Sun acquires StorageTek in US$4.1-billion deal

Sun Microsystems said its US$4.1-billion purchase of StorageTek on Thursday will give it the products and services it needs to help enterprise customers contend with the growing body

of privacy and governance regulations that affect the way they manage and archive data.

The two firms said the deal, which is expected to close in the fall, will see StorageTek folded within Sun, with teams from both developing the integration plan. Sun already has its own storage business, including software for virtualizing pools of storage resources, while StorageTek is best known as a supplier of tape and storage automation products. Both firms supply disk storage, though neither is a market leader in that segment.

Sun chief executive Scott McNealy said the company realized it needed to beef up its storage expertise as Sarbanes-Oxley and a range of privacy laws affect what Sun and competitors such as EMC call “information lifecycle management,” which focuses on how data is collected, distributed, and archived in either the short or long term.

“It is a headline news kind of activity,” he said. “The extra little secret sauce we will bring to this . . . is secure ILM, or private ILM. Privacy, security, access management, authentication of who gets access to what data.”

StorageTek president Pat Martin said the acquisition will bring his customers a much broader range of products and services, which is important in a market that demands more heterogeneous IT environments.

“The more of the system you can bring together for them, from one place where you can build integrated, the right kind of contract . . . customers kind of like that idea,” he said.

In Canada, StorageTek is led by Brent Rebus, a longtime Cisco Systems of Canada executive who moved over to the storage firm last year. Rebus could not be reached for comment at press time.

According to the most recent figures from Etobicoke, Ont.-based Evans Research, StorageTek does not even crack the top three spots in any enterprise category, including disk or tape storage.

“They have been doing storage management for many years and there are many products available in this space. It’s small and marginal,” said Evans storage analyst Jennifer Ewen. “Sun is certainly one of the smaller players in Canadian storage. Combining the two will help boost it up, but it’s . . . not like either one of them is filling a void here.”

Eddie Zeltzer, president of MasStor in Lachine, Que., has been a reseller of both Sun and StorageTek. He said the upside will be dealing with one vendor rather than two, and it would also eliminate some of the competition from StorageTek’s direct sales force.

“I guess Scott’s using up some of that $7.2 billion in cash he’s got,” he said. “If you want to be a player in storage you have to have a more rounded mix. As far as StorageTek goes, they never had the full gamut anyway.”

StorageTek products were distributed in Canada through AvNet and Bell Microproducts. Peter Diniz, vice-president and general manager at Bell Micro Canada, said Sun and StorageTek have a common set of customers with similar business needs.

“I don’t really view this as consolidation in the storage market. It’s more of an IT infrastructure play,” Diniz said. “Though Sun has a good, decent storage business, it’s really an on-platform business. And even there, a lot of what they sold wasn’t their technology. It was OEM-like product.”

StorageTek Canada had recently been enhancing its network-attached storage (NAS) business in Canada, signing an agreement in April to resell San Jose, Calif.-based BlueArc’s Titan SiliconServers, which provide a NAS gateway to StorageTek FLX2000 disk subsystems. Company spokesman Louis Gray said he did not expect the Sun deal to change that agreement.

“We definitely expect to have a strong relationship with StorageTek,” he said.

Storage vendors have been increasingly merging with or acquiring firms in areas outside their traditional realm. Last year, for example, EMC brought Documentum, a content management software developer, while Veritas merged with Symantec, one of the largest IT security products firms in the world.

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