HP, EMC part ways over reseller deal

HP, EMC part ways over reseller deal

Hewlett-Packard and storage vendor EMC have formally ended a relationship that has been heading south for several months.

The two companies agreed to terminate a reseller agreement, signed in November 1995, under which HP used EMC's high-end Symmetrix storage systems as part of its Unix server installations.

The move will have no effect on the warranties and service contracts of HP customers who have already purchased Symmetrix systems, according to the statement that announced the break-up.

EMC also will continue to support and service the products and will continue to work with HP to ensure interoperability with future HP software and hardware.

The divorce has been imminent since HP signed a joint technology and manufacturing deal with Hitachi Data Systems in May. Under that agreement, HP will modify and sell HDS's high-end storage array products as part of HP's SureStore storage line.

HP claimed that one of the main reasons it made the move to HDS was that EMC's technology was ageing.

"I think that was poor strategy on [HP's] part," said John McArthur, an analyst at International Data Corporation (IDC) in Framingham, Massachusetts. HP's decision to go with HDS products had little to do with the quality of EMC's technology, he said.

Instead, the core reason was that "HP wanted a storage product that was HP-branded," McArthur said. "By getting into an OEM agreement rather than a reseller agreement, [HP] felt [it] would have more control over the future direction of the technology."

"HP had approached EMC to be an OEM provider," said Rick Lacroix, a spokesman at EMC in Hopkinton, Massachusetts, but "we refused because of the brand equity we had."

Geoff Kulesa, an HP program manager, said that in addition to being based on 10-year-old technology, EMC's storage architecture is proprietary.

Although sales via HP contributed to almost 13 per cent of EMC's revenue of $US1.13 billion last quarter, EMC isn't backing off its financial targets for the current quarter, Lacroix said.

EMC will try to grow sales from similar reseller agreements, but it also hopes to do more direct business through its recently doubled, 2,000 person sales force, Lacroix said.

Also likely to help is that demand for storage products like EMC's is growing 25 per cent annually, according to a recent study by Merrill Lynch & Co. The report projected EMC's current quarter would show revenue growth of 35 per cent.

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