional storage – mainly the EVA arrays and tape – that is struggling. HP is offering customers a migration path from EVA to 3PAR systems to get them off the older arrays.

Donatelli was considered a candidate to replace Mark Hurd as HP CEO before Whitman got the job in 2011, and had been mentioned as a possible successor to Whitman. His new role indicates HP is looking to pick up its acquisition pace again, following the Autonomy fiasco.

“We will be back in the market as we think about acquisitions that can further our objectives,” Whitman said. “We are very mindful of the even that we just came off with Autonomy, so don’t worry about that. We are very focused and disciplined. But … there is no question that acquisitions are going to have to be a part of how we turn this company around.”

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