Posted by: Dave Raffo
Early results are in, and they indicate no massive spending slowdown for storage last quarter but vendors are bracing for one this quarter.
EMC hit expectations for last quarter while indicating customers may be cutting back. That reflects the trend of the other vendors who reported earnings this week.
Systems vendor Compellent realized its first profitable quarter with income of $464,000 a year after going public and a quarter ahead of its goal. QLogic reported higher revenue than expected, although it would have been on the low end of its forecast if not for a one-time royalty revenue benefit. Still, its HBA sales held up reasonably well despite a poor quarter from its larger OEM partner Sun.
VMware also did better than expected, and it’s no secret that virtual server sales bode well for networked storage sales.
Although the fourth quarter is usually strong for storage sales, forecasts are conservative for this quarter. A lot of the conservatism comes from the gloomy reports from analysts and in the media almost daily as well as early signs that sales are slowing.
“We see a slight slowdown in October compared to the seasonality,” QLogic CEO H.K. Desai said during his company’s earnings conference call. “It’s supposed to be a strong month. We see some slowdown compared to what we have seen in the previous October or the first month of the quarter previously.”
VMware CFO Mark Peek said the percentage of enterprise licenses was down compared last quarter compared to the previous quarter as organizations buy only the licenses they need.
“Customers continue to proceed cautiously in their capital spending decision process,” he said. “In some instances, customers are deciding to forego larger discounts offered by enterprise license agreements and instead are choosing to buy for their immediate needs.”
Compellent CEO Phil Soran said he’s still hoping for an increase in spending among smaller shops, although Compellent’s fourth-quarter revenue guidance of $25 million called for only a modest uptick from the$24.6 million it reported from last quarter.
“I think the mid-size enterprise customer is a little more resilient,” he said. “It doesn’t mean they’re not being hit by the economic environment, but I’ve seen some numbers, forecast in storage growths and it’s been hit hard at the large accounts, the enterprise accounts and the mid-size enterprise.”