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HP's Livermore outlines storage strategy, page 3

Ann Livermore, EVP of HP's Technology Solutions Group, discusses linking IT and business, HP's upcoming products and grid storage.

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The grid is the future

Storage: With grid-based storage, are customers afraid of getting locked in to one vendor?

Livermore: You look at a lot of these market spaces and it's kind of coming down to a couple of providers anyway. You look at blades today and it's a two-horse race between HP and IBM — our two companies have over 90% of the market in blades. It's a solution sale, not a box sale. Dell is a volume transaction processing company, but blades is a solution that has the storage embedded, the change and configuration management software, the network devices, the server technology and -- if you really think about that -- it's a very different kind of sale. And there are really only three of us participating — HP and IBM big time and then Dell at a way, way distant third with less than 5% of the market. And then you look at storage, where most of the categories have two big players and a bunch of distant players. The markets are already such that to afford the R&D the players have to be pretty big to play in the market. When that's the case, I think customers get a little less worried about the lock-in questions. Perhaps they have part of the architecture where they're going to standardize on HP, and another part where they'll standardize on EMC or on IBM. Then our opportunities are to be able to deliver value so that as they add more and more, they add more to the HP piece as opposed to adding more to the IBM piece. At least most of the big shops already are going to have some part of their environment — a big part of their environment — spread between three or four vendors.

Storage: And are they looking to maintain that kind of mix?

Livermore: They want fewer as opposed to more suppliers. Every big corporation that we deal with today wants fewer suppliers on board. They don't want single suppliers, but they want a smaller number of suppliers. And they want suppliers who can play general contracting roles for them, and perhaps take over the support for a broader environment. We've got a huge support organization inside HP, it's the biggest support organization in the world — there are no other IT companies that have a bigger support business than HP. And one of the fastest growing areas we're getting is customers who want to outsource, but then there's a whole customer base who don't want to outsource, but they want to try to consolidate the support of a big part of their environment to one vendor. It's kind of an in-between step of having fewer — not having 12 different companies' support personnel coming in and working your environment, maybe having only one or two. And we're seeing a lot of that happen first in the desktop environment -- take care of everything on my desktop, the network devices, the mobile devices, the PCs, the printers, some of the 1U, 2U servers that might be file/print servers. So you see it first with all the storage that's associated with what's going on with the desktop end-user environment. And then you start seeing them ask the same thing about [other areas] — we're starting to get requests around the Unix environment, can you support the Sun stuff as well as the HP stuff?

So we're starting to see some interesting trends, and I think it'll evolve to having similar things happen in the storage market. As technologies have become more standardized, customers think about it more in terms of simplifying the support and operation of the environment. So those are some interesting things, we like those trends because we have such a broad technology capability. HP today can support 25,000 different IT products and technologies in our support organization. We're broader and deeper than anyone else in the world. So that positions us nicely for a world where people want to consolidate some of this work to fewer providers. We see a lot of the trends that happened on the desktop then in the servers, with the network devices — eventually it happens with the storage world, too. It's a lot of the same trends, a lot of the same delivery models, and that's why we talked this morning about the IT delivery model of the future and then how the storage delivery model of the future really parallels a lot of the same trends and concepts.

Storage: If customers are looking to deal with fewer vendors, does that give the big players like HP incentive to make more acquisitions?

Livermore: To make more acquisitions in those areas that we need in our portfolio. You'll see HP continue to make targeted acquisitions to do just that, fill out the pieces. We go through a lot of analysis about build, buy or partner. And we do that whether we're looking at the storage business, the server business, the services or software businesses — we have a very active build, buy or partner set of tradeoffs that we make. We don't think we need to own everything, but there are certain things that we're going to want to have ownership of.

Storage: What are the key areas where you want to own?

Livermore: You'll see us invest, from a technology perspective, around both servers and storage. There are a few areas that we think are really important ones where we're investing, either for organic development or potentially targeted acquisitions. One is around management -- both the product management and capability we build into our storage and servers as well as our OpenView software asset. One's around interoperability — it's really important to have your stuff work better with everybody else's stuff and everything that's in the installed base. That's a big differentiator, how well your things work with the installed base the customer has. The third one's around availability -- customers still care a lot about the quality of the uptime of the products. And the fourth one is around virtualization. When we look at the technologies that we think are differentiated capabilities, both in a storage environment and a server environment, those are four of the key ones. The storage grid, certainly, is right at the core of being able to do virtualization, right? It's got management advantages to it, availability advantages — so a lot of those four technology areas can manifest themselves in the grid.

Storage: What's the key factor that would lead you to buy technology rather than develop it?

Livermore: It's mostly a time to market question, and the depth of the internal capability we have in HP. We have a wealth of things in HP labs, so in some ways, HP labs for us in an alternative to buying a startup. We've got a lot of similarities that you might see in a startup in HP labs. So, it's almost always about the time to commercialize it, and if there's an acquisition that we think we can get for a good value and we think the market's right, we'll go that route. If it's something we think we have the time to create or if we don't think the market understands or has some of the technical insight HP has, we'll do a lot of the work ourselves.

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