* Posts by R8it

15 posts • joined 25 Aug 2013

HPE CEO Meg Whitman QUITS, MAN! Neri to replace chief exec in Feb

R8it

It's more complex

Whitman is not an idiot (quite the opposite - she is very smart), but she was out of her depth as CEO of HP with no relevant domain expertise. This was the Board's fault with the appointment, not hers. She wanted to try and get the company to innovate its way forward using the 2011 5 year plan, but the results simply didn't come. Financial engineering, with its associated horrific human cost, became the only alternative available, and one which she aggressively pursued in order to deliver shareholder value (prompted by a now passed activist investor). Lacking expertise, Whitman relied on the advice of existing senior operating executives and more she brought in. Many were long tenured and had no better than average competence, but this was just as true of many of the shorter tenured imported executives too, most of whom gave her poor counsel.

Investment was spread too thin rather than focused - there were simply too many bets thrown against the wall hoping some would stick (lack of Whitman's expertise combined with poor advice). A ridiculous investment was made to compete with the HP Public Cloud (substantial opex that could have better served innovation in areas where HP could have actually succeeded) given HP had no chance to fund the capex required to compete with AWS or Azure long term. The Machine, now cancelled, was another poorly thought through initiative requiring millions in investment. However, most of these bets involved using the balance sheet and acquisitions. These acquisitions could be divided into two groups. The first were ones that never succeeded because initial opex investments were not sufficient and HP refused to fund or even expect the field sales force to build the sustained competencies to sell the new products effectively. Investments in Autonomy, Vertica and Security businesses were examples. The second group were acquisitions where initial investments were sufficient to allow a successful return, but they then fell foul of the big HP Achilles Heel - the Server business and Enterprise Services/EDS. These two businesses were huge and yet have not been effectively run with their respective strategies resulting in extremely low gross/operating margin percentages (the Cloudline fiasco targeting Tier 1 cloud providers being one example of chasing margins into negative territories; poor customer satisfaction driving loss of ES account revenue against high fixed costs being another). This put immense downward pressure on opex across the entire HP portfolio while trying to meet short term Wall St. expectations. Desperate measures to counter this impact resulted in the outsize influence of McKinsey and Bain consultants to drive short-sighted cuts that resulted in initially successful acquisitions turning into a stalled growth or downward spirals. Cutting specialist sales and marketing capabilities in areas like networking and storage were examples of these poorly judged actions. 3COM and 3PAR were examples of sub-optimized returns after significant initial success.

At the end of the day, changing the trajectory of HPE will be very difficult given the outsize dependency on the Server business for revenue and gross profit dollars. The acquisitions of Aruba, Nimble and Simplivity will fall into one of the two buckets described. As evidence, the latest earnings report was interesting given the focus on the need to add back storage specialists in the US given weak 3PAR performance. That is the beginning of yet another cycle of specialists vs generalists that regularly afflicts HP's Enterprise Business. Three years ago HP started cutting specialists in favor of account managers. Without specialists, Networking and Storage cannot succeed, and inevitably poorer performance resulted. So they now realize they need to start hiring more specialists. At some point, they will then reverse course when the cost of the sales force becomes too expensive and the server teams and sales executives say that it can all be done (more efficiently) with account managers and generalists. It's a never ending cycle, based on poor go-to-market strategy. I hope Neri can find a way to break the cycle successfully. If not, there is only the possibility of a steady decline. However, I for one do not wish this to happen and hope for the best. It is a great company that has been poorly served by its previous leadership.

NetApp ain't all that: Flashy figures show HPE left 'em for dust

R8it

Pure is No. 4 behind HP in Q4

Chris, unfortunately I think even your second article may be substantially misleading. You post Pure Storage numbers which are its TOTAL Revenues, including Product and Support Services. The Gartner numbers for the other suppliers cover Product Revenue only. So you are giving Pure a big advantage. It also gets another advantage because you post its Jan 2016 quarterly number as if it was a Calendar year number. All the other vendors have Calendar year numbers compiled by Gartner.

Stifel's Product only revenue numbers for Pure Storage are:

Jan 2016 Qtr: $127.35M

Oct 2015 Qtr: $113.57M

So their true Calendar Q4 Product Revenue number would probably be somewhere in between these two figures. However even if you generously take $127.35M for Pure Storage as their Calendar Q4 proxy number, it points to the fact that they were beaten by HPE All Flash numbers at $138.10M. It means that HP has already burst past Pure Storage in the All Flash market to the No. 3 position behind IBM and EMC, and Pure is down to No. 4.

Sorry if you need to update your tables and graphs again to report an accurate picture. But not a good message to potential Pure Storage investors as the PSTG insider share lockup ends next week. Pure looks as if it is starting to lose competitively before the insiders get out. Caveat emptor...

