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HP users burned by EMC court victory

A court has found that HP's virtualization product infringes on EMC patents. Neither company is saying much at this stage, but analysts say the future looks bleak for HP users of this product.

Users of Hewlett Packard Co.'s storage virtualization software are in for a rough ride in the coming months as HP's beleaguered storage group deals with the outcome of a lawsuit that could have severe consequences for its products in this area.

A jury in the U.S. District Court of Worcester, Mass., decided Monday that HP's OpenView Continuous Access Storage Appliance (CASA) infringes on three of EMC Corp.'s core patents related to remote and local mirroring. CASA enables data replication between devices from different vendors on a SAN using snapshot, Fibre Channel mirrors and IP-based mirrors.

At this point, Palo Alto, Calif.-based HP is unsure how the verdict will impact its users. HP public relations manager Brian Garabedian said, "At this time, we really don't know with any certainty when the damages phase will be completed or if there will be any impact to current customers."

HP issued a statement about the jury's decision: "We continue to believe that HP's products do not infringe upon the asserted patent claim." HP is in the process of deciding if it will appeal the verdict.

An HP CASA user whom SearchStorage spoke with was unfazed by the situation. "We hope to be done with the product by the time this shakes out," said Mark Deck, director of infrastructure technology at National Medical Health Card Systems Inc (NMHC) based in Port Washington, NY. Deck said he is "not convinced" by HP's commitment to CASA and has been looking elsewhere for similar technology for some months. "Rhapsody, which was supposed to be the next generation of CASA, is over two years behind release," he said. Deck expressed his dismay with the situation as CASA was a good product, he said.

Another CASA user we spoke with, who declined to be named, said his company has been looking at switches to perform the functions that CASA provides. "This is definitely going to speed up my thinking," he said.

We hope to be done with the product by the time this shakes out
Mark Deck
Director of infrastructure technologyNational Medical Health Card Systems Inc.

EMC's position

Hopkinton, Mass., based EMC filed the original complaint against StorageApps in October 2000, a company HP went on to acquire in late 2001 for $350 million. EMC claimed that StorageApps' SANLink appliance -- now referred to by HP as CASA -- infringed on EMC patents related to its Symmetrix Remote Data Facility (SRDF) and TimeFinder software products.

EMC plans to seek an injunction based on its court win, but has not determined what form that injunction will take. EMC spokeswoman Anne Pace said it's too early to tell whether EMC will seek financial restitution or will move to stop HP from selling its CASA product altogether. "It's premature to speculate with the decision just coming down Monday," she said.

According to HP, its Continuous Access Storage Appliance is a "relatively low-volume" product, and the company plans "to take whatever steps are necessary to minimize the potential impact on existing HP StorageWorks CASA customers and channel partners." At one time, HP was talking about licensing this software to switch vendors, including Brocade, but these talks appear to have gone by the wayside.

One industry expert said he believes the best outcome for users would be for HP to pay EMC an agreed upon sum of money to make the infringement issues go away. "It would not be in the best interests of either company to disrupt the operations of CASA users," said John Webster, founder and senior analyst at the Data Mobility Group Inc., Nashua, N.H.

Steve Duplessie, founder and senior analyst with the Enterprise Storage Group Inc., Milford, Mass., doesn't expect that money will change hands as a result of EMC's court victory. EMC has "grander aspirations," he said. "I fully expect that this could lead to bigger things; Like EMC trying to see if others have violated its patents and forcing them to license from EMC … At the end of the day, the guy with the most intellectual property patents wins," Duplessie said.

HP's future?

As things stand today, HP's storage group appears to have its job cut out rebuilding its reputation in the storage industry, according to analysts.

During late February through early April 2004, Wall Street firm Robert. W Baird & Co Inc. interviewed CIOs, CTOs and IT managers from 81 midsized to large firms. It found that user perceptions about HP were mixed, but given the negative sentiment toward HP in last year's study, related to the Compaq merger, attitudes were improved slightly.

At the same time, "The mass exodus of senior executives in HP's storage group has left the company like a rudderless ship," quipped one analyst who requested anonymity. In the past two years, HP has lost Mark Lewis, worldwide head of marketing and formally head of Compaq's storage business; Mark Sorenson, vice president of software in the network storage division; and most recently Howard Elias, general manager of HP storage. And these were just the executives who fled to EMC. Greg Schmidt, HP's worldwide manufacturing manager for storage, left some time ago to join a startup.

Bob Schultz, the current senior vice president and general manager of network storage solutions at HP, declined to be interviewed for this story.

Aside from the management issues HP faces, it now has to untangle its virtualization product from the court case just as this technology has gained real acceptance in the marketplace. "Virtualization is becoming a core feature of storage environments and infrastructure management," said Jamie Gruener, senior analyst at the Yankee Group. In other words, the timing couldn't be worse for HP.


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