Hewlett-Packard's

(HPQ) - Get Report

fourth-quarter rebound was strong enough to help smaller players in the network storage business, but it still isn't enough to threaten sector-leading

EMC

(EMC)

or

Network Appliance

(NTAP) - Get Report

.

H-P's sales of industry standard servers increased 16% year over year in the October quarter and 23% from the dismal showing of the previous quarter. And that's good news for

Emulex

(ELX)

, which derives about 20% of its revenue from sales to the giant computer and printer maker.

Emulex makes a product called a host bus adapter, essentially a link between the server and whatever storage device the network uses, and sells it to H-P. In particular, Emulex products are used in conjunction with industry standard servers, which are powered by chips from

Intel

(INTC) - Get Report

or

Advanced Micro Devices

(AMD) - Get Report

.

Rival

QLogic

(QLGC)

makes HBAs for use with higher-end Unix servers, and those sales were up for H-P by 8% year over year and 19% sequentially, noted Merrill Lynch analyst Shebly Seyrafi.

Overall, the better sales of servers by H-P "suggests that the December quarter got off to a good start for HBA companies."

Seyrafi also noted that while H-P's storage business improved sequentially by 16% to $821 million, it was still down 9% from a year earlier. Because the storage sales cycle for H-P is rather long, "the competitive threat from a reinvigorated H-P may not be as imminent, so EMC and NTAP should continue to gain market share," he said in a note to clients. (Merrill Lynch has an investment banking relationship with H-P, Emulex and QLogic.)

Another storage company,

Brocade

(BRCD)

-- which sells switches for storage networks -- also does about 20% of its business with H-P. First Albany analyst Joel Wagonfeld said it appears that H-P made gains in mid-range sales, an important market for Brocade. "We also note HP added a significant number of new storage salespeople and expects its productivity to ramp over coming quarters, which would benefit partners like Brocade," he wrote in a note to clients. (First Albany does not have an investment banking relationship with Brocade.)