“We would rather have seen the company buy back a billion shares and fire 10,000 people.” As reactions to acquisitions go, Steve Fortuna, an analyst at the Prudential Equity Group, could hardly have been more damning. The acquisition in question? Sun Microsystems’ $4.1 billion deal for tape storage stalwart StorageTek, announced in June 2005.
Certainly the deal took some industry watchers by surprise: Forrester analysts Galen Schreck and Frank Gillett admitted “the longer-term rationale eludes us”, even after talking to executives from both sides.
To counter the early negative reactions, Sun hijacked StorageTek’s November annual forum to bombard customers and partners with sweet talk and unveil a new encrypted tape device; but details on Sun’s wider plans to provide information lifecycle management (ILM) tools were thin on the ground.
On the tape side, Sun’s latest product offering is impressive enough: the new T10000 has 500GB of capacity with a throughput of 120 MB/second (the next generation will store 1TB) – the sort of capacity to set it apart from rival offerings from competitors such as IBM.
Data can also be encrypted automatically as it is written onto the tape – a positive boon for those with concerns over data protection.
Sun’s executives will hope that such products can help it cement a foothold in the $65 billion storage market, where it has yet to make a significant impact. For while tape storage is not a growing market, Sun executives believe that it rounds out their ILM plans.
James Whitemore, VP of marketing for network storage at Sun explains that the combination with StorageTek brings together the best aspects of both businesses: :”Across the industry, the biggest challenges are all about storage. But access to information starts at the point where you create or access data and not at the storage level, and a systems company can do that.”
But further details about how that product roadmap would flesh out, or indeed how the acquisition would affect StorageTek’s existing customer base were not forthcoming. That is of particular concern for those users with mainframe implementations – an area in which Sun has little direct experience.
In mitigation, Sun plans to run StorageTek as an autonomous unit until the end of 2005, before concerted integration plans are unveiled. Sun’s chief operating officer Jonathan Schwartz also encouraged those with worries to maintain a dialogue with the vendor.