Hewlett Packard Enterprise (HPE) reported disappointing fourth-quarter and full-year fiscal 2019 results on Monday as quarterly revenue fell 9% from a year earlier to $7.2 billion. Analysts expected $7.4 billion in HPE Q4 revenue.

For the fiscal year, HPE reported revenue of $29.1 billion, which misses analysts’ estimated revenue of $29.3 billion.

The company blamed declining revenue on lower-than-expected sales from its Hybrid IT business, which includes compute, high performance compute, composable and hyperconverged infrastructure (HCI), storage, Pointnext IT services, and GreenLake consumption-based infrastructure and services. This segment posted a sales decline of 11% year-over-year in the fourth quarter with $5.67 billion in revenue. This was also lower than analysts’ expectations of $5.74 billion. 

Compute revenue, which accounted for 45% of HPE's total revenue, was down 13%. Meanwhile, Apollo storage revenue was up 10% year-over-year, while HCI services increased 14% over the same time frame. HPE's Composable Cloud revenue was also up 21% year-over-year.

Intelligent Edge, which includes HPE’s Aruba networking and security products, reported fourth quarter revenue of $723 million. This business segment raked in $2.8 billion for the year, down 2% year-over-year "due to some execution issues in North America early this year," CEO Antonio Neri said, according to a Seeking Alpha transcript. 

Aruba product revenue reclined 7% year over year, while Aruba services revenue increased 17%.

Neri said revenue was impacted by deliberate action to realign HPE’s portfolio as it continues to exit the Tier 1 server business — this is what HPE calls its cloud services provider server customers — along with certain macroeconomic factors.

Neri also cited longer sales cycles, tariff disputes and "the deflationary side of the commodities," as the primary factors for the company's results.

"We believe the demand is there," Neri said. "It's just a matter of timing in many ways, and obviously customers are looking at where to spend the dollars. And I would say a lot of dollars are spent to make sure they can harness the power of the data as fast as possible because that's the value of doing this."

Although HPE's overall storage revenue declined 11% year-over-year in Q4, and 2% for 2019 compared to 2018, the company reported hyperconverged storage was up 25% for the year and Nimble saw a record year growth at 35%. 

On Monday’s call, HPE CFO Tarek Robbiati Primera called HPE Primera ”an area of growth going forward.” HPE first announced the high-end, mission-critical storage platform at its annual Discover conference in June. Primera also uses HPE’s InfoSight technology to predict and prevent any disruptions in the networking, application, and server layers.

“We are very excited about our storage portfolio and obviously is a key strategic area for us. And then with the acquisition of MapR and BlueData storage, now we have a complete portfolio for our customers in the software-defined space, and that's why we introduced our HPE container platform last week,” Robbiati explained on the call. 

Last week, HPE dumped its recent acquisitions into its hybrid IT segment and launched a new Kubernetes-focused platform that allows customers to deploy cloud native and non-cloud native applications on any infrastructure, public cloud, or edge location. The platform taps into the MapR and BlueData acquisitions.

“The industry is out of the 'drunken sailor mode' where 'everything was going to the public cloud or perish' and enterprises are more pragmatic in that many will keep a lot of data in an on-premise cloud model," said analyst Patrick Moorhead in an email. "This makes HPE's newly-introduced Kubernetes container platform vital to its success."

HPE claims its platform differentiates in the market by using an unaltered version of Kubernetes. This should help interoperability across cloud platforms compared to other options that might use altered Kubernertes iterations.

The launch also comes on the heels of Neri pledging to offer all of the company’s portfolio as a service by 2022.