Howard Elias is Hewlett-Packard's head of network storage solutions. He spoke to Peter Judge of ZDNet, on a visit to London last week. Before the merger with HP, he was senior vice president of Compaq's business critical solutions group.
Q: As part of your role at Compaq, you were in charge of storage. Now you are running a combined operation made up of Compaq and HP's storage systems. How does it look from where you are?
A: I couldn't be more pleased. I'm getting kudos from our employees, partners and everyone. They're blown away! They are impressed by the level of detail and information we have provided on the merger. We have made the hard decisions up-front. Now we will organise and execute. I will be meeting with multiple layers of managemenet over the next couple of weeks. Before the merger you were in charge of storage at Compaq, and before that, you were at Digital when it merged with Compaq. How does this merger compare with the Compaq-Digital one?
There is no comparison with the Digital merger. I was in charge of PCs and NT servers at Digital, and was asked to run the combined storage operation. We are easily six months ahead [of Compaq at the equivalent stage of its take-over of Digital]. It took a year for Compaq to integrate the sales management. We are six to nine months ahead of that, thanks to the clarity of the roadmap. In some parts of the roadmap you have been very clear, choosing one product or brand over another. For example, in servers, the announcement that Tru64 and Alpha have a limited lifespan is a tough announcement, but it has been made quickly. How are you presenting that to customers?
We have been pragmatic. Nothing falls off a cliff. We have made our decisions to avoid internal competition. But we understand business customers. We will make sure the customer has continuity. Each customer will deal with specific sales people. So, for example, with Compaq Tru64 customers who wish to make best use of that product, we will work out the best plan for each customer. If they want to move to HP-UX, we will work out the best way to do that. We will begin cross-training for our staff in thirty to sixty days, so each salesperson can understand all the options. But what about areas like your own: storage? In that plan you seem to be keeping both sets of products. The Hitachi Data Systems Lightning product that HP resells as XP, overlaps substantially with the Compaq StorageWorks EVA product. How can you keep selling both?
This is actually a customer-centric position. The two products may overlap but they are different kinds of solution, with different kinds of customer. Some customers are comfortable with monolithic data storage, which gives them the highest scalability. They will continue to want the XP product. XP is absolutely right for a mix-and-match between open systems storage and legacy storage, and for a traditional consolidated enterprise. Others want more modular storage, with a lower entry price and building over time to the same performance as the XP. They will prefer the Compaq EVA systems, which scale horizontally, instead of in the box. Customers will appreciate that choice: it is like the relation between Unix and NT. But that is not what your Compaq and HP storage sales people were saying a fortnight ago. These products were sold against each other. This situation must create uncertainty.
Yes -- the situation is complex, but this is actually business as usual. You have to consider product life cycles. HP had a mide range storage product, called VA, which used to come up against Compaq StorageWorks in the mid-range. StorageWorks started out in the mid-range, as the Enterprise Modular Array (EMA). Over the next year or so, we will retire both the HP VA and the [Compaq] EMA products, and replace them both with the EVA. But before that happens, EVA has to be properly qualified. The next generation of VA this summer will still come out. We will make sure we are crisp about this, but provide a reasonable time for customers to get benefit from these products. For example, VA support and spares will be available for five years. HP takes care of the customers. HP has made a commitment to customers for three years on all products. This is more certainty and comfort than just about anyone else I know of can offer. We are trying to make these product changes within a normal product life cycle. We may accelerate that slightly but only by offering the same functionality, and only moving at the pace of our customers. Another thing to remember is that the [Compaq] EVA was only introduced in November. Till then Compaq's StorageWorks was only in the mid-range. EVA was the first Compaq product to move up to the enterprise space. It does not have a big market presence yet. HP has not experienced a lot of competition from Compaq in the enterprise storage space yet. If you ask Compaq and HP sales people, they were both much more likely to encounter EMC, IBM or Sun. There was much less Compaq versus HP competition. Both companies had realised that the market was very broad. As it turns out, the products and customers are largely complementary. There is some overlap, on a global basis. In the top hundreds of accounts, one or other company is stronger. There is perhaps a 30% overlap. Another advantage we have found is the complementary channels. Compaq had a very strong channel, while HP had a focussed sales force. What about the fact that XP storage is third-party, coming from Hitachi? How do you balance your own products against products from another vendor, which are also available through competitors such as Sun?
