In a move that highlights the growing importance for financial services companies of end-to-end information management, Santa Clara, Calif.-based Sun Microsystems will acquire data storage system vendor Storage Technology Corp. Sun says the $4.1 billion acquisition of StorageTek will strengthen its position in the market for managing information from creation, through long-term storage, to deletion. The need to comply with government regulations such as the Sarbanes-Oxley Act is increasing demand for data storage and information life cycle management technology.
"This combination makes us one of the largest enterprise-storage players and potentially the most robust and systematic," Sun CEO Scott McNealy said in a conference call. The companies expect to complete the deal by the end of summer.
While sales of Louisville, Colo.-based StorageTek's tape automation and disk storage products have grown slowly of late, the company brings decades of experience in data archiving and security to Sun, in addition to expertise in helping large companies manage heterogeneous servers and storage as a single network.
Sun says the companies' product lines are complementary. Sun's storage management products, such as its StorEdge 6920 data storage system, can be coupled with StorageTek's data protection and intelligent data archiving products, including StorageTek's Storage Resource Management software and virtual tape systems.
Halting a Slide
The most compelling reason for the deal may be Sun's need to halt the slide in its core server business. Its share of the worldwide server market - which totaled $12.3 billion in the first quarter of 2005, according to research firm Gartner - slipped to 9.5 percent from 10.3 percent a year earlier. Sun trailed IBM (30 percent market share), Hewlett-Packard (28 percent) and Dell (10.8 percent).
"It's common knowledge that Sun's been in a difficult spot since the dot-com bubble burst," says Arun Taneja, consulting analyst at Hopkinton, Mass.-based Taneja Group. "Sun had to do something extraordinary."
The StorageTek purchase is intended to help Sun compete in the next-generation data center where virtualized pools of computing, networking and storage resources coexist. IBM, HP and EMC aggressively have pursued their own virtualization strategies. StorageTek's virtual-tape library and information life cycle management products will help Sun keep pace. "While it doesn't complete the picture, it brings them a step closer," Taneja says.
Whether that vision comes to pass depends largely on how well the companies integrate their operations and products, and corporate customers appear to be taking a wait-and-see approach. "We're waiting to see what kind of synergy the two companies will provide in the storage backup market," says Mark Moroses, senior director of technical services at Maimonides Medical Center in Brooklyn, N.Y.
The healthcare provider is evaluating whether to replace a Sun server with an IBM server in its data center. Sun's Unix operating system works well with the IBM Tivoli storage management software that Maimonides uses, according to Moroses. "The strength of Sun versus Intel-based servers is its ability to run multithreaded applications," he explains.
IBM, however, provides stronger integration among Tivoli and its own storage devices, Moroses says. "The question in our mind is whether Sun is likely to provide a stronger presence in the data center, because right now IBM has a more stable and mature platform," he adds.
Courtesy of InformationWeek, a CMP Media publication