So Pure Storage did its IPO thing and investors blinked – now what?

R8it

Re: More questionable numbers????

Not quite my point though I understand that the valuation could easily be down from a private round to the IPO.

The issue I am questioning is if $16.01 x (X+~25M shares) equals a $2.9B valuation TODAY (X being the share count at the F-1 funding round, and 25M are the newly issues IPO shares), then how can $15.73 x X equal an "over $3B" valuation back in 2014. The arithmetic doesn't work.

Was the Pure Storage CEO just claiming an over-inflated "over $3B" valuation in 2014 just to boost the company, when the valuation would seem to have been clearly way under $2.9B using simple arithmetic?

Pure Storage allowed that kind of stuff to slide with Gartner Revenue numbers, did they also do it with "claimed" valuation?

R8it

More questionable numbers????

After the Gartner over-inflated, yet uncorrected (by Pure Storage) revenue claim scandal, maybe El Reg would like to follow up on another odd financial conundrum that appeared today.

When Pure Storage announced their last F-1 private funding round there was much talk from the "Pure" CEO about the company being valued at "over $3B" after raising $225M. Today, however, a lot of the press coverage was of the stock finishing at $16.01 after the first day's trading putting a market cap/valuation of $2.9B on Pure Storage (i.e. under $3B).

The only problem seems to be that the stock price of the F-1 funding round is available for all to see in the SEC S-1 filing at $15.73. Since it is reasonable to assume that there are now significantly MORE shares of stock in the company (given the ~25M issued as part of the IPO), and the fact that the price is higher (at $16.01) than it was at F-1 (at $15.73) it would seem to be impossible using simple arithmetic to have a HIGHER valuation at the time of the F-1 round (i.e. "over $3B" claimed by Scott Dietzen), than the actual valuation today - $2.9B.

Was Pure Storage and their CEO being economical with the truth at the time it announced its F-1 funding round valuation in the same way it was economical with the truth when it didn't repudiate Gartner's revenue figures for Pure Storage? Is a pattern emerging?

For a company that prides itself on being Pure and Puritanical, it seems that the other side of the ethical line is shaded too often. Buyers beware...

Pure Storage pushes all-flash array purification

R8it

The Hot Air is leaking out of the Balloon

Pure is heading for a nasty crash. Nothing they can do about it now. They needed to get out into the stratosphere when Nimble did their IPO, but missed the launch date. The marketing hot air is losing steam as their differentiation has already dissipated. They have nothing to delay the hard landing but the fading supply of ballast from being "an early flash vendor." The big boys, EMC/XtremIO and HP/3PAR All-Flash, have already surpassed them before the ink on their S-1 has had time to dry. According to VARs I've spoken to, Pure's desperate strategy of over-distribution in an attempt to keep the growth going have annoyed the very Channel Partners that invested in them early, and many of those VARs are now turning away.

There's only one question left. Will it be a slow crash landing as the air leaks out, or will some poor bunch of mutual funds and other investors get suckered into an inflated IPO and then be bird's eye witnesses to a mid-air explosion of Hindenburg-like proportions?

Flame retardant anyone? The Welllington's, Fidelity's and other funds at IPO may need it since its likely to be Pure Hell.

No biggie: EMC's XtremIO firmware upgrade 'will wipe data'

R8it

What did you just say about vSAN 2.0?

Chad, just read your blog article on this. I'm staggered that you said that the upcoming VMware vSAN1.0 to 2.0 is going to be a Data Destructive upgrade as well. Really?

This is a new approach for EMC in comparison with the being the steady partner of the past (whether EMC is some type of "Star Fleet" Federation, or not). It's beginning to look like a trend if you consider the VNX2 migration as well.

The shields are way down, and the Federation is becoming susceptible.

NetApp gives its FAS range a 4 MILLION IOPS dose of spit'n'polish

R8it

(m)tuber's head is buried in the ground

mtuber's NetApp defense sounds a little desperate to me. There are a group of optimized all-flash arrays that include Pure, HP 3PAR 7450, Solidfire, and EMC XtremeIO. And then there are a group of platforms that are clearly not, NetApp FAS and EMC VNX/VMAX being obvious examples. Why is NetApp investing in FlashRay if FAS meets the need?

mtuber, your arguments are simply not compelling. AC won hands down.

Nimble nearly nudging $200m: Claims all-Flash grunt with partial iron

R8it

At this stage when a public company like Nimble has a growth in losses (109%) that is matching the growth in revenue (110%) someone should be screaming "fire" and heading for the exits. This is circa 2000 internet bubble economics applied to an infrastructure company. Has measurement of the growth in losses become the equivalent of justifying stock valuations based on the growth in number of eyeballs?

