Hurd pressures HP storage sales team

Hewlett-Packard CEO Mark Hurd’s assessment of his company’s storage sales organization was simple and blunt: “We just don’t cover enough accounts,” said Hurd on a conference call with analysts Tuesday discussing HP’s latest quarterly earnings.

Sales of storage products grew only 3 percent during the quarter ended Jan. 31, compared to a year ago, while HP’s overall revenue grew 11 percent, and revenue in the Technology Solutions Group, of which storage is a part, grew 40 percent.

“We need to drive stronger top line results in the business,” Hurd said.

To do that HP will invest in improving sales coverage and hiring more storage sales specialists, he said, as well as better aligning the company with its value added resellers, independent companies that sell HP storage.

In other words, HP has to do a better job of reaching out to customers like Gary McCready.

McCready is a storage manager in the IT department of a major New York area financial institution, which he did not want identified, and a member of Encompass, an HP user group.

Although he frequently receives invitations to HP technical forums or other events surrounding operating systems or servers, he sees very few invitations to HP storage events.

“I’m not sure HP is really putting the emphasis on selling storage the same way it puts the emphasis on other areas. I think they figure that storage simply sells itself,” McCready said.

He also lamented that HP recently merged its StorageWorks convention into the HP Technology Forum, a show devoted to all HP systems.

In fact, storage doesn’t sell itself, says Rob Enderle, principal analyst with The Enderle Group, a market research firm.

The enterprise storage buyer is a very conservative buyer who makes a decision only after careful consideration, which makes for long sales cycles, Enderle said. “If you don’t have enough specialists you are not going to get the business.”

More to the point, a storage specialist needs to know about the specific storage issues facing different industries, said Andrew Reichman, a storage industry analyst at Forrester Research.

Storage needs differ for financial institutions versus health care companies, for example, on what regulations companies have to obey, and the types of software they use, Reichman said.

“It’s hard for storage vendors in general, not just HP,” he said, but added that some storage vendors are dealing with the challenge.

EMC and Hitachi Data Systems, both solely storage vendors, are organized around sales account managers who are supported by sales specialists who can address specific needs in specific industries, Reichman said.

But while Hurd thinks HP’s storage sales operation needs attention, it is competitive.

HP ranked second to EMC in storage sales worldwide market share in the third quarter of 2006, according to IDC’s latest figures. HP’s $760 million in revenue gave it a 17.6 percent share, while EMC’s $927 million gave it a 21.4 percent share.

But HP actually lost market share to EMC that quarter as its sales grew by only 1.8 percent, compared to the year ago quarter, while EMC’s grew 18 percent.

HP has a chance to improve its sales if it takes some simple advice from customers like McCready: Call me.