Ugly as it was,

Hewlett-Packard's

(HPQ) - Get Report

stunning earnings warning contained a bright side -- for the company's main competitors in enterprise storage. But the miss was bad news for smaller storage companies that sell to H-P.

One way or the other, however, H-P has turned into its own worst enemy in the storage business, and the collapse is probably not a sign of a significant drop in demand.

"

EMC

(EMC)

is healthy,

Dell

is healthy

(DELL) - Get Report

and

IBM's

(IBM) - Get Report

storage business is healthy," said Steve Berg, a storage analyst with Punk Ziegel. "Demand may well have dampened, but I think we're seeing more of a shift in market share," he said. (Punk Ziegel does not do banking with H-P.)

H-P's internal problems were no secret. Nearly all of the top storage executives who joined the company from Compaq after the merger have gone to EMC, Dell and other storage players. So when H-P hit an unexpected speed bump -- a problem in the deployment of new software to run its fulfillment system -- it appears that no one in storage management could find a workaround in time to save the quarter.

Company Chief Carly Fiorina promptly fired several vice presidents, saying H-P's execution "was unacceptable." But the problems are much deeper than a one-time breakdown, say analysts who cover the company.

"H-P issues are just that -- H-P issues. Execution, supply-chain management issues and channel management turmoil in Europe are primary factors in the miss," A.G. Edwards analyst Aaron Rakers wrote in a note to clients. "Dell and EMC are clearly taking share from H-P." (Rakers' company does not do banking with H-P.)

Similarly, Merrill Lynch analyst Shebly Seyrafi, talked about "H-P's own weakening competitive position in storage," as well as a problem caused by an upcoming product transition. H-P is planning to sell upgraded storage equipment made by partner Hitachi Data Systems later in the year, so some customers are delaying purchases until the new gear hits the market. (Merrill Lynch has a banking relationship with H-P.)

Even

Sun Microsystems

(SUNW) - Get Report

, a company with plenty of its own problems, piled on. The modest recovery in its server business sparked sales of its storage hardware, hurting H-P at the low end, remarked another sell-side analyst, speaking informally.

What's worse, says Berg, is that "the marketing message has never been clear. There was no coherent vision of what the company should be after the merger," he said.

Meanwhile, the list of storage companies hurting in varying degrees because of H-P's storage problems includes

Emulex

(ELX)

,

QLogic

(QLGC)

,

Brocade

(BRCD)

,

Overland Storage

(OVRL)

and

McData

(MCDT)

.

Of those, most analysts surmise that Emulex, a seller of components for larger storage systems to H-P, has been hit the hardest. The company

modestly beat expectations earlier this month, but only after drastically reducing its guidance.

"Thank God we got out of Emulex a while ago," said Rob Funk of RGF Partners, a N.Y.-based hedge fund. Not only is he out of Emulex, but also he's staying away from storage altogether, at least for now. "If I wanted to get back in, I'd probably look at EMC because of its strong management," he said.

Although it's likely that information technology spending is slowing, as evidenced by the recent round of misses and warnings by many tech companies, it doesn't look like demand for storage is falling off sharply. The biggest players will probably continue to eat more of the storage pie, but for now, investors in H-P and some of its suppliers, are going to be stuck with the crumbs.