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HPE storage OEMs help anchor vendor's enterprise strategy

HPE storage revenue grew 3% last quarter, helping to offset a decline in servers. The vendor said using OEMs helps it bring new storage products to market faster at reduced cost.

Hewlett Packard Enterprise products encompass the vendor's branded storage arrays and data protection, but it also relies on OEM partners more than most major competitors.

Hewlett Packard Enterprise (HPE) 3PAR is the flagship all-flash array, and Nimble Storage by HPE and MSA arrays round out the vendor's SAN portfolio. Partnerships fill gaps in the HPE storage portfolio, including block, file and object storage, plus backup software products.

Patrick Osborne, vice president of big data and secondary storage at HPE, said the vendor's strategy reflects the cloud era. He said modern data centers want greater choices for scale-out storage and data mobility.

"Few enterprises buy along horizontal lines. Customers increasingly ask us to serve specific workloads and bring together the tenants of compute, networking, storage, data management and the cloud," Osborne said.

HPE storage partnerships include qualified vendors in the HPE Complete program. The OEM program allows data centers to purchase third-party storage software validated with HPE networking and servers. Most large storage vendors have OEM and reseller deals with partners, but HPE owns the technology of only a handful of its storage platforms.

HPE has OEM deals in place with data protection vendors Carbonite, Cohesity, Commvault and Zerto. The vendor bundles distributed file storage from Ctera, Hedvig, Qumulo and WekaIO. The HPE ProLiant servers are the base for Datera block storage arrays. Scality Ring object storage is available from HPE under a long-running OEM deal.

In April, HPE struck a deal with hyper-converged infrastructure pioneer Nutanix that allows customers to license Nutanix HCI with HPE GreenLake consumption pricing.

HPE's Pathfinder venture capital arm has funded Cohesity, Hedvig and Scality.

"I always talk about innovation in three forms: organic, inorganic and through partnerships," HPE CEO Antonio Neri said when the vendor acquired high-performance computing vendor Cray this month.
"We always evaluate, 'What is the right approach or mix between organic, inorganic and through partnerships?'"

Neri pointed to Pathfinder companies as a driver of partnerships.

Most of HPE's in-house storage -- Nimble, 3PAR and SimpliVity hyper-converged infrastructure software -- came to the company through acquisitions. HPE internally developed its StoreOnce backup appliance platform.

Scott Sinclair, a storage analyst at Enterprise Strategy Group in Milford, Mass., said OEM agreements speed time to market and lower costs of product launches.

"Getting a new product out the door is a heavy lift. OEMs require relatively low investment and give HPE more freedom in choosing partners," Sinclair said.

HPE storage OEM customers, vendors

HPE reported $942 million in storage revenue last quarter, compared to $7.15 billion in total revenue and $3.1 billion from servers. Storage revenue grew 3% from the previous year, compared to a 4% drop in total revenue and 5% drop in servers. But the storage growth came mainly from Nimble arrays, which increased 45% year over year.

Rather than refresh its SAN, Pittsburg State University in Kansas opted for Hedvig software-defined storage nodes with clustered HPE ProLiant servers. Tim Pearson, assistant director of IT at the university, said the setup provides a managed private cloud to support VMware users.

Pearson and his team chose Hedvig after reviewing SAN replacements and hyper-converged infrastructure options, including HPE SimpliVity.

"We were able to purchase the HPE compute with Hedvig storage for less money than it would cost to migrate our entire workload to VMware vCloud Air for just one year," Pearson said.

Datera combined with HPE this year to launch a series of block storage nodes for hyper-converged compute, networking and storage. The Datera storage software is bundled on packaged SKUs of HPE ProLiant hardware.

Datera CEO Guy Churchward, who has logged time as an executive at NetApp and EMC, said the Datera-HPE storage deal gives his company greater visibility. During a recent interview, Churchward said Datera and HPE have a symbiotic relationship.

"HPE's field team engaged us. They were looking for a scale-out, software-defined storage with Tier 1 capabilities. As a startup, it can be tough to get your voice heard. HPE gives us a checkbox in a space that is hot and emerging. We get wrapped in the HPE blanket," Churchward said.

Are storage OEMs gaining or waning?

Dell EMC, IBM, NetApp and Pure Storage depend on storage partnerships, but to a lesser extent than HPE. Dell EMC has added deals with Qumulo and Elastifile NAS software and extended OEM sales of Nutanix-based XC Series HCI appliances, based on Dell PowerEdge servers. But Dell EMC also sells its own developed NAS and HCI products.

"Back in my days as a product manager [at Dell], OEMs were our bread and butter," Sinclair said. "They are less prevalent today -- not because it's a bad strategy, but because of the overall consolidation in the storage market."

One area in which HPE storage investments in-house might be needed is the SimpliVity HCI product it acquired in 2017 for $650 million. The HCI market is dominated by Dell EMC and VMware and Nutanix. Those vendors control about 63% of the HCI market. HPE SimpliVity is a distant third at 5%. HPE is a VMware vSAN Ready Node HCI partner and will soon license Nutanix software through its GreenLake program, but considers SimpliVity its main HCI product.

"Given how hot the HCI market is, HPE might want to invest more in-house on it than they are," Sinclair said.

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