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Big Blue, StorageTek cuddle up – greatly

Obviously, a merger is on the cards

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StorageTek Corp reported record third quarter revenues and earnings per share only days after chairman and CEO David Weiss announced a new open storage management architecture, the Virtual Intelligent Storage Architecture (VISTA). The ambitious aim is to move data between any storage device, irrespective of platform or environment. Speaking at this year’s annual User Forum, Weiss said: “Our architecture will lower the total cost of ownership and improve performance with the goal of working with any server, any operating system, any application – even other vendors’ storage devices.” Alastair Blackburn, head of StorageTek’s storage networking business group in Europe, added: “We’ll provide the connectivity and data management to deliver content to users as and when they need it… and we will support non-StorageTek devices.” StorageTek’s strategy is based on the concept of Storage Area Networks (SANs), where intelligence is located in the network rather than the disk controller. “That way there’s no lock-in to the device, “ Blackburn said. It sounds neat, but details are thin and Blackburn acknowledged that networked data sharing is probably three years away. There’s another factor at play. StorageTek is extremely close to IBM. Some observers are wondering about the relationship and if StorageTek, which is no stranger to Chapter 11 bankruptcy, can ever afford to be truly independent of Big Blue. It was in June 1996, only a month after being promoted to CEO, that David Weiss signed a non-exclusive OEM contract deal with IBM to manufacture mainframe storage products for Big Blue. StorageTek’s Iceberg system was renamed the RVA and marketed extremely successfully by IBM, which enabled StorageTek to get on with the business of developing rather good storage technologies. This was the period when IBM seemed incapable of developing any high-end storage, having squandered a fortune on the 3990-6 and Ramac 3. Phil Payne, analyst with Isham Research, sees the IBM alliance as a double-edged sword, and he believes that, after 1996, “StorageTek lost the ability to sell disks.” Payne argues that IBM lost the ability to develop and StorageTek lost the ability to sell. The upshot was a close interdependency, and Payne now sees very little difference between their strategy directions. StorageTek calls it VISTA and IBM calls it Seagate. Payne met Jean-Marie Mathiot, IBM’s vice president Storage Systems EMEA at IBM’s IT analysts Forum in Stuttgart: “He gave us the futures pitch we expected. Keywords were 'virtual’ and ‘total cost of ownership’. IBM is talking about using very rich software from Seascape to provide multi-platform access, and he confirmed that the deal with StorageTek has been extended.” He continued: “Their strategies are very similar and equally vague. All about taking bits and pieces and putting them together in a mix and match way with no overriding architecture. It looks like they’ve thrown in their lot together, both in terms of technology and the marketing arguments. Both companies now talk about heterogeneous access and cost of ownership, as opposed to price performance benchmarks.” Payne warns that any marketing campaign based on cost of ownership is a more difficult sell than price performance benchmarks since each customer has different costs of ownership. “Cost of ownership is unique to each user.” StorageTek’s Blackburn denies that IBM and StorageTek are so close as to be conjugal, or that Seascape and Vista are one and the same. Similarly he takes issue with the accusation that the architecture is vague: “Products are emerging and there will be major announcements towards the end of next year. The Storagenet Access Hub has some data sharing capabilities already, and Vista compliance will appear next year in the Iceberg disk array, a new Eagle tape drive and Virtual Storage Manager software.” “From StorageTek’s perspective the deal with IBM has been very lucrative and given us good research and development capabilities, but we have retained our intellectual copyrights,” said Blackburn. Still, Payne maintains that StorageTek as dependent on IBM to a worrying degree. He commented: “It’s too close for comfort. IBM may be perceived soon as StorageTek’s sole marketing arm for disks. It’s just like the relationship between St Michael’s and Marks & Spencer.” ® Click here for more storage

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