History 2003: HP Merges Server and Storage Business

Like IBM before it, at the end of 2002, Hewlett-Packard has decided to combine the forces of its server and storage activities.

Within the company, 3 divisions, Business Critical Systems, Industry Standard Servers and Network Storage Solutions (NSS) will henceforth be combined under one business unit to be known as Enterprise Storage Servers (ESS), headed by SVP Scott Stallard, under the larger umbrella of the Enterprise Systems Group.

The goal of the maneuver is to push the activity towards profitability, not currently the case, even if sales have grown. For its last quarter ending in April, the ESS group revenue was $3.9 billion, up 3% sequentially, with storage growing 5% during the same period.

The other hope behind the restructuring is to reduce structural costs, as well as at the storage level, to offer more readily a global solution including the computers themselves, always a strong point for IBM, for example (particularly with respect to EMC).

Some storage distributors have also added their server lines for similar reasons, in order to allow clients the possibility of dealing with a single entity, and to avoid conflicts between vendors in the event of incompatibility between system components.

Getting back to HP, there are now 4 product line VPs who will report to ESS chief Stallard, including Bob Schultz for network storage solutions. Schultze was previously VP marketing for the former NSS division after a stint as COO at Adaptec. Howard Elias, who was VP and GM of the former NSS division, has been reassigned to SVP of the newly-created Business Management and Operations group that reports to HP’s ESS.

In StorageNewsletter dated February 2020, in an interview with Elias, we asked him the following: “IBM has just decided to merge its server and storage organization 2 years after separating them. Which is the best business model, storage and server together or separate?”

Curiously, his response at the time was: “That’s a very interesting question… I’m not sure I quite even understand the question. We’re a systems company, since we have servers and storage already.”

Jet-lag or corporate disingenuousness?

Following HP’s restructuring, Patrick Bonelli has replaced Olaf Swantee as EMEA VP for network storage solutions, reporting to EMEA VP for hardware Rudi Schmicul. Swantee is now in charge of HP’s ESG EMEA sales.

This article is an abstract of news published on issue 185 on June 2003 from the former paper version of Computer Data Storage Newsletter.