There is a train wreck coming for new investors who have been sucked into the stock. I pity those that bought in the public market all the way up to $58 and have got killed with it back down to $28. The shorts will let it run back up from here, despite the end of the lock up, to maximize their opportunity and then the next down trend won't stop at $20. It's painful to watch what looks like a Ponzi scheme that's about to burst.

Why storage needs Quality of Service

R8it

Re: Indeed, delivering good QoS isn't easy

Sorry Dave@SolidFire, but 3PAR Priority Optimization QoS software seems to do exactly what you claim "only" SolidFire does. If that was your big unique differentiator, time to think again:

http://www8.hp.com/us/en/products/storage-software/product-detail.html?oid=5386541#!tab=features

Here comes the SAN: HP gives away virtual one

R8it

Just read the specs on the HP VSA. Seems a much more capable VSAN than any of the others I've seen - auto-tiering (with flash and hard disks), replication (synch/asynch), snapshots, thin provisioning, runs in Hyper-V or VMware environments and integrated/certified with their management systems, scales out through clustering.

http://h18000.www1.hp.com/products/quickspecs/13255_div/13255_div.pdf

May get a lot of traction with small businesses who can get their enterprise storage on the cheap rather than buying EMC or NetApp. Bet you resellers will love the upsell opportunities...

Storage firms, tremble: MASSIVE tech beast Cisco has just spaffed $415m on Whiptail

R8it

Desperate peace moves

Heard the same messaging from Dell all the way through the CX/VNX transition to EqualLogic, (failed) 3PAR bid, and then finally (nailed coffin) Compellent aquisition. "No, EMC really remains our friend".

Game is over David McC. If you don't go to war with EMC, they'll come blitzkrieging you (at least their sales force will, whether Joe T likes it or not).

Array upstart Violin peeks at PCIe cards, goes all in with $172m IPO bid

R8it
Angel

Desperation

Obviously not now financable in a private round any more given the huge amounts in already (is it over $250M?), one last Hail Mary in the public market. My crystal ball a lot of investor tears no more than one month after an IPO, if it ever gets out.

EMC, you big tease! At last, the specs for million-IOPS VNX2

R8it
Stop

MC rewrite? Hit reject

If VNX2 does represent a huge rewrite of FLARE, then I advise all EMC customers and prospects to hit the REJECT button until some poor suckers try it out for at least 12 to 18 months. Massive rewrites of very old code bases have a 100% track record of having extremely costly data loss and outage bugs. My advice - don't touch it, despite the fanatical EMC sales force and channel representations. Only consider it in September 2014, not 2013.

Dell spits up storage revenues after gobbling promising upstarts

R8it
Alert

3 Problems

Dell has three problems.

First, as pointed out, the EqualLogic and Compellent product lines directly overlap each other (given that Compellent has iSCSI). Dell stupidly acquired Compellent (in a rush to hide the embarrassment of losing 3PAR) and have watched the two platforms simply split the revenue Equallogic used to have by itself. Possibly Compellent picked up a little of the old Dell Clariion business, but EMC hoovered up most of it.

Second, HP has changed the game in the midrange since the introduction of the new four way 3PAR 7000 platform that doesn't suffer the performance problems after a controller failure that plague a dual controller Compellent. Both systems originally had a similar architecture approach, but 3PAR used to sit at a price point substantially above Compellent, but not now. At the same price point as Compellent, HP now offers mission-critical availability with the 3PAR 7000. Why would a customer choose Tier 2 storage when they can now get Tier 1 at the same price? Talk to the channel and HP is ripping into Dell Compellent, EMC VNX and NetApp with the 3PAR 7000.

Finally, this "going private" thing is scaring customers to death. What will it mean? There's a reason most customers won't buy from private companies, and its because they view them as representing too much risk.

If I'm a Dell storage rep right now, I'm updating my resume fast.

EMC demotes VMAX into 'capacity tier'

R8it
FAIL

Confused and abused

How can anyone consider VNX2 and XtremeIO to have "rich software functionality?" The first is so far behind VMAX in its software functionality, implementation for implementation, that the comparison is laughable. VNX (and VNX2) is only about "acceptable functionality at a moderate price." The second hasn't got any software functionality at all, XtremeIO is only about "performance and handling Flash" (which apparently neither VMAX nor VNX can do properly). And the EMC CTO says that VMax is about "a capacity tier" (with rich software functionality, of course).

Slightly embarrasing that EMC can't provide a single platform that combines the ability to handle performance, capacity, rich software capability, and a moderate price. Not really very customer-centric. Can they keep winning market share? There may be a reversal soon. I'll be watching the Gartner and IDC numbers (and why has EMC hidden the VNX revenue numbers anyway?).

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