M&A action bodes well for storage buyers

Posted on January 01, 2000

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Fueling an ongoing trend, the storage industry rang in the new year with a number of interesting mergers, acquisitions, and corporate investments. Although I hate to see small, innovative companies gobbled up by big, bureaucratic companies, it's good news for storage administrators, most of who prefer to buy from vendors with extensive service and support capabilities. This is particularly true for technologies such as Fibre Channel and architectures such as storage area networks (SANs), which still require a lot of hand-holding in the implementation phases.

All of the recent acquisitions are covered in this issue, but here's a quick recap.

After months of rumors, Mercury Computer's Shared Storage Business Unit was acquired by IBM (for a bargain $23.5 million). As did Hewlett-Packard's buyout of Transoft last year, this acquisition should go a long way in enabling IBM to sell "open" SANs because Mercury's SANergy allows data sharing in heterogeneous storage networks. And IBM's marketing muscle should give SANergy the exposure it deserves.

Another interesting move was Seagate's $360 million acquisition of XIOtech, a relatively small RAID vendor in Eden Prairie, MN. Seagate could have entered the RAID subsystem market any time over the last decade, but apparently liked XIOtech's SAN- centric architecture. In fact, XIOtech used to refer to its flagship Magnitude array as a "SAN in a box." Although it's sort of like Intel entering the server market (and competing with its customers), Seagate's acquisition should give it a broader presence in the SAN market, which it helped pioneer with its Fibre Channel disk drives and zealotry.

Compaq invested a cool $20 million in HighGround Systems, a financially challenged vendor with great technology. HighGround's Storage Resource Manager in large part spurred the market for storage resource management software (the focus of next month's Special Report). Compaq's partnership with HighGround is not exclusive, and HighGround was expected to announce a number of other big-name partnerships this month.

Also on the storage resource management front, EMC is in the process of acquiring Softworks Inc. for $192 million. The deal is expected to be completed within the next month, and will further bolster EMC's formidable software arsenal.

Software rules

The IBM-Mercury and Compaq-HighGround deals highlight a key trend in the storage industry: Software is king, which is why InfoStor will step up its coverage of storage management software this year. In addition to our Special Report next month, check out this month's "Using CIM and WBEM for management," written by the technical director of the Storage Networking Industry Association. SNIA, by the way, is eager for involvement from the IT community, so if you want to influence standards and how you'll be managing your storage infrastructure in the future, get involved: www.snia.org.

Dave Simpson, Editor-in-Chief


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