Integration issues linger at Sun StorageTek

Sun must dispell the 'market confusion' to compete against established storage vendors like EMC, HP, and IBM

Sun Microsystems' acquisition of StorageTek will be finalized Oct. 17 when the price lists of the two technology companies become one. But some observers say integration issues remain for Sun StorageTek.

The issues are being discussed by more than 1,000 customers, partners, and Sun executives attending SunForum 2006 this week in Las Vegas.

Sun bought StorageTek in 2005 for $4.1 billion to improve its position in the storage business, but there is still some "market confusion" about what kind of company Sun StorageTek is, said Andrew Reichman, an analyst at Forrester Research.

"People have a concept of [StorageTek] as a tape vendor and a backup vendor and don’t really have much of a perception of them as a primary storage vendor. Sun's challenge is to leverage the expertise, the trust and the sales force of StorageTek, yet turn it into ... that idea of having the whole datacenter," Reichman said.

The Oct. 10-12 event had been hosted for the previous 18 years by StorageTek, but was renamed for Sun this year.

Sun StorageTek can competitively serve the storage needs of the next phase of Internet growth, said Jonathan Schwartz, Sun's chief executive officer, in a keynote address Wednesday.

With the popularity of new Web 2.0 sites such as News Corp.'s MySpace and YouTube -- which was just acquired by Google -- the amount of data flowing through the Internet and the amount that needs to be stored will grow, said Schwartz.

"People are now authoring the content on the Web, not just browsing the content," he said. "All of this creates an enormous opportunity for us."

But Sun StorageTek may have difficulty competing in the present market for storage against established vendors like EMC, Hewlett-Packard, and IBM, said Richard Villars, a storage systems analyst at IDC.

Enterprises buying storage tend to be conservative and reluctant to switch vendors, Villars said. However, Sun StorageTek could make inroads with the Web 2.0 companies.

Sun enjoyed encouraging news from IDC, which reported that Sun's second quarter disk drive systems revenue of $392 million was 13.4 percent higher than in the second quarter of 2005, more than any of the other four storage vendors.

StorageTek employees wondered at last year's Forum, held just after Sun's proposed acquisition was announced, whether Sun would support mainframe computers, noted Jon Benson, Sun's vice president of engineering for tape products, formerly of StorageTek.

Sun StorageTek supports the mainframe, said David Yen, executive vice president for the Storage Group. In the early 1990s, Sun benefited from the growth of Unix-based server platforms as a mainframe alternative.

"Sometimes [the CEO] Scott [McNealy] went out of his way trying to promote the Unix world," Yen said. "Unfortunately that created this wrong perception that we are anti-mainframe."

In fact, Sun's current strategy is to build and maintain a data center regardless of the technology in place, said Yen. While Sun promotes its Solaris operating system, it supports Windows, Linux and other OSs. He took a dig at competitors like IBM, Hewlett-Packard, and Dell by explaining that Sun's focus is on the infrastructure alone.

"We don’t have a strategy completely biased toward services trying to use human bodies to win the advantage. We don’t have printers and we don’t sell large TVs," Yen said.

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