Published: 01 Oct 2010
In baseball there are two ways to win: find the raw talent and build your team from the ground up, or shell out the big bucks and buy your way into the World Series. These days is seems like a lot of storage companies are taking the latter route, tearing a page out of the Yankees playbook and buying up emerging technology companies at a brisk pace.
And just like in baseball, you can't tell the players without a scorecard. Quantum bought ADIC. Sun bought StorageTek. Oracle bought Sun. HP bought LeftHand, PolyServe, Ibrix and Opsware. Dell bought EqualLogic and Perot Systems. IBM bought XIV Systems, Diligent, FilesX and Arsenal Digital. NetApp bought Spinnaker and Onaro. F5 bought Acopia. Hitachi bought Archivas. Cisco bought NeoPath Networks and Nuova Systems. LSI bought ONStor and StoreAge. CA bought XOsoft. Seagate bought Maxtor.
Tandberg bought Exabyte. Symantec bought Revivio. Rackable bought SGI. Brocade bought Foundry Networks, Silverback Systems and NuView. McData bought CNT, Nishan Systems and Sanera. Brocade bought McData.
And EMC bought all the rest.
That list just scratches the surface, yet all of that activity keeps Wall Street busy and gives venture capitalists (VCs) a reason to go to work each day. But what does it mean to data storage managers, especially those who bought stuff from a "little guy," when they see a company disappear into the corporate portfolio of a major-league organization?
The short answer is: Who knows? The better answer is don't let all this buying and selling deter you from your own acquisitions -- that is, getting the best storage technology to fill your company's needs. When you're dealing with newer (and smaller) firms some caution is advised, but that doesn't mean you should avoid them. A few years ago nobody knew what a Kia was, but now it's considered a pretty cool car with a solid service record. Same deal with Data Domain, which created its own success with timely technology and good products; the company didn't need EMC, but I'm sure Data Domain's VCs don't mind being $2.1 billion richer.
If you're a customer of a company that was scooped up, there are several possible scenarios that can occur:
You're outta luck. The buying company is just looking to kill off potential competition (or just came to its senses), and they deep-six the acquired company's products and offer something completely different in its place. (Still trying to get support for that NeoPath File Director?)
They didn't screw it up. In this scenario, the purchaser remembers why they shelled out billions to buy a pretty cool company that has had some success. The back-office stuff, marketing and those kinds of things may get absorbed by the new parent company, but it's pretty much hands off when it comes to the newly acquired technology and product lines. Dell's handling of EqualLogic comes to mind, and I think most current and past EqualLogic customers would agree that the boost Dell has given the company has worked out well.
What happened to that cool technology? Sometimes, a company gets bought not for its products but for the ideas behind those products. The purchaser is looking for the intellectual property -- engineering designs, patents, etc. -- that it lacks to bootstrap a new effort or resuscitate one that's on life support. For users of the acquired company's products, it may seem a lot like the "You're outta luck" scenario above, at least until the technology they liked is resurrected in a new product.
They don't know what to do with it. Most acquisitions make sense to reasonably intelligent adults. But once in a while a real head-scratcher comes along that can induce some warranted anxiety for users of the products in question. Oracle plus Sun? A puzzle alright, but Oracle doesn't make a lot of mistakes. And what about HP buying Palm? A hardware company that failed in the smartphone market buys a software company that failed in the smartphone market and that should equal success, right? It's way too soon to tell, but bewildering to say the least. The bottom line is that if your array vendor gets bought by a company that sells ringtones on the web, you better find a new array vendor.
This kind of stuff happens in all industries for all kinds of products, so it's not surprising that storage should be going through such a shakeout. Still, when you see that the maker of the storage gear you pleaded for is on the block and the vultures are circling, it can be a little nerve wracking. The truth is that a lot of the big storage vendors don't do much innovating these days so they go shopping for new ideas, technologies and markets. Hopefully, the startup you took a chance on will wind up in a smart new owner's shopping cart.
BIO: Rich Castagna (firstname.lastname@example.org) is editorial director of the Storage Media Group.
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