In a surprise raid, HP Tuesday carried off the president of EMC’s Storage Division David Donatelli – the guy responsible for the bulk of its rival’s revenues – and made him head of its $19.4 billion-a-year Enterprise Servers and Storage (ESS) unit throwing him its Cisco-competitive ProCurve networking business for good measure.
Starting May 5 Donatelli, who was with EMC for 22 years and so knows all its secrets, is supposed to replace retiring HP exec Scott Stallard.
At least he is if he can clear the legal hurdles.
EMC sued Donatelli in Massachusetts to enforce his non-compete after Donatelli sued EMC in California, where HP lives, to get out from under the non-compete, according to Reuters.
Massachusetts, where EMC lives, respects non-competes. California doesn’t.
EMC has some practice at this sort of thing. In 2001 it sued Doran Kempel, who was general manager of its Media Solutions Group, when he tried to go off and become CEO of a nearby little start-up called SANgate Systems that was doing storage management software. EMC won and kept Kempel out of work for over a year.
More recently New York-based IBM delayed its chip guru Mark Papermaster in taking a top job at California-based Apple for six months. It fact he’s just started.
Presumably HP saw this coming.
Anyway, Cisco, EMC’s new best friend, obviously has interests in the Donatelli case. When HP flourished its prize it talked about “converged platforms of servers, storage and networking,” making the move sound like a clear offense against Cisco.
EMC and its baby VMware are closely allied with Cisco in its industry-upsetting Unified Computing plunge into servers.
HP is number two in the global server market behind IBM and the unit Donatelli is supposed to run is a few billion dollars bigger than the one he just left. It’s also got a Cisco-like Matrix blade server for virtualized data centers to do battle with the server upstart and its friends, not to mention its storage interests.
EMC’s immediate response to Donatelli’s treasonous resignation Monday indicated its surprise. For all its talk about its deep bench, it installed EVP Frank Hauck in Donatelli’s empty chair on an interim basis. He will keep running global marketing and customer quality, leaving question marks over who will wind up running the division.
Although EMC last week said its first-quarter earnings were down 20% to $205.3 million on revenues down 9.2% to $3.15 billion, CEO Joe Tucci, borrowing Intel CEO Paul Otellini’s hymnal, called a bottom, saying he expected spending to pick up in the back end of the second half.
He still expects the recession to shave 10% off spending this year. Donatelli was one of the senior managers at EMC to take a 10% pay cut this year.
There’s talk that successor planning at EMC – or lack of it – had something to do with Donatelli’s departure. At HP he is supposed to report to Ann Livermore, executive vice-president of HP’s Technology Solutions Group. ProCurve general manager Marius Haas would report to Donatelli.
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