IBM plans advance in race for data storage market
By Ross Kerber, Globe Staff, 3/28/2000
IBM Corp. plans to launch a multimillion-dollar effort in the information storage market today, pledging to hire 1,000 more sales and technical specialists to promote its data storage systems.
The step is one of the first moves by Linda Sanford, an IBM veteran who was named to head the company's Somers, N.Y.-based storage division in December after a reorganization. IBM hopes she can help it catch Hopkinton-based rival, EMC Corp., which dominates the most lucrative parts of the data storage industry.
As part of its new campaign promoting what it calls'storage area networks,' IBM also will open testing facilities and introduce software to allow different programs and computers to make use of the same information.
IBM said it will spend $400 million as part of the effort, though it declined to disclose its current levels of spending in the storage business, or its revenue in the area. The storage division has about 2,500 sales and technical specialists for storage integration work.
The moves mark the latest attempt by IBM to catch EMC in the race to supply e-commerce companies and major corporations with the hardware they need to manage vast amounts of data. EMC leads in the important storage segment known as External RAID, for 'random array of inexpensive disks.'
The term refers to the large devices that sit outside server computers and are used to link scores of disks, so that information can be accessed rapidly across large networks.
Last year EMC controlled 27 percent of the main market for such storage systems, according to International Data Corp., with Compaq Computer Corp. second at 13 percent, and IBM in third place with 11 percent.
The consulting firm estimates the market was worth $16.6 billion last year and will grow to $28.7 billion in 2003.
IBM still supplies many components for EMC and other vendors, and said today's announcement relates to all storage area networks in addition to external systems. Last July IBM introduced its so-called Shark storage products, and said in January it had sold 1,000 of the systems, which it advertises as 'open' systems for which outsiders can write software code.
But Shark has suffered delays recently as IBM has pushed back delivery dates for some of the software that is used to transfer data between the devices and 'server' computers that run application programs. Now IBM said it will introduce new Shark models and software produced by its Tivoli Systems unit in Austin, Texas.
Technology analyst Mike Kahn of the Clipper Group in Wellesley said he will be curious whether the expanded sales force will help IBM leapfrog Compaq or EMC in certain subsegments. 'There's nothing here that's technologically amazing,' Kahn said. 'But this is an opportunity for big revenue and profits, and that's why IBM looks so committed to doing whatever it takes to gain its share.'
Sanford, a 25-year IBM veteran and one of the company's top female executives, took over IBM's Storage Subsystems Division in December after having been general manager of its global industries units, overseeing sales to IBM's largest corporate customers.
In New York Stock Exchange trading, IBM stock closed at $126.875, up $6.25. EMC stock closed at $143.25, up $1.25.
This story ran on page E03 of the Boston Globe on 3/28/2000.
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