By Ann Silverthorn
Sun’s conference call last month announcing its plans to acquire StorageTek for $4.1 billion-the largest acquisition in Sun’s history-provided a 50,000-foot overview of the transaction, but since then Sun has been in a relatively quiet period between the announcement and the close of the acquisition, which is expected late summer or early fall. However, Mark Canepa, executive vice president of Sun’s Network Storage Products Group, recently updated InfoStor with a view that’s at least a little closer to the ground.
StorageTek has a lot of mainframe customers, and Sun has been perceived over the years as an open systems company with a reputation for bashing mainframes. So, not surprisingly, there’s a set of customers that have questions about how important mainframe environments are to Sun. “Obviously, we’ve driven Solaris business and…the value proposition of open systems over non-open systems,” says Canepa, “[but] once the deal closes, we’ll have a whole set of mainframe accounts from StorageTek and we will take care of those customers.”
Canepa compares the situation to Sun’s relationship with Microsoft, which initially caused many companies to re-evaluate their position with Sun. “Now all of Sun’s products are certified to run on the Microsoft hardware certified list,” he says. “It’s a message that was hard to convince people of prior to the overall global relationship that Sun and Microsoft provided. But the same case can be applied to the mainframe.”
Convincing both storage and financial analysts that the overall deal is wise has not been an easy task for Sun and StorageTek. Reviews are mixed, ranging from lukewarm to negative (although a few stragglers have since weighed in with guarded optimism). Some are asking why Sun is spending so much of its disposable cash on a tape company when the tape market is mature and relatively stagnant.
Simon Robinson, sector head, storage and systems, for The 451 Group research and consulting firm, says, “Sun has failed to build a [successful] storage business, and it has never used storage strategically. This move addresses that [problem], but it’s a strange acquisition because Storage-Tek doesn’t have any technology that Sun didn’t have access to anyway. Sun resells or OEMs tape products, and in midrange disk arrays they both have essentially the same products.” (For example, both companies OEM disk arrays from Engenio Information Technologies.)
What StorageTek does have is a strong channel (repeatedly referred to by Sun executives as a key part of the deal), a sales force of about 1,000 storage-savvy sales-people, and an installed base that might be receptive to Sun’s StorEdge 6920 disk arrays and other products. And 36% of the archived data in the world is on StorageTek media, according to some estimates.
StorageTek has been relatively unsuccessful selling disk arrays, which are often included as part of server sales, so the two sales forces should have a lot to learn from each other, according to analysts.
Steve Duplessie, senior analyst and founder of the Enterprise Strategy Group, says that there’s good, bad, and ugly in the deal. “The good is that Sun got what it wanted-$2 billion in storage sales out of STK [and a top-notch sales force]. The bad is that it’s [almost] all tape, which is not a growth market. The ugly is that neither Sun nor STK has been successful selling outside their respective boxes: Sun sells servers, STK sells tape. Hopefully that can change.”
Duplessie adds that what’s often missing in discussions of the acquisition is that StorageTek has a services business in the $1 billion-per-year range. “STK is already maintaining third-party gear at very big accounts,” Duplessie notes, “and if Sun is smart it will nurture and grow this very profitable business line.”
John Webster, president and founder of the Data Mobility Group, says that Sun’s key gains are the following:
- An intensely loyal mainframe customer base [translation: cash cow];
- A premier storage R&D group with significant expertise in areas such as security;
- Acres of prime real estate in Colorado [and around the world]; and
- $1.2 billion in cash.
“Sun has been trying to piecemeal storage R&D, with limited success at best, by acquiring small storage companies,” says Webster. “With STK, Sun gets the whole enchilada, [although] there will be some product and marketing overlap to shake out and some OEM relationships to review.”
From the financial analyst community: “StorageTek got a decent price for the company, but Sun did not get anything nearly as tangible,” says Steve Berg, an analyst with Punk, Ziegel & Co. “At best, Sun got an increased presence in the data center. While Sun did not add growth, it did add significant cash flow from operations and some cost-cutting synergy that could be valuable down the line.”
