Storage: HP sees "huge" growth potential in Asia

Hewlett-Packard Co said it sees "huge" opportunities to grow its storage business in Asia due to more data being created and to the growth of the Internet.

SINGAPORE--Hewlett-Packard Co said it sees "huge" opportunities to grow its storage business in Asia due to more data being created and to the growth of the Internet.

HP vice president and general manager (Network Storage Solutions Organization) Nora Denzel said the company "could potentially contribute a bigger revenue (share)" to its storage business in the region. She was speaking at the sidelines of an HP media forum Friday.

Without revealing specifics, she said she expects its present storage business' 25 percent contribution to overall revenues in Asia to grow in the longer term. She cited Singapore, China and India as "strong" markets for HP in the region because of their strong gross domestic product growth. She did not elaborate.

Denzel told reporters at the press briefing that with an explosion of data, HP expects most data centers in Asia to be 10 times bigger in storage capacity in three years' time than they are today. Citing industry figures, she said companies worldwide are projected to increase their storage spending from 4 percent of their total IT spending in 1999 to 17 percent by 2003.

She claimed that unlike pure play storage makers, HP's strength lies in the fact that it provides not only storage hardware but also outsourcing and consulting services, which help companies design and install their (storage) infrastructure. "More customers want to have a complete system installed and services to go with that".

HP's competitors in the storage sector include IBM, EMC Corp, Compaq and Sun Microsystems.

Denzel noted that despite the cutbacks in IT spending by companies, "capacity has not slowed down" because people need more storage space for their businesses. However, she admitted that there are "competitive pricing pressures" due to the economic slowdown.

Investments, impact on cost-cutting
To a question, HP Asia Pacific vice president and general manager (Network Storage Solutions Operation) Charlie Trentacosti declined to reveal investments in its storage business in the region. But he said the company has invested more research and development (R&D) resources in Singapore for its Storage Area Network (SAN) Integration Center.

In a statement, HP said it would add new R&D capabilities to its SAN Integration Centers--in Singapore, Seoul, Beijing, Tokyo and Sydney--to perform "platform qualification to test and certify HP's storage interoperability".

The R&D capabilities are part of the company's investment to roll out a storage strategy called Federated Storage Area Management (FSAM), which is said to be a "combination of hardware, software and services that administer management network of modular storage in a scalable manner".

In March, the IT giant said it would spend US$50 million in Asia Pacific (including Japan) until year end to deliver solutions to the storage sector.

Then, HP Asia Pacific Network Storage Solution marketing manager Subroto Das said at a press symposium here that the investment would mainly go into infrastructure resources and services such as software, hardware, R&D and localization of systems.

Meanwhile, Trentacosti declined to say what market share the company has in the storage business in Asia, except that in the hard disk system category, it is No 5 in market share terms. He did not provide further details.

When asked if HP's recent cost-cutting measures had impacted its storage business, Denzel said: "Cost-cutting measures are putting price pressures on all vendors in storage, as IT budgets are getting scrutinized. Storage has continued to be one of our top strategic initiatives, and I don't see any changes in our go-to-market and execution for storage in Asia."

Trentacosti declined to name the company's specific storage customers, except to say that they are "major banking and financial, oil and manufacturing companies" in the region.

In the US, shares of HP last traded at US$27.98, up US$0.96.