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back to article 'Not normal': Dell and NetApp price war puts crimp in Pure Storage revenue growth

A price war led by Dell has clipped the wings of Pure Storage, as a wider slowdown in enterprise spending and uncertainty caused by the protracted US and China trade war continue to hurt the storage sector. In the earnings call last night, Pure Storage CEO Charlie Giancarlo reported a "double-digit drop in pricing each of the …

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  1. Anonymous Coward
    WTF?

    There's always some excuse to explain why storage is having the Hell commoditized out of it...

    The industry results have been lackluster for the last 4 or 5 years, and there is always somebody saying essentially "When we work through industry competitive challenge X, sales/margins will improve." That's all fine and well, but as soon as X alleviates, competitive challenge Y is behind that, with Z and AA and AB behind Y.

    I asked this in another post about the storage industry a couple years back, but is anybody in the storage industry actually doing WELL? Meaning, are they profitable, with comfortably growing revenues and unit shipments while being a significant non-niche player in storage? The real problem is that the industry is being commoditized like crazy, but nobody in the storage industry wants to be the one to admit that and be seen as scaring off investment in the industry.

    1 0 Reply
    1. dinsdale54
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      Re: There's always some excuse to explain why storage is having the Hell commoditized out of it...

      These days, "doing well" means not failing. As you say, the storage industry is mature and being commoditized. Investment is long gone. There are no storage startups being funded unless it's software only/cloud.

      3 0 Reply
  2. Anonymous Coward
    Anonymous Coward

    There's no price war

    I listened to the earnings call and if you listened carefully they contradicted themselves explaining it. If there was a price war, it would be reflected in margin pressure either from Pure (which grew margin significantly) or from Dell and NetApp who are also getting respectable margin. If you listened to the live call, you heard Charlie stuttering and stammering through his weak explanation of a price war where their own margin numbers don't show that. The truth is that Pure's growth is slowing, their once unique value prop (Evergreen) is being matched by competitors and they aren't the standout storage vendor any more (#2 in Gartner's MQ). This isn't complicated... and it's definitely not a price war.

    Pure Storage should be considered an acquisition target now as their earnings have risen but their market cap is barely above its IPO level. The fat lady is singing and Dell isn't scared of more, cheap debt.

    <drop the mic>

    3 0 Reply
    1. J. Cook Silver badge
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      Re: There's no price war

      ... I'd accept Dell/EMC buying them. Or, frankly, anyone but HPE.

      4 0 Reply
    2. tomjoyce64
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      Re: There's no price war

      It will have to drop more to get acquired. And it will drop more, as you said it is a victim of long term decline and commoditization of storage, servers, flash, etc. This was happening with or without cloud, and with cloud it was game-over for an independent company like this eventually. HCI is also a factor but in my opinion a smaller one for Pure because HCI is really just VMware and Nutanix, not a really big market. Pure is in a death spiral ending in an acquisition but not yet.

      Why not yet? I don't watch their stock but the numbers are something like 220M losses on a billion and a half in revs. Brutal. Forward multiple is low now but that is with Pure still forecasting growth and others forecasting decline. The are not going to take meaningful share. They are still overspending like crazy for revenue, as they always have, and actually accelerating this; other acquirers can sustain that and so would experience greater decline after an acquisition.And no acquirer needs their product. It is not differentiated now, the file pipeline is a non event and flashblade wasn't all that.

      What's good? 7000 customers, strong gross margins, Product that works. That's all I see. At 4 beeellion+ market cap it would have to drop more to get bought and it will but I am not sure who needs it and would go through the hell of dealing with the field and HQ expense. Of course, private equity is eating the world...

      To give them credit they got out fatrest on the flash trend, built a slick product and an effective and strong (if a bit weird) culture. They had a couple great technical founders. Bringing Delane in was good. But the management team is too insular and the current CEO was a huge mistake. They really flubbed the earning announcement blaming it on NTAP/Dell price war.

      0 0 Reply
    3. IareFlash
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      Re: There's no price war

      Dell would only buy Pure for their customer base, but 90% of Pure's customer base is already a Dell customer.

      IP? Well EMC successfully sued Pure for the use of DD IP in their kit so nothing to be had their.

      Cisco were always favourite but now they have sorted that arena out....

      0 0 Reply
  3. spinning risk

    No more tears (Tiers)

    Sorry Pure. You are a victim of HCI and cloud. You failed to make the paradigm shift and FlashBlade is a dull, blunt instrument. Pure now resembles the HOOLY box and will see more of their lac lustre execs exiting the self-inflated gravy train.

    1 0 Reply

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