Berg adds that the deal will make more sense “if Sun acquires some storage array and storage management software technology to give them a clearly defined and defensible ILM solution. Then they could define themselves as a ‘technology supermarket.’ ”
Scott McNealy, chairman of the board and CEO at Sun, touched briefly on the topic of grids (storage, compute, and network) in the Q&A section of the acquisition announcement: “A lot of people ask why the environment that creates and distributes and manages information is different from that which stores the data assets that are a by-product of the compute environment,” said McNealy.
Canepa outlined several different grid scenarios. “Customers can buy a grid with all the related hardware and software and install it in their IT environment, or they can buy grids from a service provider. Or, Sun can build a grid and offer its customers compute and storage, which for a given set of applications, represents a significant improvement in the ability to run, compute, and store data. We strongly believe that in the future, grids will be a very cost-effective way for customers to manage their IT environments.”
According to Canepa, StorageTek has technologies to enhance the capabilities and effectiveness of grids, such as archival and virtual tape products.
During the initial acquisition announcement, McNealy said that Sun is moving toward providing an integrated environment, starting when data is created and taking it all the way to when it is archived or destroyed. The vision is to give customers one point of contact for servers, storage, and service contracts.
“When you look at the capabilities we have built into Solaris, file systems, clustering, storage resource management [SRM], and you look at the whole information life-cycle management [ILM] environment, it’s not just about putting data on disk. It starts at creation, capture, and transactions and moves all the way through archiving. We can give a much more integrated environment-one architecture on which to build your data.”
One area in which Sun hopes to improve is in storage software. Unfortunately, Canepa was guarded in his comments. “It’s not until close that we’ll be able to get the right group of execs in a room. They’ll roll up their sleeves and see what they have. We’ll find resources from what is discovered and create a big picture. [Software] road maps will emerge after close.”
Many analysts, such as The 451 Group’s Robinson, are skeptical and want some more concrete answers. “Sun would like us to view its move as part of a bigger picture, and as such, it should be seen in that wider context and not simply as ‘Sun buys a tape company.’ Our concern is that beyond the ‘one throat to choke’ argument, the message still lacks clarity. Is this primarily an ILM play, or a grid play? Or both? What else does Sun need as part of this vision? Sun needs to better articulate its strategic intentions.”
The information ecosystem
Whether it be grid or ILM, most of all Canepa wants everyone to understand the value proposition of the deal.
“The value proposition of bringing Sun and StorageTek together is about the ‘information ecosystem,’ ” says Canepa. “That is information from the day it is created, and technology that is imbedded in the future client, like Java and Java Card, through the entire life cycle. That life cycle includes storage, data movement, computation, and distribution through networks. It must retain the security, identity, and policy of the information to the day it finally dies. And then the information must be truly deleted from the enterprise system.”
That’s what Canepa refers to as a “trusted information ecosystem.” “If you can’t trust your ecosystem, you can’t trust your data. It’s a systems company that will solve those kinds of problems, and that’s at the kernel of the strategic nature of this acquisition.”
Sun completes Procom buy
By Heidi Biggar
About a month before announcing its impending acquisition of StorageTek, Sun relatively quietly completed its acquisition of the intellectual property (IP) of Procom Technology, a Sun partner and early pioneer in NAS. The all-cash transaction was valued at about $50 million-a far cry from the $4.1 billion price tag on StorageTek, but evidence nevertheless that Sun is out to refresh its storage image. The company’s plan is clearly to rely less on OEM relationships and more on its own technology for product development going forward.
According to Tom Martin, director of marketing for Sun’s NAS product line, the decision to bring Procom’s IP in-house was straightforward. “It allows us to get to market quicker and [stay aggressive] on pricing,” says Martin.
Sun has been embedding Procom’s technology into its StorEdge 5000 family of NAS appliances since April 2004 in an effort to fill what it describes as a “large gap” in its storage portfolio. The entry-level StorEdge 5210 and high-end StorEdge 5310 are both based on Procom technology. The 5310 is positioned against NAS filers from market leaders EMC and Network Appliance.
