With the longest bear market in 60 years hovering over the storage industry, a spate of recent acquisitions begs some exploration. Is this bargain hunting by the big boys or desperation on the part of the little guys?
In August, IBM announced it had acquired TrelliSoft, Inc., a provider of storage resource management software. Then, last month, EMC Corporation announced the acquisition of Prisa Networks, a supplier of storage area network (SAN) management software while Sun Microsystems, Inc. announced an agreement to acquire Pirus Networks, Inc., a player in multi-protocol, multi-vendor intelligent storage networking for distributed open systems environment.
"I think that this is just the beginning," said Steve Duplessie of the Enterprise Storage Group. "Small companies will have trouble both raising money at reasonable valuations, and getting to market without big brother kind of help," he said. "That makes these guys ripe for the picking by the big boys, who have time-to-market issues -- the little guys make awesome stuff, but that alone doesn't guarantee success."
Ed Broderick, an analyst with the Robert Frances Group agreed with much of Duplessie's assessment. In particular, he noted that leading storage vendors are under pressure to get to market "with as much speed as is humanly possible." Thus, they are happy to acquire promising technology whenever doing so looks to be faster than developing in house.
Furthermore, notes Broderick, as
Thus, the race to acquire new technology is simply the opposite side of the same phenomenon that has seen all kinds of relations, API swapping, and so on between giants like HDS, IBM and EMC.
Broderick cautions that none of the recent large acquisitions had publicly disclosed purchase prices. "These probably aren't billion dollar deals," he says.
More information on this topic:Sun acquires Pirus, strengthens virtualization plans
IBM buys SRM vendor to boost Tivoli product line
EMC to buy storage software maker Prisa Networks
About the author: Alan Earls is a freelance writer in Franklin, MA.
This was first published in October 2002