It's a question of where we have expertise to add. If you consider our laser printer business, that is based on an engine from Canon. We add value, and the value is HP. Sales, service, software and integration work. In storage management it seems clear that you are using the OpenView brand because of its strength as a brand. How much of the underlying management technology will come from Compaq?
Yes, we are using the OpenView SAM suite for storage management. Both companies had a reasonable product portfolio in storage management, product for product, the lines were more or less equivalent. We had to choose one, and we chose OpenView SAM for two reasons. Firstly, it has a well designed and architected framework. It has a uniform look and feel, and is modular. It is easy to develop new additions to the suite. [Compaq's] SANworks, on the other hand is a series of individual products. We went for the architected framework. Also, OpenView SAM integrates more seamlessly with the OpenView framework which is strategic for us. Secondly, OpenView is the leading brand for enterprise customers. SANworks is a relatively new brand; it has been around for two years. We will take some technology and intellectual property, and port some [Compaq] products over to OpenView SAM. Looking back, do you think this merger may work better than he Compaq-Digital merger because the cultures are more similar? Compaq had to absorb people who worked on big systems, and become a big systems player. This time we have two much more similar bodies meeting.
That's true. HP understands the value of what it has acquired. Compaq wanted to extend beyond the PC to the enterprise, and proceeded to absorb Digital. It had to operate in a new way to handle large accounts. We will treat our merged corporate accounts in the same way as before. Large accounts will have an account manager. That is different to the small and medium-sized business. Different -- but not more or less important. Compaq did not make a success out of many of the parts of Digital that it acquired. Storage is one exception -- was that good management, or simply down to the fact that storage has been a very buoyant market?
Compaq understood and valued the storage assets it acquired -- and by the way, it is not the only Digital division that did well in Compaq; the services business has been very profitable. Compaq had to parlay the technology assets it acquired. [Digital's] Alpha couldn't do what Compaq wanted in the broad Unix market. In storage, Compaq was helped by the fact that storage is a vibrant and growing market. Users had been crying out for a cost-competitive model. It was a combination of all that. How will storage develop? Will it become a branch of networking?
In the new HP, storage is part of the overall corporate systems group -- which handles servers. Storage customers don't buy it like deploying an IP network -- that is the base level infrastructure. Storage is a bigger decision, and the network is just a component. Vendors like Sun say "Why not make storage part of the IP cloud?" Over time we may see that through iSCSI, but not for a long time. iSCSI is excellent for some things, but Fiber Channel has so much more performance and scalability. We have 2Gbps today. Andy Grove [of Intel] has said that a customer will not change technology unless the new technology offers an order of magnitude performance boost. iSCSI does not offer that against Fiber Channel. In sorting out the product range of the new HP there is a danger of getting fixated on internal issues, and not on the competition. In this interview we have certainly looked more at those than external ones. How do you stack up against the other vendors?
Firstly, we have the broadest and most complete product range. We have a clear mission and strategy, as well as detailed three year product roadmaps and transition plans. Secondly, we are making intense investment. In storage, we will invest in pulling together better ways for provisioning. There is a tremendous investment in virtualisation, for example. That will be the single best way to offer better storage utilisation for customers. Thirdly, we have gained critical mass in research and development and all other areas. We have doubled our sales, technical support and marketing resources. We are building the industry's most cost-competitive business model. We are moving to standard building blocks. We need to add value high above that layer. We have a cost-structure that will allow us to make reasonable profit even when margins are squeezed. Thank you for your time, Mr Elias.