Sun’s Martin says users can expect to see a performance boost in the Procom-based NAS filers in the next four to six months, as well as new migration options, including the ability to migrate data between various storage resources (e.g., SAN storage, tape, SATA disk arrays, etc.).
Just what role the Procom technology will play in the development of Sun’s “Honeycomb” platform is unclear at this time. Honeycomb is the codename for Sun’s content archiving platform, which is currently under development.
STK gets ‘smart’ about archiving
CAS platform complements Sun lineup
By Heidi Biggar
Shortly after news broke of Sun’s impending acquisition, StorageTek introduced its IntelliStore platform last month-the company’s first “all-purpose” archiving system.
IntelliStore is expected to compete head-to-head in the content archiving, or content-addressable storage (CAS), market against products from vendors such as Archivas, EMC, Hewlett-Packard, IBM, and Permabit. (StorageTek entered into a reseller agreement with Permabit earlier this year.) Unlike StorageTek’s Life Cycle Fixed Content Manager (LCFM) 100, which is based on Permabit’s Permeon Compliance Vault software, IntelliStore is built completely on StorageTek’s intellectual property.
What differentiates IntelliStore from some other products in the disk archiving space-in particular, EMC’s Centera-is its ability to capture both structured and unstructured data from multiple applications and then archive that data on the back-end to disk or tape as needed. Disk and tape resources are treated as a single archive pool. Data can then be moved back and forth from disk to tape as needed and/or as determined by policies set by administrators.
IntelliStore supports a variety of database and e-mail archiving applications, including products from IXOS, KVS, Princeton Softech, Zantaz, and others, and additional support for up to 25 applications is expected by year-end.
According to Dianne McAdam, senior analyst and co-founder of the Data Mobility Group (DMG) consulting firm, “IntelliStore allows data to be easily migrated to WORM [write-once, read-many] tape from WORM disk, and that is one of the key differentiators.” IBM’s DR550 also allows users to migrate data from WORM disk to WORM tape using Tivoli Storage Manager (TSM) software, she adds.
By archiving to disk (StorageTek’s FlexLine 600 Serial ATA, or SATA, disk arrays) and tape (STK’s SL500 and SL8500 libraries), users are able to keep overall archival costs down without sacrificing access time. IntelliStore is designed to keep users from falling into the costly trap of archiving all data to disk. “Storing data across multiple tiers [disk and tape] allows users to keep costs down,” says Russ Kennedy, director of software product management, information life-cycle management solutions, at StorageTek.
StorageTek expects IntelliStore’s tiered archive to enable cost savings of 25% to 30% versus competitive products, including EMC’s Centera. The company also expects Intelli-Store to deliver 15x the managed file capacity of its nearest competitor (Centera) and up to 10x to 20x the throughput of some other CAS products (see “at a glance”).
In terms of IntelliStore’s ability to service multiple applications and multiple data types, not just e-mail, Brad O’Neill, senior analyst and consultant with the Taneja Group consulting firm, says: “It’s a smart strategy. This is a disk-archiving solution that is just as applicable to database archiving as it is to fixed file content, and that’s what users want: one archive.”
IntelliStore fits into StorageTek’s overall disk/tape strategy and should help propel Sun’s information life-cycle management (ILM) strategy, according to analysts. “IntelliStore provides synergy between StorageTek’s traditional strengths in archival and its new emphasis on disk technologies and ILM,” says O’Neill.
Pricing for IntelliStore starts at $75,000 for 4TB of disk capacity; additional capacity can be purchased in 1TB increments for $9,000. A “Compliance Archive” option, which provides disk-based WORM support, is available for an additional $15,000.
AT A GLANCE
Pricing: Begins at $75,000 for a 4TB solution, and additional 1TB increments available for $9,000 each
Maximum throughput: Approximately 120MBps*
Other features: Support for CIFS/NFS; four Ethernet ports; front-end portal config = 2 nodes (min/max), N+1 availability; and support for local and remote copy replication
Supported apps (at press time): AXS-One, CommVault, FileNet, Hummingbird, Ilumin, Interwoven, KVS/Veritas, Mobius, OpenText (IXOS), Princeton Softech, Zantaz